Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 97.352 | EURUSD 1.3523 | EURJPY 131.659 | AUDUSD 0.94446 | NZDUSD 0.82987 | USDCAD 1.03939 | EURCHF 1.23063 | USDCHF 0.91011 | GBPUSD 1.59556 | EURGBP 0.84756 |

 

Harry Hindsight

  • EUR: The market opened around the mid 1.3570’s and rose quickly into the Tokyo opening to above the 1.3605 levels on continued wrangling’s between sides in the US and the announcement of Yellen’s nomination for Fed Chief. The market held the high levels for a couple of hours before the market started to give ground for no real reason other than same old same old. The USD started to appreciate against all the majors and two hours into Tokyo the market had fallen back to the starting point. Some light stops triggered from the fresh longs were triggered and the market dropped into the mid 1.3560’s and struggled from there into the London session. Early Europeans started the day by buying USD’s having seen the intraday 1.3560 level broken and then the UK numbers put paid to any more rallies. Euro’s was dragged lower with the fall in GBP after a set of poor numbers pushing to below the 1.3530 area and holding the levels into NYK with only minor declines from that point and reasonable support showing around the 1.3520/00 area for a good portion of the day. Late selling in the futures eventually set the low through 1.3490 however, having triggered some minor stops the market immediately bounced back higher to the mid 1.3520’s for the run to the close. Volumes were brisk during the static periods as two-way flow came to the market from leveraged types, with day traders doing particularly well on the one way traffic.
  • GBP: Cable made early gains from the 1.6080 area opening pushing to 1.6120 on the back of the US news mentioned above. However, it was short lived and Cable led the way lower from that point, dropping steadily through to the mid 1.6060’s in Asia. The release of the UK data saw the pair nose dive to below the 1.5980 levels with very disappointing set of numbers with EURGBP rising some 40 pips. We stabilized for a short period before the market moved into the NYK session around the 1.5960 level, the market made a final move lower triggering minor stops from bottom pickers before holding the 1.5930 levels and slowly clawing its way to the 1.5960 levels into the close.
  • JPY: USDJPY made early gains bucking the initial trend of USD selling from the opening with the market moving from the 96.85 areas to 96.95 before giving ground and trading through the opening in the move into the Tokyo session from that point on though large Japanese banks appeared in the market for the second day buying USD’s steadily over the Asian session with suspected onshore fund movements to offshore vehicles. We rose steadily and with only minor setbacks moved to above the 97.40 level and sat in a tight 10 pip range around the level into the London session. The range widened a little in London however, it failed to make any new highs and quietly moved into the NYK session with light profit taking entering the market. The market dipped into the NYK option cut as gamma players adjusted positions before again starting a steady rally back towards the highs then a quick move taking out weak stops to trade to the 97.65 level before dropping back to the 97.35 area just as quickly as we moved to the close.
  • AUD: A mixed day for the Ozzie with early traders buying early from the opening 0.9420 areas to take the market to 0.9445 as Tokyo opened and the US news hit we pushed to above the 0.9455 level in early Tokyo, with USDJPY pushing higher the market in the Ozzie started to drop back from the highs and dropping quickly on the release of the consumer confidence numbers to a low in the mid teen’s. The market struggled off the lows and spent the rest of the session rising into the London opening around the 0.9440 level and continuing into the NYK session with light but steady buying to touch around the 0.9465 level before gradually moving back to 0.9450, during this period there was a lot of interest in the 0.9500 calls however, the market again started to wane once the demand was completed and we slipped back to base around the 0.9430 as liquidity dried up and only in the final few hours did we see the market attempting to rise finishing the day around 0.9445.

Yesterday’s premiership results

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

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%

JPY         Machine Tool Orders Y/Y Sep (P) A -6.30% | P -1.70%

GBP       Industrial Production M/M Aug A -1.10% | C 0.40% | P 0.00% | R 0.10%

GBP       Industrial Production Y/Y Aug A -1.50 | C -0.70% | P -1.60% | R -1.10%

GBP       Manufacturing Production M/M Aug A -1.20% | C 0.40% | P 0.20%

GBP       Manufacturing Production Y/Y Aug -0.20% | C 1.00% | P -0.70%  | R -0.30%

GBP       Visible Trade Balance (GBP) Aug A -9.6B | C -8.9B | P -9.9B

EUR        German Industrial Production s.a. M/M Aug A 1.40% | C 0.90% | P -1.70% | R -1.10%

GBP       NIESR GDP Estimate Sep A 0.80% | P 0.90%

USD       Crude Oil Inventories A 6.8M | P 5.5M

 

For today

USDJPY
Topside: 97.70-98.00 medium offers  98.00-98.30 light mix 98.50-98.70 light buy stops
Downside: 97.00-97.30 light sell stops 96.70-97.00 large bids 96.40-96.70 light sell stops 96.10-96.40 light bids

EURUSD
Topside: 1.3530-1.3560 light offers  1.3570-1.3600 light mix
Downside: 1.3480-1.3490 1.3420-1.3450 light bids 1.3380-1.3400 light sell stops

EURJPY
Topside: Nothing of note.
Downside: 131.00-131.30 light bids 130.70-131.00 light sell stops

AUDUSD
Topside: 0.9450-0.9480 light mix 0.9480-0.9510 medium buy stops
Downside: 0.9370-0.9400 medium bids

 

AUD:

Australian Unemployment Posts Surprise Fall

JPY:

IMF Official: BOJ Will Have Difficulty Meeting Inflation Target

Japanese Sold Net 2225.7 Billion Yen Overseas Debt Last Week

Japan August core machinery orders rise 5.4% MoM

Japan PM Abe Likely to Avoid War Shrine Visit in Oct.: Yomiuri

CNY:

China GDP Expected to Stay Above 7.5% in First 3 Quarters: Li

Former CB advisor warns China against hasty capital account reform

IMF’s Zhu Says China Has Tools to Deal with Surging Debt Levels

EUR:

Draghi Says U.S. Critics Were Wrong to Think Euro Would Collapse

IMF Sees Greek Government Surplus 1.1% of GDP, Report Shows

NZD:

NZ manufacturing eases in September, still strong – survey

RBNZ Research Sees 1-3ppt Cut in Housing Credit Growth From LV

 

 

  • EUR: The market limped into the Asian session around the 1.3525 area and struggled to make any impact in early trading, the market saw some minor selling in EURAUD as the market moved higher in the AUD and this started the Euro’s movement lower. With the market talking about some resolution to the US’s woes USD started to pick up interest and particularly against the Euro dropping just after the Tokyo fix to the 1.3500 level over the course of an hour or so. The market again held on light bids before a news release of “Republicans consider short-term U.S. debt ceiling increase” allowing the sellers to push through some of the resting bids. The market touched a low of 1.3491 before stalling however; we still remain in those low areas as we move towards London.
  • GBP: A similar pattern to the Cable with a quiet opening around the 1.5955 levels rising to just above the 1.5965 before dropping off over the next hour to hold the 1.5940 level and then a second drop to make the lows below 1.5920 where the market currently holds, EURGBP was fairly static holding in the 0.8475 areas with USD doing a lot of work over the session.
  • JPY: USDJPY again found light trading pre-Tokyo before strong buying appeared in the market from just before the Tokyo opening. Moving from the opening 97.35 levels a few minutes after the Tokyo opening the market was some 20 pips higher and while there was a brief pause around the Tokyo fix the market again started to climb higher steadily over the course of the session. JPY numbers had little bearing on the moves with better numbers shown and the market touched around the 97.80 level as we start the run into the grey hours, plenty of volume in USDJPY and crosses, with suspected onshore funds using large Japanese banks to buy the straight and retail Japan lightening their AUDJPY longs.
  • AUD: With better numbers released we saw the AUD move higher from the opening 0.9445 areas to climb to above the 0.9460 level in pre Tokyo market, initial selling by Japanese retail saw the AUD drop back before the AUD releases underpinned the market and a quick spike lower then higher to hit above the 0.9470 market before starting a quick drop lower as USD buyers started to move into the market. The market quickly moved back to the lows holding around the 0.9430 level with light bids slowing the decent all the way to 0.9400 briefly pushing below the level to around the 0.9393 area before holding a range between there and 0.9410 for a couple of hours. As we move towards London the market remains just short of the 0.9400 levels.

Today’s data

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

JPY         Tertiary Industry Index M/M Aug A 0.70% | C 0.40% | P -0.40%

JPY         Machine Orders M/M Aug A 5.40% | C 2.50% | P 0.00%

AUD       Consumer Inflation Expectation Oct A 2.00% | P 1.50%

AUD       Employment Change Sep A 9.1K | C 15.0K | P -10.8K

AUD       Unemployment Rate Sep A 5.60% | C 5.80% | P 5.80%

JPY         Consumer Confidence Index Sep A 45.4 | C 43.5 | P 43

08:00     EUR        ECB Monthly Bulletin

11:00     GBP       BoE Rate Decision C 0.50% | P 0.50%

11:00     GBP       BoE Asset Purchase Target C 375B | P 375B

12:30     CAD       New Housing Price Index M/M Aug C 0.30% | P 0.20%

12:30     USD       Initial Jobless Claims (OCT 5) C 307K | P 308K

12:30     USD       Import Price Index M/M Sep C 0.30% | P 0.00%

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               97.83 | 97.35

EUR/USD             1.3529 | 1.3488

EUR/JPY               131.965 | 131.69

AUD/USD            0.9473 | 0.9392

NZD/USD             0.8310 | 0.8235

USD/CAD             1.0420 | 1.0391

EUR/CHF              1.2322 | 1.2307

USD/CHF             0.91315 | 0.9100

GBP/USD             1.5965 | 1.5914

EUR/GBP             0.8477 | 0.84665

 
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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