Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 101.156 | EURUSD 1.3481 | EURJPY 136.364 | AUDUSD 0.92336 | NZDUSD 0.8200 | USDCAD 1.05187 | EURCHF 1.23081 | USDCHF 0.91288 | GBPUSD 1.61993 | EURGBP 0.83217 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               101.36 | 101.00

EUR/USD             1.3488 | 1.34625

EUR/JPY               136.54 | 136.02

AUD/USD            0.9249 | 0.9167

NZD/USD             0.8245 | 0.8185

USD/CAD             1.0548 | 1.0516

EUR/CHF              1.2319 | 1.2307

USD/CHF             0.91505 | 0.9124

GBP/USD             1.6202 | 1.6178

EUR/GBP             0.8327 | 0.8317

 

For today

USDJPY:
Topside: 101.20-101.50 medium mix  101.50-101.80 large buy stops 101.80-102.10 large offers
Downside: 100.60-100.90 medium bids 100.20-100.60 decent sell stops

EURUSD:
Topside: 1.3490-1.3530 medium buy stops 1.3530-1.3570 light buy stops 1.3570-1.3610 light mix
Downside: 1.3425-1.3450 medium bids 1.3380-1.3420 light bids 1.3300-1.3340 medium bids

EURJPY:
Topside: 136.60-137.00 light buy stops
Downside: 135.30-135.60 light bids

AUDUSD:
Topside: 0.9290-0.9300 light offers 0.9300-0.9330 light buy stops
Downside: 0.9140-0.9170 light bids 0.9100-0.9120 light bids

 

  • EUR: Euro’s has been in a steady decline since the start of the session drifting to the 1.3460 area where the market starts to see bids appearing, for the moment the market seem becalmed having reversed its losses they are probably wondering which idiot is going to speak next as one side tries to weaken the Euro with talk of negative rates and the other says the opposite, its not particularly damaging to the market, it just limits the actual effectiveness of the market to manage risk for those that rally need it. In the meantime offers in the EURJPY dominated for a limited period with the cross eventually drifting lower and allowing the Euro to move up a little from its lows. Volumes today so far have been light with little volatility to drive the flows.
  • GBP: Cable remained becalmed during the best part of the session moving from the opening levels above 1.6200 to below the 1.6180 as Euro’s dipped lower and EURGBP remained static however, it did bounce from the lows back to just below the 1.6200 level and EURGBP drifted off from the opening levels and drifted into the 0.8317 areas, Euro’s as we’ve seen attempted to rally however Cable moved back through the opening levels and holds for the moment around those areas as we move towards London.
  • JPY: Early Tokyo bought from the go having opened just below the 101.20 area we soon found the market moving to above the 101.30 area before stalling on the official market open, the market dipped with some light supply during the fix to trade the 101.10 levels before a steady rise again to attempt another move on the 101.35 area only to fail for the second time and the reaction was to immediately move away from the area and set new lows for the day just above the 101.00 level thus pinning itself between the now visible support and resistance levels with really only the topside tested to the full.
  • AUD: The AUD remains under pressure and no doubt the charts pattern will have all the technical guys talking about a head and shoulders movement. While I’ve been known to dabble in the technical stuff I’m more inclined to believe that the FX market is more driven by fundamentals, therefore yesterday’s comments by Steven’s was the real reason for the pattern and just as likely to see the market reject the move down than confirm the pattern altogether but that’s just my non-opinion. With no real data and very little said other than yesterday’s comment re-hashed, re-packaged and put out as intervention imminent by the usual, make it up too put on the front page. However, a couple of tech levels have now been breached and open up the possibility for a deeper move but again these are likely to be the front runners of the pattern than anything else and it remains to be seen if the momentum can be maintained. The market initial opened around the 0.9240 area and held for a good portion of the session before dipping, with good volumes seen from algo traders taking the market quickly from those levels to touch around the 0.9170 levels before holding as we head towards London 0.9180. Volumes one has to say have been fairly brisk in the AUD.

 

Overnight News

JPY:

BOJ’s Kuroda Says Doesn’t Think Yen Is Excessively Weak Now

BOJ Kuroda: ready to make adjustment if inflation goal threatened

Amari: GPIF Management Should Be in Accordance With Prices

Industry Min Motegi: Govt to Phase Out Automobile Tax in Light of Sales Tax Rise

NZD:

RBNZ Assistant Governor McDermott: NZ’s Exchange Rate Overvalued

NZ migration inflows scale 10-yr high in October

 


Today’s data

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

07:00     EUR        German GDP Q/Q Q3 (F) C 0.30% | P 0.30%

09:00     EUR        German IFO – Business Climate Nov C 107.7 | P 107.4

09:00     EUR        German IFO – Current Assessment Nov C 111.5 | P 111.3

09:00     EUR        German IFO – Expectations Nov C 104 | P 103.6

13:30     CAD       CPI M/M Oct C -0.10% | P 0.20%

13:30     CAD       CPI Y/Y Oct C 0.80% | P 1.10%

13:30     CAD       BoC CPI Core M/M Oct C 0.20% | P 0.20%

13:30     CAD       BoC CPI Core Y/Y Oct C 1.20% | P 1.30%

13:30     CAD       Retail Sales M/M Sep C 0.50% | P 0.20%

13:30     CAD       Retail Sales Less Autos M/M Sep C 0.30% | P 0.40%

 

Harry Hindsight

  • EUR: Steady declines through Asia with EURJPY offers pushing the Euro lower as USDJPY rose. Taking the market from the opening 1.3440 area down slowly to the 1.3415 areas, the market then found support into the grey hours and the release of PMI numbers rising to the 1.3430 levels just prior to a dip lower to 1.3400 on the French numbers and then back to the starting point after the release of the German numbers. Overall numbers remained on the weak side so the moves higher were initially gradual rising to the starting levels as we moved towards the NYK opening.  A move higher in Cable helped the Euro a little higher and comments from Draghi who played down negative rates allowed the market to firm even further to recapture a good portion of the previous day’s losses, ah well good news for the USD I suppose. The market moved to the 1.3470 levels and then spent several hours in a tight range around the 1.3450/1.3470 areas into the close with a last gap run to the 1.3485 area.  US numbers seemed to be broadly in line with expectations and had little bearing on the matters and the market seemed to be more dominated by the moves in JPY. Real money seemed to dominate the buying on the moves up with leveraged names showing on the offers.
  • GBP: With weakness in Asia as USDJPY rises met GBPJPY sellers, Cable was forced steadily lower not helped by the drag of the Euro through the session as EURGBP cross held its levels. Having opened around the 1.6105 area it dropped to below the 1.6075 level before finding some light bids to help the GBP start to rally again. Cable moved into the London session only slightly off its opening levels and with a Net Borrowing level better than the previous month which had also been revised lower the GBP started to rally moving to the 1.6140 level before stalling in the face of some Real Money supply and then again pushing through as the market moved into the NYK session to push a second wave to 1.6170 and then finally to the 1.6200 levels as EURGBP selling kicked in as Euro rose against the USD.
  • JPY: Having stalled in front of the BoJ decision and the FOMC the whole day was catch up day, with plenty of speculation for the future easing arrangements next year etc however, this is several months away and while the USD in particular missed out on the moves the previous day probably made the difference and we saw the USDJPY hedging up from the 100.00 opening areas in a reasonably tight channel throughout the day, with flat spots caused by JPY cross offers in EURJPY, AUDJPY and GBPJPY in the Asian session the market was bid from the point of Tokyo coming back from lunch into the grey hours and from that point it pushed steadily through the session with medium term leveraged account seen with Real Money and during Asia importers seen buying. It wasn’t completely one way and we saw reasonable two way flow throughout the session however, the steady grind continued into the close finishing the day on it’s highs above the 101.16 levels.
  • AUD: As the USDJPY rose higher we saw the same pattern for the AUD only in the opposite direction if that make sense. The reason was the AUDJPY in early trading the market in the carry trade seemed to be capped at the 93.70 areas and a couple of good attempts higher always met with same resistance so once the early Europeans had made their attempt the London market went the other way and the market traded lower through 93.10 and triggered light stops for a dip to just above the 92.90 areas into the late NYK session. We bounced of the low as some medium type shorts took back there positions and the pair eased higher in the carry. The Oz continued to drift lower in a tight channel before holding around the 0.9220 levels having made the dip to 0.9200, USDJPY had halted its steady rise and was holding into the close and the AUD followed suit. With a quiet rally into the close we finished just below the 0.9240 levels. Stevens comments during the session have all the papers talking about intervention however, all he really said was that a cut in rates was not off the cards and that is really a reiteration of the RBA minutes where they told the market they hadn’t cut so that they would have the facility available if necessary.

 

Yesterday’s premiership results

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

CNY        HSBC/Markit Flash Mfg PMI Nov A 50.4 | C 50.8 | P 50.9

CHF        Trade Balance (CHF) Oct A 2.43B | C 2.60B | P 2.49B | R 2.40B

EUR        French PMI Manufacturing Nov (P) A 47.8 | C 49.5 | P 49.1

EUR        French PMI Services Nov (P) A 48.8 | C 51 | P 50.9

EUR        German PMI Manufacturing Nov (A) A 52.5 | C 52 | P 51.7

EUR        German PMI Services Nov (A) A 54.5 | C 53 | P 52.9

EUR        Eurozone PMI Manufacturing Nov (A) A 51.5 | C 51.5 | P 51.3

EUR        Eurozone PMI Services Nov (A) A 50.9 | C 51.9 | P 51.6

GBP       Public Sector Net Borrowing (GBP) Oct A 6.4B | C 5.1B | P 9.4B | R 8.6B

GBP       CBI Trends Total Orders Nov A 11 | C 1 | P -4

USD       Initial Jobless Claims (NOV 15) A 323K | C 335K | P 339K | R 344K

USD       PPI M/M Oct A -0.20% | C -0.20% | P -0.10%

USD       PPI Y/Y Oct A 0.30% | C 0.30% | P 0.30%

USD       PPI Core M/M Oct A 0.20% | C 0.10% | P 0.10%

USD       PPI Core Y/Y Oct A 1.40% | C 1.30% | P 1.20%

USD       Philly Fed Survey Nov A 6.5 | C 15 | P 19.8

EUR        Eurozone Consumer Confidence Nov (A) A -15 | C -14 | P -14.5
Good Luck

Andy

 

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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