Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 97.386 | EURUSD 1.37764 | EURJPY 134.149 | AUDUSD 0.96256 | NZDUSD 0.83868 | USDCAD 1.03845 | EURCHF 1.22929| USDCHF 0.8923 | GBPUSD 1.61637 | EURGBP 0.8523 |

 

Harry Hindsight

  • EUR: The Euro opened around the 1.3780 area and slowly moved lower into the Tokyo market and it looked as if we were set for another slow day as we moved to just below the opening. AUD numbers with an unexpected rise in inflation and the market started to move higher with cross JPY buying. Euro’s moved to above the 1.3790 level however, some heavy offers kept a lid on the market running away and we struggled for a limited period around the highs. A quick drop in the Nikkei caused by a spike in Chinese Shibor rates and news Chinese banks were raising loan loss reserves saw the market in JPY change direction with USDJPY causing stops to be triggered in EURJPY and AUDJPY in particular. The sudden movement triggered margin calls in retail Japan and this tumbled into an ever increasing sell off of crosses to cover. Euro’s was dragged lower as the amounts been sold increased and the Euro traded to the 1.3770 level before holding initially into the London session. The selling then started up again with late Asia being the primary sellers and the Euro again dropped this time to the 1.3745 level. With what could be construed as the beginning of a reversal we started to see some further weak selling to make the lows below 1.3743. NYK opened and the Euro again started to rise with numbers in line with expectations the market continued to rise ignoring the European confidence numbers. With the Asian market well and truly past the market rose back to its former levels and again attempted to push through the 1.3790 level before drifting off the level after the second failure to trade back to the 1.3775 level to finish the day just shy of its opening.
  • GBP: Cable was very little different for the most part opening around the 1.6235 area and trading slightly lower into the Tokyo session the market moved steadily higher from the AUD numbers moving to a peak just shy of the 1.6260 levels before the reversal kicked in and the Cable moved quickly to the 1.6220 level as we moved into the grey hours the market again moved quickly another 50pips. The official opening in London saw the market still looking weak and the struggled slightly lower touching the 1.6120 level into the NYK session and what buying was limited moving only to a high of 1.6180 before struggling into a slow close around the mid 1.6160’s. EURGBP lost ground into the London session moving away from the 0.8485 area lows and moving to test the 0.8530 several times holding in a tight range into the close around the 0.8525.
  • JPY: The USDJPY opened quietly and moved from the 98.10 levels to trade a high of 98.20 levels. As cross JPY pairs reached their highs the market suddenly broke lower as the Nikkei dropped some 0.9% triggering margin calls in the retail market and forcing those players to liquidity other trades. The fact that some of the crosses in particularly the AUD were empty of bids of any size for 50 pips or so exaggerated the move and once the momentum kicked in the USDJPY dropped quickly over a couple of hours from above 98.00 to trade the 97.30 areas. At this point the market had a lot of strong bids resting in the market and this sated the selling pressure until we moved into the London session and a steady grind lower to the 97.20 level saw some depletion however, the market was unable to move beyond this point and then moved between the 98.20-98.50 levels for the rest of the session holding into a 97.40 close.
  • AUD: The Oz had a large day with initial movements limited in pre number trading; opening around the 0.9710 area the market tested the 0.9700 levels. On the release of unexpectedly high inflationary numbers, which incidentally were blamed on energy and the exchange rate, led to the market quickly moving to above the 0.9750, holding in the area for about 3 hours. The drop in the Nikkei seemed to be the catalyst for a collapse in USDJPY and consequently JPY crosses. AUDJPY was the main mover, having seen the AUD move up 50 pips after the AUD numbers it left the market devoid of anything meaningful to the 0.9700 levels with momentum on the seller’s side we dropped very quickly through the level triggering stops in AUD, AUDJPY, EURJPY and the market didn’t stop until it hit the 0.9640 level. The market from there moved into the London session drifting slightly lower to the 0.9610 level the market bounced weakly from this level several times through  the day with some reasonable bids supporting the market. The market finished the day around the 0.9620 level. With AUDJPY resting on the key level of 93.50 which technically is the key reversal point.

Yesterday’s premiership results

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

AUD       Conference Board Leading Index Aug A -0.20% | P 0.30%

AUD       CPI Q/Q Q3 A 1.20% | C 0.80% | P 0.40%

AUD       CPI Y/Y Q3 A 2.20% | C 1.80% | P 2.40%

AUD       CPI RBA Trimmed Mean Q/Q Q3 A 0.70% | C 0.60% | P 0.50% | R 0.60%

AUD       CPI RBA Trimmed Mean Y/Y Q3 A 2.30% | C 2.10% | P 2.20% | R 2.30%

AUD       CPI RBA Weighted Median Q/Q Q3 A 0.60% | C 0.60% | P 0.70% | R 0.60%

AUD       CPI RBA Weighted Median Y/Y Q3 A 2.30% | C 2.30% | P 2.60% | R 2.50%

GBP       BoE Minutes A 0—0–9| C 0—0–9 | P 0–0–9

GBP       BBA Loans for House Purchase Sep A 43K | C 39.4K | P 38.2K | R 38.8K

USD       Import Price Index M/M Sep A 0.20% | C 0.20% | P 0.00% | R 0.20%

USD       House Price Index M/M Aug A 0.30% | C 0.80% | P 1.00% | R 0.80%

CAD       BoC Rate Decision A 1.00% | C 1.00% | P 1.00%

EUR        Eurozone Consumer Confidence Oct (A) A -15 | C -14.5 | P -14.9

USD       Crude Oil Inventories A 5.2M | 2.7M | P 4.0M

 

For today

USD/JPY
Topside: 97.50-97.60 light buy stops 97.60-97.80 light mix  97.80-98.00 light buy stops  98.00-98.30 medium offers 98.80-99.00 large offers
Downside: 97.00-97.20 medium mix 96.80-97.00 medium mx  96.60-96.80 large sell stops 96.40-96.60 light mix

EUR/USD
Topside: 1.3790-1.3800 medium offers  1.3810-1.3840 medium offers
Downside: 1.3730-1.3760 light mix 1.3700-1.3730 light sell stops 1.3640-1.3660 light bids

EUR/JPY
Topside: 134.40-134.60 light buy stops
Downside: 133.50-133.80 light sell stops 133.00-133.30 light bids

AUD/USD
Topside: 0.9675-0.9700 light offers 0.9700-0.9740 medium offers
Downside: 0.9570-0.9600 light bids 0.9540-0.9570 medium bids 0.9500-0.9525 light bids

 

CNY:

HSBC October Preliminary China Manufacturing PMI at 7-Month High

China’s benchmark money rate rockets up as CB drains cash

JPY:

Japan’s Abe: to use extra tax revenue, not new debt, for stimulus spending

AUD:

RBA’s Lowe: Low Rates, Weaker Currency to Help Boost Growth

RBA’s Lowe Says Pessimists about China Being Proven Wrong Again

NZD:

New Zealand Trade Deficit Narrows Sharply in September

RBNZ Planned to Introduce Loan Restrictions Sept 1: Document

 

 

  • EUR: The Euro rose from the 1.3777 opening levels during early Tokyo moving steadily towards the 1.3790 level eventually pushing slightly above but unable to push through the offers on the topside. As we moved towards the London session the market started to drift away from those eyes and while volumes have been reasonably brisk the range has been fairly tight.
  • GBP: Cable opened around the 1.6165 level and the market moved quickly in the Tokyo session triggered by fixing demand to take the pair to above the 1.6203 level before drifting back to the 1.6200 areas, EURGBP moved off the 0.8528 areas to hold around the 0.8515 levels. As we move towards the London session the market has begun to drift lower and holds just below the 1.6190 levels.
  • JPY: A busy day for USDJPY however, caught in a reasonably tight range having opened around the 97.40 area the market moved initially higher before finding some sellers appear in USDJPY for the fixing as opposed to the buying in GBPJPY. The market dropped quickly to the 97.20 levels before bouncing back towards the highs and holding around the 97.35 levels as we move towards the London session, of note has been a steady rise in AUDJPY as positions are reset ahead of the 93.50 levels.
  • AUD: Having opened around the 0.9620 level the market moved to a low of 0.9610 levels before the carry trade came into focus and we started to see a steady rise in the pair trading to a high just short of the 0.9670 level and resting offers only to dip to the 0.9650 level where the market currently holds.

Today’s data

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

NZD       Trade Balance (NZD) Sep A -199M | C -680M | P -1191M

CNY        HSBC/Markit Flash Mfg PMI Oct A 50.9 | C 50.4 | P 51.2

07:00     EUR        French PMI Manufacturing Oct (P) C 50.1 | P 49.8

07:00     EUR        French PMI Services Oct (P) C 51.3 | P 51

07:30     EUR        German PMI Manufacturing Oct (A) C 51.4 | P 51.1

07:30     EUR        German PMI Services Oct (A) C 53.7 | P 53.7

08:00     EUR        Eurozone PMI Manufacturing Oct (A) C 51.4 | P 51.1

08:00     EUR        Eurozone PMI Services Oct (A) C 52.2 | P 52.2

10:00     GBP       CBI Trends Total Orders Oct C 10 | P 9

12:30     USD       Initial Jobless Claims (OCT 18) C 341K | P 358K

14:00     USD       New Home Sales Sep C 425K | P 421K

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               97.515 | 97.17

EUR/USD             1.3792 | 1.3775

EUR/JPY               134.435 | 133.90

AUD/USD            0.9668 | 0.9616

NZD/USD             0.8446 | 0.8405

USD/CAD             1.0383 | 1.0370

EUR/CHF              1.2301 | 1.2290

USD/CHF             0.8930 | 0.89145

GBP/USD             1.6203 | 1.6162

EUR/GBP             0.8526 | 0.85125

 

 

 
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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