Daily FX Market Commentary

Andy Harrison

Good morning,

NYK Close SYD open

USDJPY 83.507 84.28-30 | EURUSD 1.31621 1.3180-88 | EURJPY 109.90 111.081-175 | AUDUSD 1.0566 1.0568-70 | NZDUSD 0.84634 0.8445-70 | USDCAD 0.9859 0.9865-73 | EURCHF 1.20836 1.2070-88 | USDCHF 0.91801 0.9130-0.9250 | GBPUSD 1.61697 1.6180-90 | EURGBP 0.81392 0.8125-475 |

 

Weekend News

JPY:

Japan Voters Go to Polls with LDP Forecast to Topple Noda’s DPJ
USD:

Boehner Offers Obama Tax Rate Increase Deal for Entitlement Cuts
Fed Targets Foreign Banks with Stricter U.S. Capital Requirement
EUR:

Greek Default and Euro-Exit Scenarios Are Over, Stournaras Says
Merkel Says Europe Has Quite a Stretch to Go on Integration
ESM’s Regling Says European Crisis May End in 2-3 Years: Focus
EUR/PLN:

Poland Could Join Euro Jan. 1 2016, Presidential Aide Tells RMF
CNY:

China Scraps Investment Limit on Sovereign Funds, Central Banks
China 4Q Economy ‘Modest Rebound’ Basically Certain: Weekly
China’s CIC Says It Will Report Positive 2012 Investment Return
CNY/JPY:

China Says Japanese Planes Enter Airspace Near Disputed Islands
HKD:

Hong Kong Chief Pledges More Property Measures, RTHK Says
AUD:

Australian Tax Changes Vital for Government Finances, Swan Says
HUF:

Hungary May Only Sell Forint Bonds Next Year, Minister Says

 

Harry Hindsight

·         EUR: We traded steadily higher throughout the Asian session moving from the opening area just below 1.3080 to push up against the 1.3120 level as London walked in on a background of weak USD as the arguments continue and a rubbing of hands in Europe as a job well done for the moment, I doubt its far from over but the market believes so. London initially sold the Euro on the back of employment numbers coming in worse than expected but with everything else in line, we dropped back to the 1.3070 level and stayed in that area until the NYK market opened and the data from the US was released and to be honest a decent set of numbers but nothing that was going to effect the USD as the Euro went from strength to strength pushing through the resistance areas and triggering weak stops on the way up to trade above 1.3170 before settling back to the 1.3160 level into the close.

·         GBP: No data out for Cable and we saw the market rising in Asia from the opening levels around 1.6110 to just above 1.6140 into the London open and until the US market opened it remained the high for the day, GBP moved along with the Euro, but lost ground over the session as EURGBP moved firmly above the 0.8125 over the course of the day. Cable topped out above 1.6177 after the US numbers and held onto those gains into the close.

·         JPY: With elections on the doorstep this weekend we saw early buying of USDJPY helped along by poor tankan numbers taking us to just below the 84.00 area by mid session, as we headed to London the market took a breather and started to drift lower on what one could assume was over indulgence so early on, moving back to the starting level just above 83.60, as NYK opened USDJPY suffered as the USD gave ground after the figures and never recovered as we settled into a trading range around the 83.40 level all the way to the close.

·         AUD: The Oz spent most of the Asian session caught in the Gamma play as that seemed to be the only players willing to buy or sell in the market and we struggled to move in either direction with any confidence, we started the day around the 1.0520 level dipped to make the low below 1.0515 before a steady rise above 1.0555, London opened and we saw sellers appear and we were sold off again towards the starting areas and settled down into a steady sideways market up until the US data when again we broke higher touching above 1.0575 before failing dropping back to the 1.0560 level into the close.

Friday’s premiership results

Actual = A | Consensus = C | Previous = P | Revised = R 

JPY         Tankan Large Manufacturers Index Q4 A -12 | C -9 | P -3              

JPY         Tankan Non-Manufacturing Index Q4 A 4 | C 4 | P 8        

CNY        HSBC Flash Manufacturing PMI Dec A 50.9 | P 50.5          

JPY         Industrial Production M/M Oct (F) A 1.60% | C 1.80% | P 1.80% 

EUR        Eurozone Employment Q/Q Q3 A -0.20% | C 0.00% | P 0.00%      

EUR        Eurozone CPI M/M Nov A -0.20% | C -0.20% | P                 0.20%   

EUR        Eurozone CPI Y/Y Nov A 2.20% | C 2.20% | P 2.20%          

EUR        Eurozone CPI – Core Y/Y Nov A 1.40% | C 1.50% | P 1.50%             

CAD       Manufacturing Shipments M/M Oct A -1.40% | C 0.00% | P 0.40%            

USD       CPI M/M Nov A -0.30% | C -0.20% | P 0.10%       

USD       CPI Y/Y Nov A 1.80% | C 1.90% | P 2.20%              

USD       CPI Core M/M Nov A 0.10% | C 0.20% | P 0.20%

USD       CPI Core Y/Y Nov A 1.90% | C 2.00% | P 2.00%    

USD       Industrial Production Nov A 1.10% | C 0.20% | P -0.40% 

USD       Capacity Utilization Nov A 78.40% | C 78.00% | P 77.80%           

 

For today

USDJPY 
Topside: 84.50-84.80 light offers  84.90-85.20 medium offers  85.50-85.80 decent buy stops 
Downside: 83.90-84.20 light bids 83.40-83.70 decent bids 83.00-83.30 medium sell stops 

EURUSD 
Topside: 1.3190-1.3220 medium buy stops  1.3230-1.3260 medium buy stops  1.3270-1.3300 light offers 
Downside: 1.3130-1.3160 light bids 1.3100-1.3130 light bids 1.3070-1.3100 light sell stops 

EURJPY 
Topside: 111.30-111.60 medium buy stops  111.70-112.00 medium offers  112.00-112.30 light buy stops 
Downside: Nothing of note

AUDUSD 
Topside: 1.0560-1.0590 light buy stops 1.0600-1.0630 medium buy stops 1.0650-1.0680 medium buy stops 
Downside: 1.0490-1.0520 light sell stops 1.0450-1.0480 light sell stops 1.0400-1.0430 light sell stops

 

JPY: Japan next PM Abe says eyes big extra budget to beat deflation

JPY: Ex-Japan PM Aso Eyed For Deputy PM, Finance Minister -Kyodo

JPY:

S&P: Too Early to Say Japan Election to Bring Forceful Reforms

Moody’s: Not Raising Japan Sales Tax Would Be Credit Negative

Japan Business Leader Calls for Speedy Policy Implementation

SGD:

Singapore November Exports -2.5% on Year; +2.1% Expected

Singapore New Private-Home Sales Fall to 2012 Low in November

CNY:

China Central Bank Newspaper: Must Prevent Overly Loose Monetary Policy Next Year

China official sees no big pressure for policy easing

China Finance Ministry: To Lower Tariffs on Over 780 Imports

CNY/JPY:

China Media Says Japan’s New Leader Abe Must Repair Relationship

CNY/HKD:

China weighs more mainland firms listing in Hong Kong-paper

USD/CNY:

Apple says China iPhone 5 sales in first weekend top 2 million

NZD:

NZ consumer confidence rises to year high in Q4 – survey

New Zealand services index cools in November – survey

GBP:

UK House Prices Slump in Dec; Mild Recovery Seen in 2013 – Survey

EU proposals threaten final salary pensions-report

 

·         EUR: Generally speaking the markets against the USD opened higher from Friday’s close that is all but the Oz Euros. Opened above the 1.3180 level and after some gyrations on the opening from 1.3185-60, we settled down to the opening levels as EURJPY cross selling paused as results continued to flow into the market place from the Japanese election, we again moved to the 1.3160 levels however, this time we didn’t move back up and continued to drift lower touching below 1.3150 as the market closed the gap from Friday’s close, as we move towards London we are slowly clawing upwards with very little conviction and are currently hanging around the mid 1.3160’s

·         GBP: Cable opened only slightly higher than Friday’s close and moved quickly to peak above 1.6195 however, offers above 1.6200 seemed to frighten the market away and we dropped back towards the NYK close touching below 1.6160 and then holding for the rest of the session between 1.6155/75 moving into London slightly to the upside of the range.

·         JPY: With the LDP believed to have won with a convincing majority of 325 seats, 5 above the required majority, this will leave them with the ability to overwrite most decisions by the upper house where they don’t have a majority, the USDJPY opened well above 84.00 the highest level this year and immediately moved to the 84.00 as EURJPY profit taking and fresh shorts were seen moving through the market after the choppy start settled down and USDJPY again moved towards the 84.20 level, once the jumping around had finished and the failure to push to far below 84.00, only managing to reach just below 83.90 the market settled down to trading in the 84.00-20 area for the remainder of the session, we are already starting to see rumours of policies likely to be run by the new government to stimulate the economy, but one supposes we’ll hear more over the coming weeks.  

·         AUD: The Oz was the exception to the rule opening just below Friday’s close trading below 1.0540 and above 1.0565 on the Tokyo opening, we did initially run slightly higher touching above 1.0570 in early trading before settling and moving lower over the course of the session to trade below 1.0535 and ranging around the 1.0540 level as we move towards London, chatter from CNY on weakening GDP helped keep the market subdued.

Today’s data

Actual = A Consensus = C  Previous = P Timings GMT

21:00     NZD       Westpac NZ Consumer Confidence Q4 A 111.1 | P 102.5               

00:01     GBP       Rightmove House Prices M/M Dec A -3.30% | P -2.60% 

10:00     EUR        Eurozone Trade Balance Oct C 10.8B | P 11.3B    

13:30     CAD       International Securities Transactions (CAD) Oct C 9.81B | P 13.90B            

13:30     USD       Empire State Manufacturing Dec C -1 | P -5.22   

14:00     USD       Net Long-term TIC Flows Oct C $25.0B | P $3.3B

Ranges as of 6am London time

                                Highs   Lows

USD/JPY               84.48 | 83.86

EUR/USD             1.3205 | 1.3149

EUR/JPY               111.30 | 110.38

AUD/USD            1.0580 | 1.0534

NZD/USD             0.8474 | 0.8435

USD/CAD             0.9873 | 0.9850

EUR/CHF              1.2095 | 1.20705

USD/CHF             0.9195 | 0.9145

GBP/USD             1.6202 | 1.6156

EUR/GBP             0.8155 | 0.8137

 

 Stay lucky

Andy