Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 102.421 102.42-48 | EURUSD 1.35891 1.35805-1.3600 | EURJPY 139.208 139.091-455 | AUDUSD 0.91099 0.9105-19 | NZDUSD 0.81334 0.8111-67 | USDCAD 1.06153 1.0603-25 | EURCHF 1.23156 1.2303-18 | USDCHF 0.90613 0.90355-70 | GBPUSD 1.63688 1.6342-85 | EURGBP 0.83024 0.8298-0.8325 |

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.65 | 102.22

EUR/USD             1.3612 | 1.3578

EUR/JPY               139.50 | 139.04

AUD/USD            0.9164 | 0.9108

NZD/USD             0.8209 | 0.8130

USD/CAD             1.0629 | 1.0610

EUR/CHF              1.23165 | 1.2308

USD/CHF             0.9067 | 0.9045

GBP/USD             1.6443 | 1.6370

EUR/GBP             0.8302 | 0.8275

Overnight News

CNY:

China November HSBC Final Manufacturing PMI 50.8 Vs. 50.9 in October

PBOC Vice Governor Says China Forex Reserve ‘Sufficient’: Caixin

PBOC’s Liu Says QE Exit Will Bring Volatility to China: Qiushi

PBOC Issues Guide for Financial Support to Shanghai FTZ

China New Home Prices Moderate in November

China Faces Upward Price Pressures in 2014: Sec. Journal

JPY:

Japan MOF Survey: July-Sept Capex Up 1.5% On Year

Japan Abe Cabinet Support Rate Falls 4 Percentage points to 49% in Asahi Poll

BOJ’s Kuroda: No plan to alter 2 % price goal

BOJ Gov Kuroda: Hope Japan Firms Will Raise Base Salary Levels

BOJ’s Kuroda: Overseas factors key risks to meeting price goal

Japan Economy Minister Amari Admitted to Hospital for Tests

Japan Isn’t Considering Appointing Fill-In for Amari, Suga Says

Sumitomo Life pays $351Mn for 40% stake in Bank Negara unit

AUD:

Australian Home-Building Approvals Fall Slightly in October

Australian Company Profits Rise More Than Expected In Third Quarter

NZD:

N.Z. Treasury Says Pricing Pressures Starting to Emerge

GBP:

U.K. House Prices Rise for 10th Month as Low Rates Spur Demand

U.K. 3Q Home Planning Permissions Rise 20% v 2Q, HBF Says

For today

USDJPY:
Topside: 102.60-102.90 medium offers 102.90-103.30 large buy stops
Downside: 102.00-102.30 light mix 101.60-102.00 light sell stops 101.30-101.60 light bids

EURUSD:
Topside: 1.3610-1.3640 light mix 1.3650-1.3680 light buy stops
Downside: 1.3520-1.3560 light mix 1.3480-1.3520 light bids

EURJPY:
Topside: 139.70-140.10 light buy stops
Downside: 138.40-138.80 light sell stops

AUDUSD:
Topside: 0.9150-0.9190 light offers
Downside: 0.9070-0.9100 light bids 0.9040-0.9070 light sell stops

• EUR: The week starts with a change of lead currency, Euro’s tagged along for the rise opening around the 1.3590 area and dipping into the mid 80’s before rallying quickly to above the 1.3610 mark as Cable showed the way. The high and the lows made the market drifted from that point holding the 1.3600 1.3610 level for the most part in an otherwise dull session.
• GBP: Cable opened around the 1.6370 levels and the market slowly moved into the Tokyo session, we saw some steady buying from Technical and model types and once the market moved above the 1.6380 level it moved quickly to above the 1.6440 (two year highs) level as weak and entry stops were triggered, the market dipped off the highs however, it remained fairly well bid for the rest of the session and has moved back to the 1.6440 areas on several occasions before settling back into a 1.6420-30 range for several hours as we approach the grey hours.
• JPY: USDJPY opened unchanged overall and moved quickly in early trading to a high just below the 102.60 levels before dipping back quickly as the Cable broke higher and we started to see some counter flow in GBPJPY, for the most part USDJPY has been quiet all session with the low hitting just above the 102.20 level and the market dominated by the Cable movements, which given the session we are in was probably a little exaggerated. None the less the USDJPY continues to hold onto the best of last week’s gains and is just below the opening areas as we move to London.
• AUD: With building approvals better than expected early sellers from the opening 0.9130 area were caught short once the market started to move off the lows of 0.9110, the market had already started to recover before the Cable rally and this just added to the momentum for the AUD as there was nothing to limit its movement with GBP. We topped above the 0.9160 area and traded in a similar pattern to the Cable in general and currently hold around the highs as we move to London. It has to be noted that unlike the Cable though the Oz has seen far less volume in the market.

Today’s data

Actual = A | Consensus = C | Previous = P | Revised = R All timings GMT

NZD       Terms of Trade Index Q/Q Q3 A 7.50% | C 2.90% | P 4.90% | R 4.70%

AUD       TD Securities Inflation M/M Nov  A 0.20% | P 0.10%

JPY         Capital Spending Q3 A 1.50% | C 2.80% | P 0.00%

AUD       Building Approvals M/M Oct A -1.80% | C -5.00% | P 14.40% | R 16.90%

AUD       Building Approvals Y/Y Oct A 23.10% | C 17.00% | P 18.60% | 22.20%

CNY        HSBC/Markit Manufacturing PMI Nov A 50.8 | C 50.5 | P 50.9

08:30     CHF        SVME PMI Nov C 54 | P 54.2

08:45     EUR        Italian PMI Manufacturing Nov P 50.7

09:00     EUR        Eurozone PMI Manufacturing Nov (F) C 51.5 | P 51.5

09:30     GBP       PMI Manufacturing Nov C 56.2 | P 56

15:00     USD       ISM Manufacturing Nov  C 55 | P 56.4

15:00     USD       ISM Prices Paid Nov C 55 | P 55.5

15:00     USD       Construction Spending M/M Oct P 0.40%                                             

Weekend News

CNY:

China Manufacturing Index Exceeds Estimates as Output Climbs
China Sets IPO Reform Plan Signalling End of Freeze on Listings
China Home Prices Rise 0.68% in November on Month, SouFun Says
EUR:

EU, IMF Say No Troika Visit to Athens Before Dec. 9
Guindos Says Central Banks Tapering Is Positive Sign
Euro Still at Risk Without Fiscal Union, Visco Tells Messaggero
EU Must Complete Work on Banking Union, IMF’s Lagarde Says
JPY:

Japan to Aim for Lower FY14 New Bond Issues Than in FY13: Nikkei
Japan Utilities See 1.7t Yen N-Plant Safety Steps Bill: Nikkei
Toyota Increases Contract Hiring in Japan by 60%, Nikkei Says
USD:

Retailers Post 2.3% Holiday Sales Increase, ShopperTrak Says
USD/CNY:

U.S. Carriers Told by State to Heed China’s Air-Defence Zone
KRW/USD:

North Korea Detains U.S. Korean War Veteran for ‘Hostile Acts’
GBP:

Banking System is More Open Over Bonuses, U.K.’s Osborne Says
U.K.’s Osborne Says ‘No Housing Bubble at the Moment’
AUD:

Australia Must Deal With Debt Limit on December Breach: Abbott
CHF:

Swiss Hold Back Untaxed-Asset Strategy for Data Exchange Clarity
CHF: Swiss Regional Banks to Opt Out of U.S. Tax Deal, T-A Reports

Harry Hindsight

• EUR: A choppy tight day for the Euro opening around the 1.3605 area and immediately rising the 1.3613 levels before dropping back again and trading just above the 1.3600 levels into the Tokyo opening. EURJPY buying was the focus for the day with the Euro touching above the 1.3622 levels while good amounts of the cross were bought however, the USDJPY continued to rise while the Euro failed to push through 1.3625 and then held in a range of 1.3605-22 for the remainder of the session, Good volumes were seen throughout the session and news that the Netherlands was cut to AA+ from its triple A rating by S&P did very little to the market with a minor dip to just below 1.3600 and into the London session. The London market was little different with the range opening only a little 1.3596-1.3619, the market continued to chop around as you’d expect with the US practically out for the day. The move into NYK held no surprises until the early close in the futures markets sent the Euro lower trading down to the 1.3585 levels with liquidity becoming an issue that late in the day, we then settled into a tighter range to finish the day around the 1.3590 levels.
• GBP: Early part of the Asian market the Cable followed the Euro however, after holding the highs of 1.6370 for a good period it began to slide back the opening area of 1.6345 and continue you into early London touching below 1.6370. A dip in money supply caused some minor movement however, once the day was coming to a close for the London session we saw a strong move higher connected to the NYK option cut if there was such a thing. The market moved off its lows as we approached the 1600hr and moved quickly to above the 1.6380 level and then held into the close between 1.6380-1.6360 finishing the day on the 1.6370 levels.
• JPY: USDJPY and more particular EURJPY was the big player for the day. The market had been flirting with key levels over the past 24hrs or so. The market in USDJPY opened around the 102.30/35 levels and EURJPY had already pushed through 139.20 the bottom end of the key range and traded steadily into the Tokyo session holding around the levels when the buying appeared, it was quick sharp and took both legs initially higher before the USDJPY took over and we moved to 139.40 before pausing and then a second leg up took the market to above the 139.70 thus clearing the supposed levels. The market saw real money, technical players as well as leveraged types buying while the retail Japanese were large sellers into the move taking profit on positions from way down. Once the move was over the market corrected itself catching a few weak stops along the way before hitting below the 139.00 level into the grey hours. The USDJPY leg moved to above the 102.60 levels before retracing to the 102.13 area. Early London bought from the lows and the market moved back into a ranging day around the opening levels. As with the Cable there was a little more action around the 1600hrs period and the market saw USDJPY again move up to trade the 102.40/45 levels into the close.
• AUD: Initially we saw the Oz falling off from the opening 0.9110 areas trading to below 0.9070; this was after Treasurer Joe Hockey rejected the Bid from ADM for local grain handler Grain Corp. While this takeover bid had been in the market for some time in all likelihood locals would have been buying Oz in front of the suspected AUD buying if it had gone through however, this is never a given thing as sometimes companies such as this have large reserves for natural reasons. Once the news was out of the way the quick rise in the USDJPY sent the Oz lower again this time to below the 0.9060 levels and AUDJPY refused to be bullied to the topside for a while and although USDJPY continued pushing once the buying was over on that front the Oz again started a steady rise back to the opening levels into London. London on the whole was a drab affair with the market stuck to a reasonably tight range and only breaking higher late in the London session to push above 0.9140 before dropping back into the close to finish the day more or less unchanged.

Friday’s premiership results

Actual = A | Consensus = C | Previous = P | Revised = R All timings GMT

NZD       Building Permits M/M Oct A -0.60% | C 1.70% | P 1.40%

JPY         Nomura/JMMA Manufacturing PMI Nov A 55.1 | P 54.2

JPY         Household Spending Y/Y Oct A 0.90% | C 1.00% | P 3.70%

JPY         Unemployment Rate Oct A 4.00% | C 3.90% | P 4.00%

JPY         National CPI Core Y/Y Oct A 0.90% | C 0.90% | P 0.70%

JPY         Tokyo CPI Core Y/Y Nov A 0.60% | C 0.40% | P 0.30%

JPY         Industrial Production M/M Oct (P) A 0.50% | C 2.00% | P 1.30%

GBP       GfK Consumer Sentiment Nov A -12 | C -10 | P -11

JPY         Housing Starts Y/Y Oct A 7.10% | C 5.00% | P 19.40%

EUR        German Retail Sales M/M Oct A -0.80% | C 0.50% | P -0.40% | R -0.60%

CHF        KOF Leading Indicator Nov A 1.85 | C 1.81 | P 1.72 | R 1.71

GBP       Mortgage Approvals Oct A 67.7K | C 68.5K | P 66.7K | R 66.9K

GBP       M4 Money Supply M/M Oct A 0.10% | C 1.10% | P 0.60%

EUR        Eurozone Unemployment Rate Oct A 12.10% | C 12.20% | P 12.20%

EUR        Eurozone CPI Estimate Y/Y Nov A 0.90% | P 0.80% | R 0.70%

CAD       GDP M/M Sep A 0.30% | C 0.10% | P 0.30%

Stay lucky

Andy