Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 99.637 | EURUSD 1.34354 | EURJPY 133.866 | AUDUSD 0.93028 | NZDUSD 0.82169 | USDCAD 1.04945 | EURCHF 1.23267 | USDCHF 0.91753 | GBPUSD 1.59048 | EURGBP 0.84474 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               99.685 | 99.43

EUR/USD             1.34535 | 1.3430

EUR/JPY               133.93 | 133.695

AUD/USD            0.9313 | 0.9286

NZD/USD             0.8239 | 0.8196

USD/CAD             1.0496 | 1.0485

EUR/CHF              1.2330 | 1.23235

USD/CHF             0.9177 | 0.9164

GBP/USD             1.5912 | 1.5886

EUR/GBP             0.8464 | 0.84465

 

For today

  • EUR: The market opened around the 1.3435 area and after a steady hour or so moved up 10 pips as early cross buying in EURJPY. We drifted back initially into Tokyo trading to its lows before moving back towards technical levels above 1.3465 only to run out of steam in weak trading just above the 1.3450 area. The market ran out of ideas from that point and drifted a little lower into the mid 1.3440’s as we move towards the London session.
  • GBP: The market opened above the 1.5900 level and struggled quietly holding the levels around the 1.5905/08 level in very quiet trading before some buying in the EURGBP buying and the small rally in Euro’s pushed the Cable lower to then trade on the 1.5890 area for the rest of the session in very quiet trading. EURGBP continues to move steadily higher as a follow through from yesterday’s action moved into Asia. One suspects its good news for the UK trade numbers if Euro’s remains stronger than it should be against the GBP or the USD.
  • JPY: USDJPY initially started to push higher from the 99.65 area but with little give on the topside the market couldn’t find the impetus to really test the barriers to the topside and started to slide lower on light volume with fix supply starting the general move lower and a steady move to mid-99.40’s before finding some respite and bids to hold the market at the levels.
  • AUD: Another day, another consumer confidence number and a different result for Nov compared with Oct or so Westpac say, the market barely reacted to the news and while the pair moved higher from the opening areas of 0.9300 to around the 0.9312 before dropping back quickly on AUDJPY selling into the Tokyo session and the Oz touched below 0.9288 before stabilizing and moving back to above the 0.9300 and currently holds there in a quiet session.

USDJPY:
Topside: 99.80-100.00 medium mix 100.10-100.40 large buy stops 100.40-100.60 light mix 100.60-100.80 light buy stops
Downside: 99.20-99.50 large bids 98.90-99.20 light mix 98.60-98.80 light bids

EURUSD:
Topside: 1.3460-1.3485 light buys stops 1.3485-1.3500 light mix 1.3500-1.3540 light mix
Downside: 1.3380-1.3400 light mix 1.3340-1.3380 light bids

EURJPY:
Topside: 134.90-135.30 light offers
Downside: 133.40-133.70 light mix

AUDUSD:
Topside: 0.9300-0.9320 light buy stops 0.9380-0.9420 light mix

Downside: 0.9230-0.9270 light bids 0.9200-0.9230 light sell stops

 

Overnight News

JPY:

BOJ’s Miyao: focusing more on downside risks to Japan’s economy

Japan Sept core machinery orders fall 2.1% MoM

Japan Oct wholesale prices rise 2.5% YoY

USD:

Lew Says ‘Optimistic About Core U.S. Economy,’ CNBC Reports

CNY:

China Reform Plan Raises Hope for Capital-Market Changes -Report

China Bank Regulator: Non-Performing Loan Ratio 0.97% End-September

Shanghai Zone to Let Foreign Investor Trade Energy Futures

AUD:

Australia consumer sentiment turns higher in Nov-survey

Australia’s new PM brings carbon tax repeal bill, as promised

Australia Wages Rise 0.5% in September Quarter

SGD/CNY:

China Workforce No Longer to Be Growth Source: Shanmugaratnam

USD/SGD/CNY:

GM to move international headquarters to Singapore from China


Today’s data

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

AUD       Westpac Consumer Confidence Nov A 1.90% | P -2.10%

JPY         Machine Orders M/M Sep A -2.10% | C -2.00% | P 5.40%

JPY         Domestic CGPI Y/Y Oct  A 2.50% | C 2.50% | P 2.30% | R 2.20%

09:30     GBP       Claimant Count Change Oct C -30.0K | P -41.7K

09:30     GBP       Claimant Count Rate Oct C 3.90% | P 4.00%

09:30     GBP       ILO Unemployment Rate 3M Sep C 7.70% | P 7.70%

10:00     EUR        Eurozone Industrial Production M/M Sep C -0.30% | P 1.00%

10:30     GBP       BoE Inflation Report

19:00     USD       Monthly Budget Statement Oct P -$104.0B

 

Harry Hindsight

  • EUR: Euro’s struggled during the early part of the day with Asia continued to drift from the 1.3410 area to push slightly lower over the Asian session, while the market was reasonably quiet with only middling numbers going through the further into the session we moved the more volume increased. Having touched the 1.3380 level the move into London saw early sellers appear in the market pushing to a low of 1.3360, German CPI numbers coming in as expected. UK numbers though surprised the market and Euro’s lifted off the lows as the market saw EURGBP buying moving in strongly and the rally was in full swing as we moved into the NYK session. Euro’s continued rallying and eventually topped above the 1.3455 areas before the run was over with even then the volumes seemed to continue into the late session petering out only towards the end finishing around the 1.3435 area. With comments from Nowotny making comments that stagflation was a real threat the market generally ignored the speech with Asmussen balancing with the ECB has not yet reached its limit.
  • GBP: The Cable stayed quiet during the early part of the day with little going on in Asia and the market opening around the 1.5990 we moved slowly to a low of 1.5965 area before moving back to the starting area. Early Europeans started to slowly sell and by the time we reached the data releases the market had already dropped steadily to the 1.5940 area where some bottom pickers held the market. The inflationary news when released was better than expected and so the GBP weakened broadly across the market moving quickly to below 1.5860. There was a bounce and one suspect’s some in the market worked out the same as myself, why sell GBP we all know that the criteria for the next rate rise is employment related and a drop in inflation will mean no rise? The BoE target has always been 2% and one way or the other we’ve ran at a good 1% above for a considerable time. The bounce into NYK moved the market back to 1.5940 before the selling re-appeared from long term longs and sent the market back to the 1.5900 again finally closing just above there.
  • JPY: USDJPY opened around the 99.20 level and saw some light selling in Sydney touching 99.10 before early Japanese moved into the market, the buyers moved higher helped by a poor industry index and a quick move to above the 99.50 area. From here there was a lot of two way trading with the market doing a lot of work around the 99.55 areas with retail and medium term leverage buyers against option barriers. The market moved into the grey hours around this level before the first break higher occurred moving to the London opening to touch 99.80, London continued to push against the barriers but was unable to penetrate the levels and slowly drifted into NYK. Having rejected the topside for the moment the market drifted back to the 99.50 level. As the market began to thin a little with the close of London we again saw the market attempt to move higher failing this time above the 99.70 area and drifting to a 99.60 close.
  • AUD: With the strength in USDJPY the carry trade moved steadily higher however, it wasn’t a one way trip with plenty of selling coming to the market to limit rises to the 93.00 levels. A weaker NAB confidence number started the selling and the Oz having opened around the 0.9360 topped just above there before falling on the release quickly to the 0.9340 levels, it held at the level briefly before starting a slow drift lower through into London and ultimately into the NYK session, The NYK option cut saw a few strikes expire and delta, gamma players sold into the cut and we dropped over the next hour or so to touch the 0.9270 level for the low. The market bounced off the level and moved back to the 0.9300 levels and struggled into a close just above the levels.

 

Yesterday’s premiership results

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

JPY         Japan Money Stock M2+CD Y/Y Oct A 4.10% | C 3.90% | P 3.80% | R 3.90%

JPY         Tertiary Industry Index M/M Sep A -0.20% | C 0.20% | P 0.70% | R 0.60%

GBP       RICS House Price Balance Oct A 57% | C 58% | P 54% | R 53%

AUD       NAB Business Confidence Oct A 5 | P 12

JPY         Consumer Confidence Index Oct  A 41.2 | C 46.3 | P 45.4

JPY         Machine Tool Orders Y/Y Oct (P) A 8.40% | P -6.30%

EUR        German CPI M/M Oct (F) A -0.20% | C -0.20% | P -0.20%

EUR        German CPI Y/Y Oct (F) A 1.20% | C 1.20% | P 1.20%

GBP       PPI Input M/M Oct A -0.60% | C -0.40% | P -1.20% | R -1.00%

GBP       PPI Input Y/Y Oct A -0.30% | C 0.30% | P 1.10% | R 0.90%

GBP       PPI Output M/M Oct A -0.30% | C 0.00% | P -0.10%

GBP       PPI Output Y/Y Oct A 0.80% | C 1.00% | P 1.20%

GBP       PPI Output Core M/M Oct A -0.30% | C 0.10% | P -0.10% | R 0.00%

GBP       PPI Output Core Y/Y Oct  A 0.90% | C 0.70% | P 0.70% | R 0.80%

GBP       CPI M/M Oct A 0.10% | C 0.40% | P 0.40%

GBP       CPI Y/Y Oct A 2.20% | C 2.50% | P 2.70%

GBP       Core CPI Y/Y Oct A 1.70% | C 2.00% | P 2.20%

GBP       RPI M/M Oct A 0.00% | C 0.50% | P 0.40%

GBP       RPI Y/Y Oct A 2.60% | C 3.00% | P 3.20%

 

Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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