Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close Wellington open

USDJPY 101.262 101.20-30 | EURUSD 1.35563 1.3540-54 | EURJPY 137.291 136.725-137.435 | AUDUSD 0.91706 0.9174-85 | NZDUSD 0.81904 0.8170-99 | USDCAD 1.05162 1.0516-30 | EURCHF 1.22937 1.2291-96 | USDCHF 0.90686 0.9066-845 | GBPUSD 1.6225 1.6215-33 | EURGBP 0.83551 0.83475-645 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               101.895 | 101.14

EUR/USD             1.3561 | 1.3538

EUR/JPY               137.97 | 137.045

AUD/USD            0.9188 | 0.9128

NZD/USD             0.8230 | 0.8170

USD/CAD             1.0560 | 1.052

EUR/CHF              1.2308 | 1.2287

USD/CHF             0.9090 | 0.9061

GBP/USD             1.6241 | 1.6212

EUR/GBP             0.8352 | 0.83455

 

Overnight News

JPY:

BOJ Kuroda: Japan on track to meet 2% price target

BOJ Kuroda: Japan economy recovering moderately

BOJ Kuroda: Japan economy expected to grow above potential

BOJ Kuroda: Japan CPI is likely to follow a rising trend

Japan’s deflation coming to an end-MOF’s Furusawa

Abe Says China’s Airspace Move Is Dangerous, Expresses Concern

EUR/JPY:

Aso, Noyer Didn’t Discuss FX at Meeting: Japan MOF Official

CNY:

China protests U.S., Japan criticism of airspace move

PBOC to Approve ABS Quota of 425b Yuan by June: Sec. Journal

China local Govt debt at manageable levels, though some risks-expert

China Govt ‘Macro Controls’ Now in Secondary Role: Yang Weimin

China State Council Approves FTZ in Tianjin: Sec. News

EUR:

ECB’s Coeure: Don’t see deflation risks materialising in Europe

For today

USDJPY:
Topside: 101.90-102.00 large offers 102.00-102.30 large buy stops
Downside: 100.60-100.90 medium mix 100.20-100.60 light mix

EURUSD:
Topside: 1.3570-1.3610 medium buy stops 1.3620-1.3650 light offers
Downside: 1.3480-1.3510 light  bids 1.3450-1.3480 medium bids

EURJPY:
Topside: 137.50-137.80 light buy stops 137.80-138.20 light buy stops
Downside: 136.00-136.30 light sell stops

AUDUSD:
Topside: 0.9200-0.9220 light offers 0.9220-0.9240 light mix
Downside: 0.9140-0.9155 light bids 0.9100-0.9140 light mix

 

  • EUR: The ECB and functionaries never know when to shut up as they counter each other or themselves at every step. The market opened around the 1.3550 area little changed from the Friday close in NYK and the market was limited to the topside more by the strength of USDJPY, with limited offerings in EURJPY keeping the Euro from moving beyond the 1.3560 levels. Volumes have been limited to some extent given the movement in the market although the Euro was never a mover. The market moved steadily lower on peripheral movement of other currencies and moved to a low just below 1.3540 and as we move towards the grey hours we hold just above those levels. Retail EURJPY selling has affected the Euro more than anything with some longs taking profit as an ever higher USDJPY allowed.
  • GBP: The Cable went bid from the opening around 1.6223 moving to above the 1.6240 levels as light stops were triggered in the market in GBPJPY however, once the stops in the cross were completed we have been steadily dragged lower as the USD became more dominant across the board helped by JPY weakness. For the moment we hold just around the 1.6215 levels below the opening levels in a mediocre session for the pair. EURGBP has been slightly lower however, for the most part its held around the 0.8345/53 levels all day.
  • JPY: The USDJPY with some large orders both limit and stops to the topside one would have been forgiven in expecting the day to be a dull affair with no one willing to buy at the current levels, well like me you’d have been totally wrong. The market opened in Sydney quietly around the 101.25 area and moved quietly sideways touching above 101.30 until we moved into the Tokyo session, first we saw strong selling appearing in the market from retail traders taking the market to below the 101.15 levels and then the drive kicked in with funds, importers and real money accounts trying to hedge exposure, the topside was swamped with large offers then stops then offers etc and it moved through them like a knife through butter and still the retail types sold into the rally. The market pushed through the July highs and eventually stalled at the 101.80 levels, while its not been our biggest day on the pair given the one way nature it was surprising how much selling appeared in the market. We paused after the first couple of hours of a strong push up holding the 101.65 levels before again attempting to push through another batch of offers, and still attempting as I finish this off as the market holds just short of the 101.90 levels. Whether the fact that JPY shorts have increased to close to the second highest on record or the fact that the Chinese are rattling sabre’s remains to be seen.
  • AUD: The AUD saw some early buying in particular the AUDJPY as the USDJPY moved quickly higher catching the market a little however, it wasn’t long before the market started to see sellers in the carry and Oz moved off the 0.9188 highs to move steadily back through the opening 0.9170 and to the 0.9150 level. The market paused for a period from there before trading a little low to match Friday’s lows however, with the USDJPY pushing higher and the move beginning to look like it could become a broader based USD move one wonders whether the support will hold with very little data for the day.

Today’s data

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

09:30     GBP       BBA Mortgage Approvals Oct C 45000 | P 42990

15:00     USD       Pending Home Sales M/M Oct C 2.00% | P -5.60%                            

 

Weekend News

USD:

Iran Agrees to Historic Deal with Powers on Nuclear Work
Iran to get $7 Billion in Sanctions Relief in Six-Month Deal
Fed’s Tarullo Says Volcker Rule Will Prevent More London Whales
JPY/CNY:

China Declares Defence Zone Covering Islands in Japan Row
China, Japan Should Restore Normal Relations: Committee
Japan, China Must Work to Prevent ‘Explosive Situation’: Komura
JPY:

Third Point’s Loeb Discloses $1 Billion Stake in SoftBank
Amari Says Japan to Select Strategic Economic Zones by January
CNY:

China’s Wuhan City Curbs Non-Resident Home Buying, Caijing Says
EUR:

Asmussen Says Must Be ‘Very Careful’ With Negative Deposit Rates
Coeure Says ECB to Discuss Publishing Account of Monthly Meeting
Samaras Says We Have a Stable Government, Won’t Lose Majority
IMF Says New Greece Measures to Be Less Than Past: Kathimerini
German Retailers Expect Record Holiday Sales: Bild Zeitung
Portuguese President Silva Asks Court to Review Pension Measures
AUD/IDR:

Australian Agriculture Minister Delays Indonesia Trip, Age Says
GBP:

London Luxury Homebuilding Accelerates Even as Price Gains Slow
GBP/PHP:

U.K. Pledges More Support to Philippines after Typhoon Haiyan

 

Harry Hindsight

  • EUR: Having opened around the 1.3480 area in Asia the market slowly declined as the USDJPY rose, dropping back through the session to trade into the mid 1.3460’s with EURJPY offers holding the Euro down. The move into London saw the market start to pick up as chatter from different ECB officials muddied the water, not for the first time, over what to expect if inflationary news continues to move lower and away from the 2% target area. Leveraged types were seen for the most part mixed with some light buying from funds. Good German numbers kept the market buoyant and we ground higher from the initial boost they gave to push to the 1.3520 areas and some light selling. The move into the NYK session was nothing to write home about and with no data releases for the session the bid tone remained and pushed steadily higher to trade around the 1.3550 so negating the 25bps cut by the ECB. The market finished on its highs in NYK into the weekend.
  • GBP: The Cable kept pace with the movements of the Euro for the most part of the day with early selling in GBPJPY as the USDJPY rose especially in the move into the Tokyo session, Cable opened around the 1.6205 area and pushed to a low below the 1.6180 levels as that selling came to market however, for the most part we remained just below the 1.6200 level through Asia. The move into the grey hours moved the market back to the starting areas and London’s official opening saw the market move to the 1.6215 as early real money bought in front of the European numbers, some light EURGBP buying after the German numbers moved the Cable back to just below 1.6200 however, the market remained resilient and all though it was a little choppy during the early part of NYK started to move steadily higher into the last couple of hours of trading to finish the day around the 1.6225 areas.
  • JPY: Having seen the USDJPY rise strongly through the previous 24hrs the market really took a pause, we opened around the 101.08 area and early Sydney trading ran the market to the mid 101.30’s before stalling into the Tokyo session, the market attempted the move for a second time however, the offers seemed to be substantial and having failed the second time we saw plenty of leveraged type accounts selling. The market moved down to the starting levels and as we moved into the grey hours day traders out of Europe moved in to complete another round of selling. The market did dip and moved through the 101.00 just before the London opening however, it was never convincing and after a few hours of holding around the figure area it again started to rise with EURJPY buying moving into the market after the German numbers moving to the 101.20/25 areas and slowly into the NYK session. Light profit taking from the opening in NYK set the market to the opening levels and from there it was a drab affair with the market stuck between 101.10-101.30 for the most part finishing the day just off the highs.
  • AUD: There was nothing concrete to be gleaned from the moves, Oz newspapers reported of imminent intervention in the currency based on comments made the previous day about the ability to cut interest rates when necessary, this created a head and shoulders pattern for the technical guys, which was a bit late in the day when people started to talk about it. Having opened around the 0.9235 area the market had initially started to rise however, early gains in USDJPY chased the AUDJPY carry trade lower as retail clients and others still remain on the topside selling into those rallies, with this in mind and chatter about what Steven’s had said at dinner sent the market moving quickly lower once the H+S was pointed out by some of the major banks triggering some light stops below the 92cent level, the move into London saw day traders picking bottoms and pushing the pair back above the 92cent level only for a reversal once the German numbers were released and EURAUD buying impacted, saying that the move to 0.9160 was a little exaggerated but the tone had been set early in the session after the first selloff. We traded gradually lower over the course of the day however, the move into NYK was very quiet and the session didn’t quiet see the technical selling some had expected with the low set around the 0.9145 area for the day and a gradual rise for the close as profit taking from short day traders finished the day off around the 0.9170 levels.

Friday’s premiership results

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

EUR        German GDP Q/Q Q3 (F) A 0.30% | C 0.30% | P 0.30%

EUR        German IFO – Business Climate Nov A 109.3 | C 107.7 | P 107.4

EUR        German IFO – Current Assessment Nov A 112.2 | C 111.5 | P 111.3

EUR        German IFO – Expectations Nov A 106.3 | C 104 | P 103.6 | R 103.7

CAD       CPI M/M Oct A -0.20% | C -0.10% | P 0.20%

CAD       CPI Y/Y Oct A 0.70% | C 0.80% | P 1.10%

CAD       BoC CPI Core M/M Oct A 0.20% | C 0.20% | P 0.20%

CAD       BoC CPI Core Y/Y Oct A 1.20% | C 1.20% | P 1.30%

CAD       Retail Sales M/M Sep A 1.00% | C 0.50% | P 0.20% | R 0.10%

CAD       Retail Sales Less Autos M/M Sep A 0.00% | C 0.30% | P 0.40% | R 0.50%

 

Stay lucky

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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