Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 97.282 | EURUSD 1.38012 | EURJPY 134.257 | AUDUSD 0.96223 | NZDUSD 0.83504 | USDCAD 1.04197| EURCHF 1.23152 | USDCHF 0.89237 | GBPUSD 1.62027 | EURGBP 0.85179 |

 

Harry Hindsight

  • EUR: Euro’s traded higher from the opening in Tokyo rising from the 1.3777 areas to above the 1.3790 level and similar levels to the previous 24hrs, although some reasonable volume went through the market it failed the levels until the grey hours. The market rallied quickly triggering stops above the 1.3800 level and topped just above the 1.3820 level before declining as PMI numbers in Europe came out worse than expected with only the manufacturing number out of Germany meeting expectations. The return trip was sufficiently savage enough to push through the lows to post 1.3765 on the spike lower before a bounce back now that the topside had been cleared. As we moved into the NYK session the swings were repeated with quick moves from above the 1.3815 level to below 1.3780 and this time bouncing back to extend the high to above the 1.3825. With very little now between the two levels the market moved in an ever tightening range as liquidity dried up to finish the day around the 1.3800 area. The market seemed to be dominated by medium term buyers have broken through the 1.3810 levels especially into the NYK session.
  • GBP: We opened around the 1.6165 area holding steady until the market opened in Tokyo, moving steadily to above the 1.6200 area for the early high. Early London bought the market and took the market above the 1.6220 before seeing substantial real money selling enter the market; this forced the market down to the 1.6170 level coupled with some reasonable selling in the Euro the EURGBP stayed in line for the most part. However, the rise in the Euro into the NYK session was not followed by the GBP and EURGBP started to move higher to touch above the 0.8555. Cable moved steadily down to the 1.6140 as the real money continued selling into the early part of NYK before petering out and starting a recovery. As the Cable climbed so the EURGBP came back to the early levels with Cable running out with gains on the day both against the USD holding around the 1.6200 levels and against the Euro holding just below the opening.
  • JPY: While the early range in Tokyo was reasonable the USDJPY seemed to take second place to the market, opening around the 97.35/40 area and managed to push to the 97.50 levels before dropping back on fixing supply with a follow through to touch below the 97.20 setting the low for the day. While the market was in a narrow range to some extent with good bids on the downside holding the market up we saw plenty of flow around those lows. The market then stabilized around the opening levels only to see late buying out of Tokyo in the grey hours to trigger a move to above the 97.60 level in what seemed to be system buying. The highs were short lived and we soon started to drop back again to those same levels around the 97.30-40 range and stayed quietly in those areas, stepping only just outside those levels. We finished the day on the weak side around the 97.30 area.
  • AUD: From early reversals in the AUDJPY through the Tokyo session we saw the Oz moving higher from the 0.9620 level to push to near the 0.9660 levels before holding around the 0.9650. The 93.50 level seems to be of continuing significance and the market flirts with the AUDJPY with the market yet to close below the level while trading back and forth around the level. The lack of interest in the pair once we moved into London set the Oz back to the starting levels and the move into NYK saw fresh selling of the cross as break out traders attempted to take advantage. The market steadily rose back to the start line into the late session to finish almost unchanged on the day.

    Yesterday’s premiership results

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

NZD       Trade Balance (NZD) Sep A -199M | C -680M | P -1191M | R -1234M

CNY        HSBC/Markit Flash Mfg PMI Oct A 50.9 | C 50.4 | P 51.2 | R 50.2

EUR        French PMI Manufacturing Oct (P) A 49.4 | C 50.1 | P 49.8

EUR        French PMI Services Oct (P) A 50.2 | C 51.3 | P 51

EUR        German PMI Manufacturing Oct (A) A 51.5 | C 51.4 | P 51.1

EUR        German PMI Services Oct (A) A 52.3 | C 53.7 | P 53.7

EUR        Eurozone PMI Manufacturing Oct (A) A 51.3 | C 51.4 | P 51.1

EUR        Eurozone PMI Services Oct (A) A 50.9 | C 52.2 | P 52.2

GBP       CBI Trends Total Orders Oct A -4 | C 10 | P 9

USD       Initial Jobless Claims (OCT 18) A 350K | C 341K | P 358K | R 362K

USD       Trade Balance (Aug) A -38.8B | C -39.4B | P -38.6B

 

For today

USDJPY
Topside: 97.40-97.70 light offers 97.70-98.00 light offers  98.00-98.30 light offers
Downside: 96.70-96.80 medium bids 96.40-96.70 large sell stops

EURUSD
Topside: 1.3830-1.3860 light offers
Downside: 1.3760-1.3780 light sell stops 1.3730-1.3760 light bids

EURJPY
Topside: 134.40-134.70 light offers  134.70-135.00 light buy stops
Downside: 133.80-134.00 light bids

AUDUSD
Topside: 0.9620-0.9650 light buy stops  0.9650-0.9680 light buy stops  0.9680-0.9710 light mix
Downside: 0.9570-0.9590 light bids 0.9540-0.9570 light sell stops 0.9500-0.9530 light bids

 

CNY:

PBOC May Resume Reverse Repos If Money Mkt Rates Too High: MNI

JPY:

Japan Sep Core CPI +0.7% on Year; Mkt Expected +0.7%

Japan’s Amari: core-core CPI is good sign in deflation battle

Japan FinMin: Next year’s 3Q GDP key to sales tax hike decision

ASO: Will Consider How Much Forex Management to Outsource

 

 

  • EUR: The market opened around the 1.3800 levels and struggled in early trading moving into Tokyo fairly unchanged before dropping lower to the 1.3785 level before moving back to the 1.3795 where the market held for a good portion of the session. A move in the DXY (USD index) caused a broad selloff of the USD’s with the Euro moving from the 1.3795 level to push above the 1.3830 level triggering minor stops before running into some offers. For the moment the market is holding in the 1.3820/25 areas as we move towards the London session.
  • GBP: With the Cable finishing on its highs the market held the 1.6200 areas into the Tokyo market dipping into pre fix to around the 1.6180 level before recovering slowly to the opening levels with very little volume going through that is until the move in DXY and the Cable rallied quickly from the 1.6200 level to push quickly above the 1.6245 areas and then hold around the 1.6230. Decent volumes traded over the short period of the rally.
  • JPY: With a similar story to the other pairs the market was fairly quiet moving from the opening 97.30 to above the 97.40 level with the help of AUDJPY buying. The move into Tokyo though saw renewed selling impacting the market and a move in USDJPY back to 97.20 to set an early low. The market then held the 97.30 area for the most part and like the other majors USDJPY dropped quickly moving to below 96.95 driving through some moderately large bids before bouncing like a wet cat to just above the 97.00 level. For the moment we hold just above the 97.00 levels as we head to the London opening
  • AUD: Oz opened as yesterday around the 0.9620 level and we saw early buying in the AUDJPY moving the USDJPY higher and leaving the Oz fairly static into the Tokyo market. Once in Tokyo the market in AUDJPY was sold off quickly as reluctant longs cut positioning as the 93.50 level looks to be under pressure somewhat. The Oz moved to a low around the 0.9585 areas before finding a little support and moving back above the 96 cent level and trading in a tight range around the 0.9610 level, the broad based selling in the USD did next to nothing in the Oz staying steady, in a bypassed market.

Today’s data

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

JPY         National CPI Core Y/Y Sep A 1.10% | C 0.90% | P 0.90%

JPY         Tokyo CPI Core Y/Y Oct A 0.60% | C 0.50% | P 0.50%

JPY         Corporate Service Price Y/Y Sep A 0.70% | C 0.80% | P 0.60%

08:00     EUR        German IFO – Business Climate Oct C 108 | P 107.7

08:00     EUR        German IFO – Current Assessment Oct C 111.4 | P 111.4

08:00     EUR        German IFO – Expectations Oct C 104.5 | P 104.2

08:00     EUR        Eurozone M3 Y/Y Sep C 2.40% | P 2.30%

08:30     GBP       GDP Q/Q Q3 (A) C 0.80% | P 0.70%

08:30     GBP       Index of Services 3M/3M Aug C 0.50% | P 0.50%

12:30     USD       Durable Goods Orders Sep C 2.00% | P 0.10%

12:30     USD       Durables Ex Transportation Sep C 0.50% | P -0.10%

13:55     USD       U. of Michigan Confidence Oct (F) C 75 | P 75.2

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               97.44 | 96.94

EUR/USD             1.3833 | 1.37845

EUR/JPY               134.43 | 133.99

AUD/USD            0.9622 | 0.9585

NZD/USD             0.8346 | 0.8299

USD/CAD             1.0428 | 1.0410

EUR/CHF              1.2316 | 1.2304

USD/CHF             0.8933 | 0.8895

GBP/USD             1.6248 | 1.6180

EUR/GBP             0.8523 | 0.85045

It’s another one of those weeks where I go off to torment the fish, this time I’m after some river Perch which frequent the local river at the bottom of the road, have a good week ahead and I’ll be back a week Sunday.
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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