Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 98.578 | EURUSD 1.35608 | EURJPY 133.683 | AUDUSD 0.94887 | NZDUSD 0.8365 | USDCAD 1.03522 | EURCHF 1.23455 | USDCHF 0.91036 | GBPUSD 1.59833 | EURGBP 0.84846 |

 

Harry Hindsight

  • EUR: The market opened higher from Friday’s close with the ever on going US debate over who will back down, opening around the 1.3560 level the market held for the most part in the 1.3555/65 levels for most of the session with some peripheral markets also close for bank holidays as well as the US for Columbus day. The Move into London was very little different and the volumes were already below normal for the day as the market stayed in a tight range up until the IP numbers were released for the Eurozone, showing a marked improvement both in the revision of the previous months and the August number coming in double the expectation, this helped the Euro move from its lows having broken lower on light volume selling to the high 1.3540’s recovering to the previous range into the early part of NYK. With the renewed talks from early in the US day rumours continued to surface of deals done and then not done. Euro’s started to rise moving from the 1.3570 level to a brief flirtation with the 1.3600 however, there was insufficient momentum and volume to push through the offers and we then spent the rest of the session drifting back to the 1.3560 level for the close.
  • GBP: With no data and very little interest the Cable traded for the most part in line with the Euro, with more chatter about technical levels than anything else the market moved steadily higher in late Asia from the opening 1.5970 levels to just short of 1.5990 only to drop back in grey hour trading and stumbling into the London session to trade just above the 1.5950 and set up the low for the day. Cable caught the same movement higher as the Euro and we triggered light stops on the move through the 1.6000 level to peak in the high teens before the drift back into the close in NYK non-existent market. EURGBP remained in a tight range with 0.8480/95 covering the day. With Cable closing just above the 1.5980 levels.
  • JPY: USDJPY saw selling in the AUDJPY cross in early pre-Tokyo trading moving from the 98.34 level to around the 98.13 level as the carry trade dropped quickly suppressing both legs before moving back to the start point for a quiet steady session drifting to the 98.25 level and keeping a 10 pip range after the recovery. London was little better and the range was limited to only 5 pips until NYK opened. Early USD sellers sold the market down to the 98.10 and we spent a few hours holding this level until the market started to rise in mid-session trading steadily higher over the course of the session and filling the gap in the charts from the low opening vs. Friday. The market eventually settled around the 98.58 area however the move was probably exaggerated by the lack of liquidity during the NYK session, and was more a technical move in AUDJPY to the pivotal point around the 93.50/60 area, which struggled to hold in the dying hour.
  • AUD: The Oz spent the day pushing higher with USD on the back foot and focus on the AUDJPY technical level of 93.50/60 add to which some short dated options close to expiry the market moved from the lower than Friday opening 0.9432 to move to above the 0.9470 during a generally quiet Asian session, home loan numbers were generally ignored and safe haven flows and carry trades seemed to be the name of the game. We moved into the London session just off the highs but again settled into a gradual climb higher pushing above 0.9480 into NYK, as the US rumbled on a quick move towards the AUDJPY key point moved the Oz through the 0.9500 level triggering some minor stops before the market settled back slightly into the close around the 0.9490 levels.

Yesterday’s premiership results

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

AUD       Home Loans Aug A -3.90% | C -1.30% | P 2.40% | R 2.10%

CNY        CPI Y/Y Sep A 3.10% | C 2.80% | P 2.60%

CNY        PPI Y/Y Sep A -1.30% | C -1.40% | P -1.60%

CHF        Producer & Import Prices M/M Sep A 0.10% | C 0.30% | P 0.20%

CHF        Producer & Import Prices Y/Y Sep A 0.00% | C -0.30% | P 0.20%

EUR        Eurozone Industrial Production M/M Aug A 1.00% | C 0.50% | P -1.50% | R -1.00%

 

For today

USDJPY:
Topside: 98.80-99.00 light buy stops 99.00-99.40 medium offers 99.40-99.70 medium offers
Downside: 98.00-98.30 light mix 97.80-98.00 medium bids 97.60-97.80 light sell stops

EURUSD:
Topside: 1.3600-1.3640 light buy stops 1.3640-1.3670 light mix
Downside: 1.3480-1.3520 light mix 1.3440-1.3480 light bids

EURJPY:
Topside: 134.00-134.40 light mix 134.50-134.90 light offers
Downside: Nothing of note

AUDUSD:
Topside: 0.9540-0.9560 Light mix
Downside: 0.9470-0.9480 light sell stops 0.9450-0.9470 light bids

 

AUD:

Australia CB keeps door open to cut, but in no hurry to act

AUD/JPY:

Toyota to cut up to 100 jobs in Australia as export orders drop

JPY:

Aso: US Lawmakers Must Understand Impact of Debt Problem on International Finance

Japan Securities Clearing Corp: Haven’t Changed Haircut Rate for Tsy Bills

Japan revised August industrial output down 0.9 % MoM

USD:

Summers Says U.S. Policy Must Aid Demand, Sees No Debt Default

EUR/CNY:

China Forex Regulator Eyes Paris Shopping Centre: Le Figaro

NZD:

NZ Treasury Says Exchange Rate is a Constraining Force on Growth

NZ house lending limits may reduce rate rises – RBNZ’s Spencer

 

  • EUR: News that a meeting of Congressional leaders had been postponed to allow senate leaders to continue with important progress helped the USD to limited gains in the opening periods in Asia moving from the opening levels around the 1.3562 to trade to the 1.3550 levels. The moves were short lived as the meeting broke up with a further meeting scheduled for tomorrow so it continues, The Euro moved off its lows and moved slightly higher to just below the opening levels before jumping to above the opening levels after Obama appeared on the wire stating there was a good chance of a default, just to turn the screws up a little one imagines, as neither the World or the US could afford that. Imagine it 30yr turned into junk bonds overnight, I think not. For the moment the market holds around the 1.3565 level. However, one suspects by other reports that an agreement is close at hand and we probably just wait for the details on any tiny caveats.
  • GBP: One imagines that the market in Cable would have been very little difference but for the quick move lower on what seemed to be supply for the Tokyo fix in GBPJPY moving the Cable from the 1.5970 level to the low 1.5950’s before recovering and overshooting to the 1.5990 levels before settling down a little. RBA minutes helped the GBP move high again through some minor cross buying triggered by a few weak stops leading the Cable to its highs in the mid 1.5990’s where the market currently holds.
  • JPY: The market opened with a little bit of a bang as technical and breakout players took advantage of the changeover of day to run the market higher in AUDJPY taking out the sticking point around the 93.60 level and firmly chasing it to the 93.80 area. Leading to an opening in USDJPY around the 98.65 levels, the market peaked in USDJPY as the leg that was lacking to touch above 98.70 before stalling and starting a move lower that didn’t see any respite until the market had moved to the 0.9845 areas where the market rests at the moment. USDJPY for the most part has been reasonably quiet with most of the action seen through the various crosses.
  • AUD: With the market slipping back into the close in NYK the move continued for a brief period into the Asian session with USDJPY making the early moves and the Oz having opened around the 0.9490 dipped to below 0.9480 before moving quickly higher as AUDJPY buying to push through the 93.60 levels saw the Oz quickly through 0.9505 and then continuing to rise over the course of the session with RBA minutes bolstering the market into Tokyo. The minutes held no surprise with them remaining with an easing basis on the table while the market seems unafraid of it being carried through. However, the rise is probably more attributable to the on-going US debacle and the pair holds for the moment above the 0.9530 levels as we move towards London. Eyes of course will now be watching the AUDJPY carry again as we look to push through the 94.00 level and a test of the 94.50 highs from last month which could lead to the 95.00/97.00 ranges from earlier in the year.

 

Today’s data

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

JPY         Industrial Production M/M Aug (F) A -0.90% | P -0.70%

08:30     GBP       PPI Input M/M Sep C -0.10% | P -0.20%

08:30     GBP       PPI Input Y/Y Sep P 2.80%

08:30     GBP       PPI Output M/M Sep C 0.20% | P 0.10%

08:30     GBP       PPI Output Y/Y Sep C 1.50% | P 1.60%

08:30     GBP       PPI Output Core M/M Sep C 0.10% | P 0.00%

08:30     GBP       PPI Output Core Y/Y Sep P 1.00%

08:30     GBP       DCLG UK House Prices Y/Y Aug P 3.30%

08:30     GBP       CPI M/M Sep C 0.30% | P 0.40%

08:30     GBP       CPI Y/Y Sep C 2.60% | P 2.70%

08:30     GBP       Core CPI Y/Y Sep C 2.00% | P 2.00%

08:30     GBP       RPI M/M Sep P 0.50%

08:30     GBP       RPI Y/Y Sep C 3.20% | P 3.30%

09:00     EUR        Eurozone ZEW (Economic Sentiment) Oct C 59.4 | P 58.6

09:00     EUR        German ZEW (Current Situation) Oct C 30.4 | P 30.6

09:00     EUR        German ZEW (Economic Sentiment) Oct C 51 | P 49.6

12:30     USD       Empire State Manufacturing Oct C 8 | P 6.29

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               98.71 | 98.435

EUR/USD             1.3568 | 1.355

EUR/JPY               133.825 | 133.44

AUD/USD            0.9539 | 0.9476

NZD/USD             0.8405 | 0.8348

USD/CAD             1.0358 | 1.0331

EUR/CHF              1.23545 | 1.2345

USD/CHF             0.9116 | 0.9102

GBP/USD             1.5998 | 1.595

EUR/GBP             0.84945 | 0.8479

 
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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