Daily FX Market Commentary

Andy Harrison

Good morning,

 

A change of format for those that look at this with mobiles and would prefer to see the present rather than yesterday.

 

LMAX Close

USDJPY 98.084 | EURUSD 1.34192 | EURJPY 131.619 | AUDUSD 0.94559 | NZDUSD 0.83418 | USDCAD 1.04605 | EURCHF 1.22907 | USDCHF 0.91583 | GBPUSD 1.60937 | EURGBP 0.83385 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               98.26 | 98.05

EUR/USD             1.3424 | 1.3405

EUR/JPY               131.775 | 131.52

AUD/USD            0.9482 | 0.9428

NZD/USD             0.8345 | 0.8312

USD/CAD             1.0465 | 1.0446

EUR/CHF              1.23045 | 1.2288

USD/CHF             0.9178 | 0.91535

GBP/USD             1.6103 | 1.6078

EUR/GBP             0.8340 | 0.83295

 

For today

  • EUR: Euro’s struggled to make any gains on the session moving slowly in the pre Tokyo stage to the 1.3405 area before catching a move higher as EURAUD buying moved into the market. The rally was short lived and while reasonable volumes were seen from bottom pickers the market resumed its hold around the 1.3410 area from midsession onwards.
  • GBP: Cable remained fairly well bid moving up in the closing minutes to above 1.6090 before flirting an hour later with the 1.6080 levels. We saw some GBPAUD buying go through the market with the news in Oz however other than that the Cable has been reasonably quiet overall pushing quietly to above 1.6100 and holding there for a few hours before drifting back with the Euro. The EURGBP cross drifted a little lower in Asia holding on the 0.8330 but even that seemed quiet.
  • JPY: While the range has been fairly tight opening around the 98.05 area and pushing to above 98.25 in early trading one has to say the amounts were brisk with plenty of two way flow and a surprising amount of volume. Having topped in early Tokyo the market remained fairly calm before drifting off to the 98.10 levels and holding just above there as we move into London.
  • AUD: The Oz opened around the 0.9450 area and was reasonably quiet in early trading before the announcement by the RBA of a readjustment to growth for next year sending the pair sharply lower to trade below the 0.9430, the market bounced as this was really nothing new as they’ve been overstating some numbers for several years and this was seen as a correction in some parts. Having moved back to the starting point the next piece of news was a healthy trade balance for China and this in turn set the high for the session with some good volume seen going through to take it above the 0.9480 before again returning to the starting levels. Overall the market seems to be in two minds now with conflicting opinions over the impact China is likely to have over the high rate of the Oz and the effects that will have on trade balances. We hold for the moment just above the openings in what has been a reasonably busy day across the market with very little impact on the levels in general.

USDJPY
Topside: 98.30-98.50 light offers 98.50-98.80 light offers 98.80-99.10 medium buy stops 99.10-99.40 medium offers
Downside: 97.50-97.80 medium bids 97.20-97.50 medium bids 97.00-97.20 light sell stops 96.60-96.80 light sell stops 96.30-96.80 large bids

EURUSD
Topside: 1.3465-1.3480 light buy stops 1.3500-1.3540 light buy stops

Downside: 1.3380-1.3400 light bids 1.3350-1.3380 light bids 1.3330-1.3350 light sell stops 1.3300-1.3330 light bids 1.3270-1.3300 medium sell stops

AUDUSD
Topside: 0.9470-0.9500 light mix 0.9500-0.9540 medium offers
Downside: 0.9380-0.9420 light bids

 

Overnight News

CNY:

China Raises Yuan Reference Rate by 0.15%, Most since June 7

China’s exports rebound in October, beat forecasts

CNY/NZD:

Shanghai firm buys New Zealand resort as Chinese tourism booms

AUD:

Australia CB trims growth outlook, still open to easing if needed

JPY:

Japanese Bought Net 276.6 Billion Yen Overseas Debt Last Week

Japan Govt Hasn’t Set Timing on Collective Defence Plan: Kato


Today’s data

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

CNY        Trade Balance Oct A $31.10B | C $22.30B | P $15.21B

06:45     CHF        Unemployment Rate Oct C 3.20% | P 3.20%

07:00     EUR        German Trade Balance (EUR) Sep C 17.2B | P 15.6B

08:15     CHF        Retail Sales (Real) Y/Y Sep C 2.60% | P 2.40%

09:30     GBP       Visible Trade Balance (GBP) Sep C -9.1B | P -9.6B

13:15     CAD       Housing Starts Oct C 195.0K | P 193.6K

13:30     USD       Change in Non-farm Payrolls Oct C 125K | P 148K

13:30     USD       Unemployment Rate Oct C 7.30% | P 7.20%

13:30     CAD       Net Change in Employment Oct C 13.5K | P 11.9K

13:30     CAD       Unemployment Rate Oct C 7.00% | P 6.90%

13:30     USD       Personal Income Sep C 0.30% | P 0.40%

13:30     USD       Personal Spending Sep C 0.20% | P 0.30%

13:30     USD       PCE Deflator M/M Sep C 0.10% | P 0.10%

13:30     USD       PCE Deflator Y/Y Sep C 1.00% | P 1.20%

13:30     USD       PCE Core M/M Sep C 0.10% | P 0.20%

13:30     USD       PCE Core Y/Y Sep C 1.30% | P 1.20%

14:55     USD       U. of Michigan Confidence Nov (P) C 74.5 | P 73.2

 

Harry Hindsight

  • EUR: We opened just below the 1.3520 level and traded in a tight range with plenty of volume going through as the market positioned itself for the ECB announcement later in the day. Moving to just above the 1.3500 level the market saw a mixture of real money buying and short term opportunists. The market remained reasonably flat as we ran into the London session and nothing really changed that much with the market moving to the 1.3530 levels before slowly drifting into early NYK and the release. The actual release was no surprise however, the market seemed to have been caught and the move really started just before the number, so you can draw your own conclusions from that. We moved from just below 1.3520 and didn’t stop until we hit 1.3360 all in the space of a couple of minutes with massive volume being absorbed by the market. A brief pause and we were off again as the US numbers hit with a GDP advance number showing a much healthy Q3 than expected and the Euro briefly moved below 1.3300 before bouncing back to that 1.3360 level. From there the market was really empty and we started to see a slow rise back to beyond the 1.3440 area as the cynics like me start to think about where the Euro should be and where it will probably go as the ECB and every two bit politician tries to talk the market lower, with the flip side of the Fed doing the same thing for the USD. Once the market had peaked above the 1.3440 it drifted into the close or should that be sagged to the 1.3420 areas.
  • GBP: Cable moved from the 1.6080 areas to slightly lower in the Asian session to below 1.6065 on thin trading and a lack of appetite, a gradual climb back and moving to above 1.6090 the day progressed slowly into the London session with the market staying away from the weaker major into the ECB announcement, with the pre-ordained no change on everything from the BoE. As we moved into the hour of the release the market started to see some decent size clips pushing the Cable lower by about 20 pips however, once the ECB release was out the Cable dropped quickly to the 1.6010 areas holding there for a few hours in choppy trading before rising back through the opening levels and triggering some weak stops to take the market above the 1.6110 level in mid NYK. EURGBP was the main player here with a quick move lower with the Euro selling however, when the Euro moved off its lows and started to recover the EURGBP only managed a 30-40 tick move if you want to call that a bounce leaving the Cable to ride high. Cable eventually finished the day rising a few ticks into the close as those caught short on the move up finally decided that discretion is the best part of valour.
  • JPY: USDJPY had a reasonably quiet day through Asia with a tight range basing off the 98.60 levels and struggling to make any meaningful moves until the ECB release. The release saw the USD go bid as the Euro dropped and EURJPY bids drove the component USDJPY leg higher through 99.40 and triggering some weak stops as the offers melted away. Once we’d hit the highs some solid amounts came to market and the move to 99.00 was gradual but determined, the fall back through the figure triggered weak stops from those that assumed a break through the offers everyone had seen in the market would trigger another attempt at 100.00 and we dropped quickly to 98.40. With all the Euro crosses now devoid of meaningful amounts the USDJPY slipped again as Euro made its move back to mid-range and triggered another batch of stops and we were through the 98.00 level and hitting a low of 97.60 before the market held. As with the rest of the market the move to the close was a gradual rise or reversal of fortunes if you like and we finished above the 98.00 area but barely.
  • AUD: With its own problems the market in the Oz opened around the 0.9530 area and slipped lower into the Tokyo open, with poor employment numbers sending the market quickly lower in the early part of the session moving through 0.9520 to bottom around 0.9470 in what was the biggest mover in Asia, carry trade selling seemed to be the name of the game for a good portion of the day however, the market calmed on the lows and steadily rose into the London session. We peaked above the 0.9510 level before being taken lower with the drag of the Euro, this time the move was less savage and we spent the rest of the session moving off the 0.9450 area making a low of 0.9440 and finishing the day just off the lows. The Oz was particularly quiet and side-lined by the Euro action and very little was made of the GDP reduction in the Ldn/Nyk time.

 

Yesterday’s premiership results

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

AUD       Employment Change Oct A 1.1K | C 10.0K | P 9.1K

AUD       Unemployment Rate Oct A 5.70% | C 5.70% | P 5.60%

JPY         Leading Index Sep (P) A 109.5 | C 109.4 | P 106.8

CHF        SECO Consumer Confidence Oct A -5 | C -2 | P -9

CHF        Foreign Currency Reserves Oct A 434.7B | P 432.4B | R 433.0B

EUR        German Industrial Production M/M Sep A -0.90% | C 0.00% | P 1.40% | R 1.60%

GBP       BoE Rate Decision A 0.50% | C 0.50% | P 0.50%

GBP       BoE Asset Purchase Target Nov A 375B | C 375B | P 375B

EUR        ECB Rate Decision A 0.25% | C 0.50% | P 0.50%

USD       Initial Jobless Claims (NOV 2) A 336K | C 335K | P 340K

USD       GDP (Annualized) Q3 (A) A 2.80% | C 2.00% | P 2.50%

USD       GDP Price Index Q3 (A) A 1.90% | C 1.30% | P 0.60%

 

Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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