Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 97.354 | EURUSD 1.35786 | EURJPY 132.207 | AUDUSD 0.93861 | NZDUSD 0.82681 | USDCAD 1.03365 | EURCHF 1.22577 | USDCHF 0.90273 | GBPUSD 1.62233 | EURGBP 0.8370 |

 

Harry Hindsight

  • EUR: Euro’s limped along from the opening around the 1.3528 level dipping to below the 1.3510 level on several occasions through the day but failing to breach the support at the levels. During Asia the market could not recover the opening levels and spent good portions of the day in the 1.3510/20 areas. Even into the grey hours the market barely moved and only at the London opening did we see a move to the downside only to fail for the third time to push lower, the rejection sent the currency higher and the Italian confidence vote improved the prospects for the pair which had been lagging the GBP move over the past few days. Even with Draghi giving a less than dovish commentary the market in Euro’s moved quickly to the topside to break through the 1.3600 for the first time in several months before holding the 1.3580-90 levels into the close. Good volumes were seen throughout the day and still feels to be wide open now the tensions in Italy have been removed.
  • GBP: Cable started the day on the back foot moving from the opening 1.6200 areas to mid-1.6160’s during the Tokyo session with GBPJPY showing up as the main culprit for the selling with some medium term players taking some profit and closing longs. However, once the supply was finished with the market started a slow drift higher into the grey hours where we moved back to the 1.6190 levels and into a London market. A PMI construction number dampened the market a little however, it still remained on the rise trading to above the 1.6120. With the Italian job out of the way Cable continued to move higher led more by the move in the Euro with Draghi’s comments having the opposite affect than I suppose he wanted with a less dovish commentary moving EURGBP from the lows for the day of 0.8335 to above the 0.8380 level as the Euro moved quickly, while the Cable’s rise was not a meteoric the Cable did manage to move to the 1.6250 level. It may be worth noting that the market traded off that level at least 6 times in the space of over an hour, so one suspects the market was held in place by some decent real money supply. Short term leverage took advantage of the level and the market was sold slowly off during NYK to trade back to the 1.6210 level and the players picked off the market around those levels for a slow 40 pips and the market moved to the 1.6230 in late trading.
  • JPY: With the new additions to the Abenomics vehicle put down on paper the Fed impasse continues to weigh on the USD and so the USDJPY market was held in place failing to move above the 98.10 level from the 98.00 opening, Asia was an orderly decline moving from those highs to drift to below 97.70 in a quiet session for the pair. The move into the grey hours saw the market drop quickly to the 97.30 levels as early sellers moved into the market however, with the Italian confidence vote out of the way a renewed interest to buy EURJPY helped to stabilize the situation. Euro’s quick move higher after Draghi caused USD sellers to reappear in the market and this chased the USDJPY to below the 97.20 into the NYK session. US numbers seemed to matter little and we saw a steady rise for the USDJPY to above 97.50 as profit taking in the futures market. As we approach the close the market holds the 97.35 area with a weekend roll ahead.
  • AUD: A dull day for the AUD and given the revisions of the previous 3yrs trade balances one would have expected a more knee jerk reaction than we have had. Opening around the 0.9410 level the market never quiet traded to those levels again and the only time we approached the levels the revisions were released causing an immediate drop of some 30 pips, the market slowed its descent somewhat and held around the 0.9370 level from there into the grey hours where further selling appeared from early Europeans. Into London and the market made the lows for the day dropping just through the 0.9335 level with AUDJPY selling appearing as retail Japan smarted over both a USD drop as well as the AUD. Much of the London session was played around the 0.9345 as the currency took second place to the story unfolding in Italy, the move into NYK was taken over by the Fed impasse and the market eventually recovered most of its losses moving to the 0.9390 as we moved to the close. Initial buying in the NYK session seemed to be centred on the NYK option cut however, I hear very little about it so the volumes may have been limited.

Yesterday’s premiership results

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

JPY         Monetary Base Y/Y Sep A 46.10% | C 45.30% | P 42.00%

AUD       HIA New Home Sales M/M Aug A 3.40% | P -4.70%

AUD       Trade Balance (AUD) Aug A -0.82B | C -0.45B | P -0.77B | -1.38B

AUD       Building Approvals M/M Aug A -4.70% | C -0.70% | P 10.80%

GBP       PMI Construction Sep A 58.9 | C 60.1 | P 59.1

EUR        ECB Rate Decision A 0.50% | C 0.50% | P 0.50%

USD       ADP Employment Change Sep A 166K | C 177K | P 176K

USD       Crude Oil Inventories A 5.5M | C 2.4M | P 2.6M

 

For today

USDJPY

Topside: 97.70-97.90 light buy stops  98.00-98.30 medium offers 98.80-99.00 medium offers
Downside: 97.15-97.25 light mix 97.00-97.15 light bids 96.70-97.00 light mix  96.30-96.60 medium  bids 95.80-96.00 light bids 95.30-95.50 medium stops

EURUSD
Topside: 1.3620-1.3650 medium offers
Downside: 1.3550-1.3570 light bids 1.3500-1.3550 light sell stops 1.3470-1.3500 light bids

AUDUSD
Topside: 0.9400-0.9430 light mix  0.9440-0.9460 light mix 0.9525-0.9540 medium offers
Downside: 0.9350-0.9380 light bids 0.9320-0.9350 light bids 0.9290-0.9320 light sell stops

 

USD:

Obama tells congressional leaders he won’t negotiate on shutdown, debt

JPY:

Abe Support Rate Falls After Sales-Tax Decision: Mainichi Poll

Japanese Bought Net 672.1 Billion Yen Overseas Debt Last Week

Fukushima Governor Orders Ocean Water Probe After Leaks: Jiji

CNY:

China’s Non-Manufacturing PMI Rises to 55.4 in Sept.

China’s Xi says wants peaceful handling of S.China Sea disputes

NZD:

N.Z. Treasury Saw Risks in RBNZ Governor as Sole Rate Setter

 

 

  • EUR: The market opened around the 1.3580 level and traded very quietly into the Tokyo session rising quickly after the CNY number to touch above the 1.3620 level triggering weak stops above the figure area from yesterday’s sellers. Talk from Moody’s limited any move higher as they stated that although the confidence vote in Italy had gone through ok it was still credit negative, the volumes are a little reduced with the 40 point move raising the levels a little as breakout players jumped in through the figure.  For the moment the market holds around the 1.3610 level as we approach the grey hours.
  • GBP: Cable opened around the 1.6220 levels and moved steadily higher through the session with some reasonable buyers in GBPJPY before holding around the 1.6230 level and then moving a further 10 pips with the CNY number helping the market higher as a general USD weakness prevails. Early financial papers report worries about a default in the US however, one would think this is a smoke screen being raised to pressure a result. For the moment we are only just off the highs of 1.6240.
  • JPY: The USDJPY opened around the 97.35 moving higher in pre-Tokyo to just short of 97.50 and then once Tokyo opened the market dropped back quickly to the 97.25 levels with AUDJPY selling. The market started to reverse as the JPY lost ground against the Euro with some light stops being triggered to the topside in EURJPY cross. USDJPY eventually moved to the 97.75 area before settling back 10 pips into light trading after a reasonably busy period.
  • AUD: The AUD opened around the 0.9390 area and moved into the Tokyo market quietly early sellers of AUDJPY from the retail market set both the USDJPY and AUDUSD level lower with the AUD pushing to below the 0.9370 level before a quick rebound after a good CNY number moving the pair back to above the 0.9400 level before holding again around the opening levels.

Today’s data

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

CNY        Non-manufacturing PMI Sep A 55.4 | P 53.9

07:45     EUR        Italian PMI Services Sep C 49.3 | P 48.8

08:00     EUR        Eurozone PMI Services Sep (F) C 52.1 | P 52.1

08:30     GBP       PMI Services Sep C 60.4 | P 60.5

09:00     EUR        Eurozone Retail Sales M/M Aug C 0.30% | P 0.10%

11:30     USD       Challenger Job Cuts Y/Y Sep P 56.50%

12:30     USD       Initial Jobless Claims (SEP 27) C 315K | P 305K

14:00     USD       ISM Non-Manufacturing Composite Sep C 57.2 | P 58.6

14:00     USD       Factory Orders Aug C 0.20% | P -2.40%

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               97.78 | 97.25

EUR/USD             1.3623 | 1.3578

EUR/JPY               133.03 | 132.14

AUD/USD            0.9404 | 0.9367

NZD/USD             0.8318 | 0.8300

USD/CAD             1.0336 | 1.0318

EUR/CHF              1.2264 | 1.2255

USD/CHF             0.90275 | 0.9000

GBP/USD             1.6240 | 1.6221

EUR/GBP             0.8388 | 0.83675
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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