Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 98.503 | EURUSD 1.34748 | EURJPY 132.728 | AUDUSD 0.95074 | NZDUSD 0.82935 | USDCAD 1.04551 | EURCHF 1.23099 | USDCHF 0.91354 | GBPUSD 1.60426 | EURGBP 0.83988 |

 

Harry Hindsight

  • EUR: The Euro started the day around the 1.3515 area and after a brief flirt with the topside above 1.3520 dropped back quickly with EURJPY selling out of the retail sector in Japan. The market moved down to the 1.3500 area and there we stayed for the rest of the session dropping a couple of times below the figure however, support held until we moved into the London session. The Euro eventually pushed through the bids around the figure and slowly moved to the 1.3480 area and while there was some heavy selling in the EURGBP cross the GBP leg took the brunt of it and Euro’s stabilised and moved back above the 1.3500 on the release of the Eurozone numbers, before again beginning to weaken as we moved into the NYK session. Where sellers sold the market down, hitting 1.3450 areas in a push through the 1.3480 level, this squeezed some weak longs out along the way. For the most part the market was all real money buying in the face of tech and speculative selling with most banks looking at a rate cut on the horizon. The market held in a tight range after the lows holding the 1.3470/80 range into the close with very little interest appearing in the market once the London session closed for the day.
  • GBP: With some minor gyrations during the pre-Tokyo session the market moved from the 1.5970 area to above the 1.5980 level, from there the market drifted along into the London session neither able to push any higher or move below the 1.5950 area until the release of the PMI number. The number was higher than expected and GBP gained across the board rallying quickly over the next 30mins to above the 1.6060 level before stalling and holding a 1.6020-50 tight range into the close. EURGBP was also down from 0.8455 areas slumping to the 0.8410 area and fulfilling tech guru’s call on a move to below the 0.8400 level although a bit lucky.
  • JPY: A reasonably quiet day for the USDJPY The market caught between good offers on the topside and a reluctance to keep buying with the resistance ahead. Needless to say the market started to slip back from the opening levels around 98.60 topping just above the 98.66 levels. We started to move lower as soon as Tokyo opened and after a couple hours of cross selling the USDJPY found itself holding the near term bids around the 98.25 level and slowly pushing back to the 98.50 levels as we moved into the grey hours. Early London began selling from the start and the bids held even though we made fresh lows just below 98.20, once we hit the area the market struggled to move in any particular direction until the NYK session entered the fray with USD buying helping the pair back to the opening areas before petering into a slow decline once the London session was wrapped up for the day and a close in NYK around the 98.50 area.
  • AUD: Having opened around the 0.9505 area the day was all about the interpretation of the RBA announcement. While the market initially took the opportunity to move to the 0.9520 area in early trading the RBA no change suited those buyers however, the fact that they tagged on not liking the high rate of the Oz sent the market scurrying lower to push the 0.9465 levels to make the lows for the day. With retail Japan heavy sellers of both AUDJPY and AUDUSD. The move into the London session saw early retail sellers dominating the market again not quiet getting to the lows, the market moved off the bottom helped in part by some GBPAUD selling in while Cable was rallying. The Oz topped out above the previous high in Asia moving to the 0.9535 levels before the move into the NYK session. NYK took the same view of the RBA as the Tokyo market and again we started to see selling appear in the market, of course by this stage the market was a little stale and there was very little available between the highs and lows and we quickly moved to the 0.9480 levels rising slowly into the close little changed on the day.

 
Yesterday’s premiership results

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

JPY         Monetary Base Y/Y Oct A 45.80% | P 46.10%

GBP       BRC Sales Like-For-Like Y/Y Oct A 0.80% | C 1.10% | P 0.70%

AUD       RBA Rate Decision A 2.50% | C 2.50% | P 2.50%

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

CHF        CPI Y/Y Oct A -0.30% | C -0.10% | P -0.10%

GBP       PMI Services Oct A 62.5 | C 60 | P 60.3

EUR        Eurozone PPI M/M Sep A 0.10% | C 0.20% | P 0.00%

EUR        Eurozone PPI Y/Y Sep A -0.90% | C -0.80% | P -0.80%

USD       ISM Non-Manufacturing Composite Oct A 55.4 | C 54 | P 54.4

 

For today

USDJPY:
Topside: 98.80-99.10 decent offers 99.10-99.50 light offers
Downside: 98.10-98.40 light mix 97.80-98.10 light bids 97.40-97.60 light bids

EURUSD:
Topside: 1.3520-1.3580 light mixed bag 1.3580-1.3610 light buy stops
Downside: 1.3425-1.3450 medium sized bids 1.3380-1.3420 large bids 1.3360-1.3380 medium bids

EURJPY:
Topside: 133.40-133.60 light mixed bag
Downside: 131.80-132.20 light sell stops

AUDUSD:
Topside: 0.9530-0.9570 light offers
Downside: 0.9450-0.9470 light bids 0.9430-0.9450 light sell stops 0.9400-0.9425 light bids

 

JPY:

Toyota to raise full-year operating profit forecast to 2.2 trln yen -NHK

BOJ Minutes: Some Members: Mkt Could Turn Volatile Again Due to Fed Policy

USD:

Fed’s Williams: Jobs Growth a Key Question for Bond-Buying Program

CNY:

China CB boosts disclosure of short-term liquidity management operations

Explosions reported in north China city of Taiyuan – Xinhua

AUD:

Australia Sept Trade Deficit A$0.3B Vs A$0.6B Consensus

NZD:

N.Z. 3Q Jobless Rate 6.2%, Matching Economists’ Estimates

New Zealand farmer confidence hits five-year high survey

GBP:

British shop prices fall for sixth straight month in Oct BRC

 

  • EUR: The Euro opened around the 1.3475 area and during the pre-Tokyo session moved down to just below the 1.3470 areas before finding itself on the end of a small short squeeze higher, helped by a good AUD bond auction the market surged quickly over the course of a couple of hours to the 1.3520 area and some light offers to top the market off, the market saw plenty of short term models involved in the buying as well as a run in stops from weak shorts. The market has drifted from the highs and is currently holding around the 1.3505 levels.
  • GBP: Cable held steady as with the Euro catching the move high and trailing in the wake of the Euro moving from the opening 1.6048 areas to above the 1.6095 and although we attempted to push higher over a two hour period couldn’t find the extra impetus to push through the 1.6100 level and currently holds just off the highs around the 1.6085 levels. With EURGBP staying in line with yesterdays close. BRC shop prices again declined for the 6th straight month helping with the overall move higher for Cable.
  • JPY: As with the rest for a change and no USD selling per sae with AUDJPY taking the front line in the Asian session, USDJPY started drifting from the opening moving from the 98.55 levels to trade to just above 98.40 and holding in that area until the rally in the AUD and a switch to 1.5% higher in the Nikkei drove the pair to above the 98.75 at one point, and while the market drifted around those levels the move into the grey hours has seen the market push back below the 98.60 area as I finish off.
  • AUD: The early catalyst for the moves that followed, opening around the 0.9505 areas and drifting in early trading to a low below 0.9490 before the auction which saw a 4.5 X cover and sending the market back above the opening and peaking above the 0.9525 underpinning the bid tone that yesterday’s London market left prevailing. With the additional weight of the AUDJPY carry trade bought in Japan it’s obvious from the volumes and the range that it wasn’t all one way traffic and we saw plenty AUD changing hands against a broad range of currencies especially in the local area. The market remains towards the top end of the range.

 

Today’s data

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

NZD       Unemployment Rate Q3 A 6.20% | C 6.10% | P 6.40%

NZD       Employment Change Q/Q Q3 A 1.20% | C 0.50% | P 0.40%

GBP       BRC Shop Price Index Y/Y Oct A -050% | P -0.20%

AUD       Trade Balance (AUD) Sep A -0.28B | C -500M | P -815M | R -0.69B

08:45     EUR        Italian PMI Services Oct C 51.2 | P 52.7

09:00     EUR        Eurozone PMI Services Oct (F) C 50.9 | P 50.9

09:30     GBP       Industrial Production M/M Sep C 0.60% | P -1.10%

09:30     GBP       Industrial Production Y/Y Sep C 1.80% | P -1.50%

09:30     GBP       Manufacturing Production M/M Sep C 1.10% | P -1.20%

09:30     GBP       Manufacturing Production Y/Y Sep C 0.80% | P -0.20%

10:00     EUR        Eurozone Retail Sales M/M Sep C -0.40% | P 0.70%

11:00     EUR        German Factory Orders M/M Sep C 0.50% | P -0.30%

12:30     USD       Challenger Job Cuts Y/Y Oct P 19.10%

13:30     CAD       Building Permits M/M Sep C 7.80% | P -21.20%

15:00     GBP       NIESR GDP Estimate Oct  C 0.50% | P 0.80%

15:00     CAD       Ivey PMI Oct P 51.9

15:00     USD       Leading Indicators Sep C 0.60% | P 0.70%

15:30     USD       Crude Oil Inventories P 4.1M

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               98.76 | 98.40

EUR/USD             1.35215 | 1.3468

EUR/JPY               133.455 | 132.55

AUD/USD            0.9527 | 0.9487

NZD/USD             0.8399 | 0.8353

USD/CAD             1.0459 | 1.0440

EUR/CHF              1.23175 | 1.2304

USD/CHF             0.9139 | 0.91105

GBP/USD             1.6097 | 1.6043

EUR/GBP             0.8404 | 0.8386
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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