Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 99.999 | EURUSD 1.35059 | EURJPY 135.062 | AUDUSD 0.93777 | NZDUSD 0.83615 | USDCAD 1.04292 | EURCHF 1.2329 | USDCHF 0.91287 | GBPUSD 1.61098 | EURGBP 0.83838 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               100.00 | 99.56

EUR/USD             1.3522 | 1.3498

EUR/JPY               135.05 | 134.62

AUD/USD            0.9391 | 0.9352

NZD/USD             0.8335 | 0.8310

USD/CAD             1.0436 | 1.0425

EUR/CHF              1.2328 | 1.2322

USD/CHF             0.91305 | 0.9114

GBP/USD             1.6124 | 1.6099

EUR/GBP             0.83895 | 0.83785

 

For today

  • EUR: A fairly quiet day with early movements dominated by the USDJPY, Euro’s opened around the 1.3506 area and drifted initially to the 1.3500 levels before moving into Tokyo and USDJPY made a beeline for rumoured stops below 99.70, Euro’s was left with some weak EURJPY bids moving the Euro higher to above the 1.3422 level before the market reversed and moved back to the opening levels. The move to the topside saw some retail buying appear in the market and while the volumes were not the best the majority seemed to be in the rise higher. For the moment the market holds just above the opening in a quiet period.
  • GBP: Cable was little different in action to the Euro, with little in the way of news and no data due for the GBP the likelihood of the GBP being dominated by the Euro is more likely and will probably flow in the same general direction. We opened around the 1.6108 area and moved steadily higher to top out above the 1.6124 areas before dropping back once the Euro drifted off. The cable continued slightly lower dropping below the 1.6100 level before holding around the 1.6105 as we move towards the grey hours.
  • JPY: Chatter of sizeable stops towards the 99.70 area attracted attention and the market moved steadily lower from the closing in NYK to the level and triggering some reasonable sized orders driving the market to below the 99.60 area before recovering as quickly as the market had dropped rising to the 99.90 areas. Respectable volumes were seen through the drop and the move up was a little less forced.
  • AUD: The market was dominated by the RBA minutes add to which the movement in USDJPY, and each leg added its own weight to the other as the AUDJPY dropped quickly to below 93.35 from the 93.80 areas. The RBA saw it prudent to hold rates, and leave that option open still, however, they warned that the AUD was still uncomfortably high and a fall is required to balance the economy. The market was already moving down from the opening just below 0.9380 and we had already moved into the upper 0.9360’s when the minutes were released, the market dropped quickly to the 0.9352 areas before bouncing back as some felt the hold signalled a reluctance to cut. The market slowly rose with the AUDJPY carry trade again doing a lot of work from its lows increasing the bounce in both legs as liquidity disappeared in an already becalmed market. So we end up little changed on the day with USDJPY seemingly reluctant to test the downside and the AUD dominated by the carry trade for the moment.

 

USDJPY:
Topside: 100.40-100.70 decent buy stops 100.70-101.00 medium mix
Downside: 99.50-99.60 light mix 99.20-99.50 light bids

EURUSD:
Topside: 1.3520-1.3550 light buy stops 1.3550-1.3590 light mix 1.3600-1.3630 medium buy stops
Downside: 1.3460-1.3500 light mix 1.3430-1.3460 light sell stops

EURJPY:
Topside: 135.60-136.00 light buy stops 136.00-136.40 light mix
Downside: 134.10-134.50 light mix

AUDUSD:
Topside: 0.9410-0.9450 light offers
Downside: 0.9300-0.9330 light bids

 

Overnight News

EUR:

French PM announces plan to simplify tax system

Greece aims for deal with troika by Dec 9, tough talks ahead: FinMin

CNY:

Foreign investment in China up 5.77% in first 10 months Govt

China plans national accounting system overhaul: stats official

JPY:

Japan to craft stimulus package early Dec, no bond issue: EcoMin Amari

NZD:

Inflation expectations little changed.


Today’s data

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

AUD       Conference Board Leading Index Sep A 0.30% | P -0.20%

10:00     EUR        German ZEW (Economic Sentiment) Nov C 54 | P 52.8

10:00     EUR        German ZEW (Current Situation) Nov C 30.9 | P 29.7

10:00     EUR        Eurozone ZEW (Economic Sentiment) Nov C 63.1 | P 59.1

13:30     USD       Employment Cost Index Q3 C 0.50% | P 0.50%

 

Harry Hindsight

  • EUR: The market opened in line with the Friday close and started a steady selloff in the pre-Tokyo session, with USDJPY rising and offers in EURJPY suppressing the Euro, pushing it into Tokyo just off its lows around the 1.3480 level, Tokyo followed through however, as the USDJPY turned lower the Euro started to move off its lows and moved steadily back to just below the opening levels around the mid 1.3490’s and held steady into the grey hours. Having started to rise during Tokyo the market continued in a tight channel higher with Eurozone numbers showing a mixed reading. We moved into the NYK session above the 1.3520 area and negligible US figures did nothing to impede the markets rise topping above the 1.3540 levels before starting a reversal from there back towards the opening levels. Overall the range has been reasonably tight and volumes less than normal and we come to a close just above the 1.3500 area. It would seem Bond yields in the US dominated the general movement with yields drifting lower. Early Comments from Praet were pretty much ignored by the market when he spoke about further measures of easing were available to the ECB however, this is on the backdrop of increasing divisions between countries over the last cut in interest rates.
  • GBP: As with the Euro the Cable was initially forced lower as USDJPY rose however, the market took on board house pricing data and eventually started to rise moving steadily higher into the grey hours, early Europeans bought small EURGBP cross and the market held around the 1.6130 in cable for a few hours before moving to its highs as the Eurozone figures were released. From the figures onwards it was all about EURGBP and the cross saw a steady rise from the 0.8365 to push back above the 0.8400 into midsession and held for a period just below the highs. Cable was forced lower dropping back to the 1.6110 areas and finally below the figure, overall the trading was light in the market and once these moves were accounted for the Cable held around the 1.6110 levels into the close.
  • JPY: In the pre-Tokyo session the USDJPY rose from the opening 100.20 and moved in the first couple of hours to trade the highs above the 100.35 level however, once we hit the highs we ran into technical selling in the AUDJPY carry forcing the USDJPY lower and once it started moving it continued in a steep channel to push through the 100 levels into the grey hours on steady two way trading. The move continued into the early London session as weak stops were triggered through the 99.95 levels and a move to just below 99.80 before the market again began to rise. The AUDJPY failed the 94.20 level which showed the 200 MA close by but could not break convincingly south for a great portion of the session. USDJPY from early London spent the day moving between the 99.85-100.20 areas as the market played second fiddle to carry trade interest which continued late into the session, the differentials between bond yields helped to keep the USD on the weak side for the most part. With the failure on the topside confirmed late into the session the carry trade dropped quickly as the Sydney players entered the market and again USDJPY was forced to its lows with the Oz, bouncing in the final hour to finish the day only just above the 100 levels.
  • AUD: Early trading was dominated by the AUDJPY buying as the market moved towards the 94.20 area, having hit 0.9360 from the opening 0.9375 area the market pushed higher as the USDJPY lost ground with stalling the break through the technical level in the carry. As we moved into the London session the market had begun to stall having pushed just short of the 0.9420. London kept the pressure on but was unable to either push the Oz higher or the carry trade and the market held for several hours above the 0.9400 level before starting a staged set of drops over the course of the NYK session once the London had left for the day. Initially dropping through 0.9400 holding, and then 0.9390 holding, before working its way to below 0.9370 and finishing the day just below the 0.9380.

Yesterday’s premiership results

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

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

EUR        Eurozone Current Account (EUR) Sep A 13.7B | C 18.3B | P 17.4B | R 17.9B

EUR        Eurozone Trade Balance (EUR) Sep A 14.3B | C 13.0B | P 12.3B

CAD       International Securities Transactions (CAD) Sep A 8.36B | C 6.71B | P 2.07B

USD       Net Long-term TIC Flows Sep A 25.5B | C 21.3B | P -$8.9B | R -9.8B

USD       NAHB Housing Market Index Nov A 54 | C 56 | P 55 | R 54
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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