Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close Wellington open

USDJPY 100.176 100.15-23 | EURUSD 1.34962 1.3500-05 | EURJPY 135.214 135.05-40 | AUDUSD 0.93692 0.9360-74 | NZDUSD 0.83382 0.8323-46 | USDCAD 1.04391 1.0438-53 | EURCHF 1.23477 1.2343-47 | USDCHF 0.9149 0.9135-0.9202 | GBPUSD 1.61176 1.6118-28 | EURGBP 0.83739 0.8365-80 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               100.39 | 99.94

EUR/USD             1.3506 | 1.3475

EUR/JPY               135.41 | 134.855

AUD/USD            0.9408 | 0.9359

NZD/USD             0.8363 | 0.8326

USD/CAD             1.0442 | 1.0429

EUR/CHF              1.2346 | 1.2340

USD/CHF             0.9162 | 0.9144

GBP/USD             1.6135 | 1.6104

EUR/GBP             0.83735 | 0.8363

 

Overnight News

CNY:

China home prices hit fresh records in challenge to government reform plans

GBP:

Fears of a squeeze on personal finances with ongoing news of higher energy prices Survey

EUR:

EU commissioner Guenther Oettinger ruled out German being sanctioned as a result of investigations into the current account surplus.

JPY:

Government is to compile second part of their growth strategy in June.

For today

USDJPY:
Topside: 100.40-100.70 medium buy stops 100.70-101.00 medium offers 101.00-101.30 medium buy stops
Downside: 99.70-100.00 light mix 99.40-99.70 light mix

EURUSD:
Topside: 1.3520-1.3560 light mix 1.3580-1.3600 light offers 1.3610-1.3630 light buy stops
Downside: 1.3420-1.3450 light bids 1.3380-1.3410 light bids 1.3360-1.3380 light sell stops

EURJPY:
Topside: 136.00136.40 light mix
Downside: 134.10-134.50 light mix

AUDUSD:
Topside: 0.9400-0.9430 light buy stops 0.9450-0.9470 light buy stops 0.9480-0.9500 light offers
Downside: 0.9340-0.9360 light mix 0.9300-0.9330 light bids

 

  • EUR: The market opened in line with Friday’s close and from the opening started to slip back in pre-Tokyo and continued for a short period into the early part of Tokyo with EURJPY showing to some extent, early into the session though the market reversed and started to move back to the opening levels having touched the 1.3475 level. We currently hold in the mid 1.3490’s with the past few hours doing very little.  With a couple of major banks almost convinced that the Greece saga is far from over. Volumes have been steady however; most of it was during the moves lower.
  • GBP: Cable saw steady buying once the market moved into the Tokyo session, it dropped from an opening level around the 1.6120 close to Friday’s close, moving to a low below the 1.6105, it then caught the general move higher and has continued over most of the session pushing to above the 1.6135 levels. The right move house prices seemed to allay fears that a housing bubble had already started to grow in the session, but for me it’s still a little early to say and something to keep an eye on.  For the moment while volumes have been ok it’s not been anything to write home about and we hold on the weak volumes above these 1.6130 levels into the grey hours.
  • JPY: The opening saw fresh buying during the Sydney part of the session and as the Tokyo market we peaked just below the 100.40 area where the first resistance area seems to be. Talk in the market of large short JPY positions continue to dominate many banks however, at the rate the Japanese can print money that should not be overly concerning if we remain on a steady path. However, the movement in AUDJPY seems for the moment to be driving the market as the Oz continued to push as the USDJPY fell with the Cross holding above the 94.10 level with a strong moving average appearing not too far from the current market. USDJPY fell back as a two way play enveloped the carry and we the market saw a steady decline in reasonable volumes to again move close to the 99.95 area that the market bounced off on Friday. We currently hold above the 100.05 area having moved back up just prior to the grey hours.
  • AUD: The opposite direction to the USDJPY for the most part through the session opening around the 0.9370 areas seen on Friday’s close the market move only slightly lower into the opening in Tokyo and having touched the 0.9360 it was all one way traffic. With no direct data from the Ozzies and less from the Chinese the market was dominated by the carry trade and the Oz rose through the 0.9400 levels just before the grey hours and has continued to push through the 0.9410 level before stalling a little as USD recovers from its lows. For the moment we hold the highs as we move to London.

Today’s data

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

0:01        GBP       Rightmove House Prices M/M Nov A -2.40% | P 2.80%

9:00        EUR        Eurozone Current Account (EUR) Sep C 18.3B | P 17.4B

10:00     EUR        Eurozone Trade Balance (EUR) Sep C 13.0B | P 12.3B

13:30     CAD       International Securities Transactions (CAD) Sep C 6.71B | P 2.07B

14:00     USD       Net Long-term TIC Flows Sep C 21.3B | P -$8.9B

15:00     USD       NAHB Housing Market Index Nov C 56 | P 55      

 

Weekend News

CNY:

China vows biggest expansion of economic freedom since the 1990’s

An ambitious reform plan from the 3rd Plenary session

One-child policy to be eased

JPY:

Sales tax is likely to have only a limited effect Poll

EUR:

Berlusconi warned that if the senate votes to expel him the he couldn’t support Letta as PM. NYT

Ireland to announce a detailed schedule of bond auctions in Jan once Moody’s remove junk status

ECB’s Chief Economist Peter Praet says There is no deflation and there remains room to manoeuvre

GBP:

UK to see net borrowings fall, Economists estimate UK borrowing to fall to £7.3B Oct vs. £11.38B Sep

Aberdeen Asset Management to seal £500M deal for Scottish Widows

USD:

Federal Reserve considering a delay to Volcker rule.

 

 

Harry Hindsight

  • EUR: The Euro started the day around the 1.3455 area and was stuck in a tight range through Asia and only once we moved into the London session and inflationary data in line with expectations and confirming a stuttering rate, the market sold just pre the number and having sold the risk of lower numbers started to buy back steadily into the NYK session to negate the low below 1.3435. NYK session woke up and started to move steadily back to the opening levels and once the US numbers came into view released the Euro higher trading over the next 30 minutes to make the highs just above the 1.3505 level. Looking at the drop from the highs one assumes that an option barrier crumpled and the buyers immediately moved out of their positions and dropped the market to the 1.3475 area. From there the market steadily rose through the topside range for a close just below the 1.3500 level.
  • GBP: Cable had a quiet day holding a tight range in Asia, having opened around the 1.6065 area the market moved in a tight range between 1.6055 to just above the 1.6070, the market started to rise into the grey hours and having moved to the 1.6090 with some light EURGBP selling the market dropped back as the EURGBP reversed its moves into the Eurozone numbers, Cable was then pulled along by the Euro and we moved back towards those highs into the NYK opening. US numbers saw the Cable rise quickly with the IP numbers seeing a swing lower dominating the numbers and Cable moved quickly to above the 1.6130 level before dropping back a little more steadily than the Euro, the market was quiet in the run to the close finishing the day just above the 1.6120 and really only just short of the lows.
  • JPY: The drive through the barriers in front of the 100 level opened up the topside however, it seemed to stall the following day and while we opened in Asia around the 100.02-03 levels the market moved slowly through Sydney to the Tokyo opening around the 100.25. Tokyo kept the market bubbling for several hours however, it was unable to really keep the pressure up and successive selling in AUDJPY kept a lid on the buying. Mid-afternoon saw the market starting to drop with comment from Aso seeming to take the edge off the market and we slipped back through the 100.00 level to bounce off 99.95 as we moved into the grey hours, while Japan may have been a bit anxious about the levels of JPY shorts in the market. London wasn’t and the market immediately saw buying going through pushing the pair through the Asian highs to top above the 100.40 before a steady slide into NYK and the data and then a quiet close finishing around the 100.20 areas with overall good volumes.
  • AUD: The Oz rose steadily throughout Asia and all though there were periods of carry trade selling there seemed to be gaps where the market bought sufficient amounts as the USDJPY broke a little higher and the legs carried it the cross through areas that a few weeks ago were key. Having dipped from the opening 0.9318 areas the market drifted to below the 0.9310 for the lows. Tokyo took the market higher as the retail market bought into the chance of a break and talk of targets for the USDJPY above 103.00 by some banks in the market. As it stood as the USDJPY peaked the market in the Oz also drifted lower and then dropped quickly to below the opening levels on the opening of London, the market recovered a little from there and the Data out of the US drove the market higher with a steady move to above the 0.9370 and pushing the carry trade through to the 94.00 levels seen just over a week ago. Once the market had hit the highs it held around the level trading the 0.9360/70 level into the close in NYK.

 

Friday’s premiership results

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

EUR        Eurozone CPI M/M Oct (F) A -0.10% | C -0.10% | P 0.50%

EUR        Eurozone CPI Y/Y Oct (F) A 0.70% | C 0.70% | P 0.70%

EUR        Eurozone CPI – Core Y/Y Oct (F) A 0.80% | C 0.80% | P 0.80%

CAD       Manufacturing Shipments M/M Sep A 0.60% | C 0.20% | P -0.20% | R 0.00%

USD       Import Price Index M/M Oct A -0.70% | C -0.50% | P 0.20% | R 0.10%

USD       Empire State Manufacturing Index Nov A -2.2 | C 5 | P 1.52

USD       Industrial Production Oct A -0.10% | C 0.10% | P 0.60%

USD       Capacity Utilization Oct  A 78.10% | C 78.20% | P 78.30%

USD       Wholesale Inventories Sep A 0.60% | C 0.40% | P 0.50% | R 0.40%

 

Stay lucky

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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