Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 96.871 | EURUSD 1.35733 | EURJPY 131.486 | AUDUSD 0.94244 | NZDUSD 0.82942 | USDCAD 1.0370 | EURCHF 1.22688 | USDCHF 0.90387 | GBPUSD 1.60836 | EURGBP 0.84392 |

 

Harry Hindsight

  • EUR: A slow move lower during Asia as light USD buying came into play for a change, with the inevitable continuation of the Fed impasse the market had to take a breather at some stage. We opened around the 1.3580 area and struggled around the area until deep into the session, USDJPY led the way however, the movement in the other majors was a slow grind with the Euro dropping on light volume to just below the 1.3560 level as we moved to the grey hours. Early Europeans reversed the move and but by the time London officially opened we were again in the mid 1.3560’s. Reasonable data from Germany was largely ignored as the market took a balanced look at the negative numbers being in line with the revisions of the previous month. By the time we moved into the NYK market we had just scraped the opening levels. The NYK session saw USD selling enter the market as the market weighted the import of comments from both China and Japan who are big owners of treasuries. The market gradually moved higher to peak above the 1.3605 levels before seeing some light profit taking late into the session and a move back towards the opening levels.
  • GBP: Cable remained reasonably quiet during opening around the 1.6095 area and struggling to make the break back above 1.6100, as with the Euro the market saw limited USD buying against the GBP moving steadily lower to touch below 1.6070 into the grey hours, entry of early Europeans helped the market to move a little higher but we struggled in early EURGBP forcing the GBP lower to mid-1.6040’s the market recovered before a misreporting of a normal Repo operation as an LTRO action. Sending Cable dropping to the 1.6020 level before the correction hit putting the market back to where it started above the 1.6070 from there we had several hours of a steady climb with minor weak stops triggered through the 1.6100 level and the market topped above the 1.6120 level with EURGBP recovering from its earlier poor performance. With the USD performing particularly poorly in the first half of the NYK session the market started to turn and move back to the opening levels as day traders covered positions and a limited liquidity as players remain on the side-lines.
  • JPY: A strong day for the USDJPY with the market initially trading down during pre-Tokyo as the knives were drawn for a key pivotal point of 96.68 however, having pushed to the high 96.50’s the market rejected the level and started to gain steadily through the session. Once the market moved into Tokyo there seemed plenty of demand from real money types and funds for offshore vehicles. With all the crosses active as well as USDJPY the market pushed to above the 97.15 area as we ran to the grey hours. London traded quietly from the opening for a couple of hours before seeing a setback to below the 97.00 before rising strongly into the NYK session to top around the 97.20 levels for the highs of the day. With no change in the Fed situation the market in NYK then started to fix on safe haven flows and the market started to sell USD’s across the board, the market traded down to hold around the 96.85 area with plenty of bids holding the market and we ran out holding that level.
  • AUD: The market opened quietly and although the ranges improved over the course of the day the market saw some decent AUDJPY buying from real money rather than the usual retail players moving the market in early Tokyo to just below the 0.9450 levels before fixing supply drove the market lower through the opening 0.9430 to touch just above 0.9410. Bids spread around the market at and below this level led the market higher after a couple of hours of trying the downside and we steadily moved to the 0.9450 level in early London. The opening in NYK saw some USD selling against the AUD again with safe haven in mind and the market was pushed to above the 0.9480’s holding for a short period before falling all the way back to the 0.9420 level as USD’s strengthened.

Yesterday’s premiership results

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

GBP       BRC Sales Like-For-Like Y/Y Sep A 0.70% | P 1.80%

GBP       RICS House Price Balance Sep A 54% | C 40% | P 40% | R 41%

JPY         Current Account (JPY) Aug A 0.35T | C 0.65T | P 0.33T

AUD       NAB Business Confidence Sep A 12 | P 6 | R 4

JPY         Eco Watchers Survey: Current Sep A 52.8 | C 52 | P 51.2

CHF        Unemployment Rate Sep A 3.20% | C 3.20% | P 3.20%

EUR        German Trade Balance (EUR) Aug A 15.6B | C 15.1B | P 14.5B | R 15.0B

CHF        CPI M/M Sep A 0.30% | C 0.20% | P -0.10%

CHF        CPI Y/Y Sep A -0.10% | C -0.10% | P 0.00%

CHF        Retail Sales (Real) Y/Y Aug A 2.40% | C 1.70% | P 0.80% | R 0.60%

EUR        German Factory Orders M/M Aug A -0.30% | C 1.00% | P -2.70% | R -1.90%

CAD       Housing Starts Sep A 194K | C 175.0K | P 180.3K | R 184K

CAD       International Merchandise Trade (CAD) Aug A -1.3B | C -0.70B | P -0.93B

 

For today

USDJPY:
Topside: 97.40-97.60 light mix 97.60-97.90 light offers 98.00-98.10 light buy stops
Downside: 96.50-96.80 light bids 96.20-96.50 medium sell stops 96.00-96.20 medium bids 95.60-95.80 light sell stops

EURUSD:
Topside 1.3600-1.3640 light offers 1.3640-1.3670 light mix 1.3670-1.3700 light buy stops 1.3700-1.3720 light offers
Downside: 1.3510-1.3550 light mix 1.3480-1.3510 light bids

EURJPY:
Topside: 132.15-132.30 light buy stops
Downside: 131.00-131.30 light mix

AUDUSD:
Topside: 0.9460-0.9480 light mix  0.9480-0.9500 medium mix 0.9500-0.9530 medium buy stops 0.9550-0.9560 light buy stops
Downside: 0.9380-0.9410 light bids 0.9350-0.9370 light mix 0.9300-0.9330 light bids

 

USD:

Obama to name Yellen as next Fed chair on Wednesday -White House

U.S. Commerce Secretary: On Track to Reach Agreement on TPP by Year-End

JPY/USD:

Hamada Sees Yellen Keeping Accommodative Stance to Spur Recovery

JPY/IDR:

Japan to Help Indonesia with Currency Woes

JPY:

BOJ members agreed Japan’s recovery is on track -Sept minutes

BOJ Deputy Gov: U.S.’s failure to lift debt ceiling would hit global economy

Nakaso: High Possibility to Reach BOJ’s 2% Target in FY14-FY15

CNY:

China aims to triple minimum capital level for new foreign banks – paper

China Should Focus on Investment Rate For Growth: Sec. Journal

China Aims to Boost Northeast Border Region Growth: Sec. Journal

AUD:

Australia Consumer Sentiment Falls 2.1% in October vs. September – Westpac

NZD:

New Zealand house prices steady in September – QV

 

 

EUR: The day started with the debate between Obama and Reid continuing and when the press release came out there was very little surprise with Yellen nominated as Fed Chief, and once Boehner came out to make statements on the disappoint he feels that the President refuses to negotiate one has to feel a little surprised by the oppositions stance, they did put him in the corner and now they expect him to be meek, needless to say the market ran higher quickly from the opening low 1.3570’s to touch the 1.3605 however, as with the previous days high it ran into a brick wall and rejected the level into Tokyo and started a slower decline lower triggering weak stops from the fresh longs from the move. And we ended up holding the 1.3575 all in the space of a couple of hours. The market then started a follow through breaking through the opening levels as further light stops were triggered and we ended up on the 1.3565 base line where the market has held for the last 4hrs or so.

GBP: A mirror image of the Euro move with a quiet opening around the 1.6085 level popping higher just before the Tokyo opening and running to above the 1.6120 level before a steady decline from the highs, GBP lost ground against the Euro in the move as the decline was a little steeper falling to below 1.6065 levels before finding some minor support. For the moment we hold around that level.

JPY: USDJPY was the fly in the ointment as the market gyrated around the opening in Tokyo with Boehner speech and the announcement of Yellen’s nomination the USDJPY opened around the 96.85 levels and moved slightly higher in pre-Tokyo to the 96.95 levels. The move into Tokyo saw the market drop slightly to below the opening levels before the buying started to kick in as similar buying appeared in the market and one can assume that Japanese funds are possibly stepping up diversification, as USDJPY moved through the 97.00 area we saw weak stops triggered quickly slowing from the 97.10-20 level but continuing and triggering further stops to the 97.30. We held for a short period in the area before putting in a final spurt this time running into some reasonable resistance just above the 97.40 and holding just off the highs.

AUD: The Oz mirrored the general USD move, with early buyers taking the market higher in pre-Tokyo as the local market bought on an almost guaranteed continuation of the Fed Govt. impasse, the market rose from the opening 0.9425 level to trade above the 0.9455 levels having seen a little follow through from AUDJPY buyers and then the same drop back to make the lows for the day as the non-event moved passed the knee jerk reaction. Weak stops were triggered on the move down from those that had moved long initially and the market bounced off the lows to move into a 0.9430/38 range for the remaining few hours and we hold in that range into the grey hours.

 

Today’s data

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

GBP       BRC Shop Price Index Y/Y Sep A -0.20% | P -0.50%

AUD       Westpac Consumer Confidence Oct A -2.10% | P 4.70%

06:00     JPY         Machine Tool Orders Y/Y Sep (P) P -1.70%

08:30     GBP       Industrial Production M/M Aug C 0.40% | P 0.00%

08:30     GBP       Industrial Production Y/Y Aug C -0.70% | P -1.60%

08:30     GBP       Manufacturing Production M/M Aug C 0.40% | P 0.20%

08:30     GBP       Manufacturing Production Y/Y Aug C 1.00% | P -0.70%

08:30     GBP       Visible Trade Balance (GBP) Aug C -8.9B | P -9.9B

10:00     EUR        German Industrial Production s.a. M/M Aug C 0.90% | P -1.70%

14:00     GBP       NIESR GDP Estimate Sep P 0.90%

14:00     USD       Wholesale Inventories Aug C 0.30% | P 0.10%

14:00     USD       Crude Oil Inventories P 5.5M

18:00     USD       FOMC Minutes

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               97.44 | 96.83

EUR/USD             1.3605 | 1.3562

EUR/JPY               132.18 | 131.42

AUD/USD            0.9456 | 0.9413

NZD/USD             0.8319 | 0.8272

USD/CAD             1.0374 | 1.0354

EUR/CHF              1.2295 | 1.2262

USD/CHF             0.9064 | 0.9016

GBP/USD             1.6122 | 1.6061

EUR/GBP             0.8445 | 0.84345
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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