Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 101.271 | EURUSD 1.35728 | EURJPY 137.461 | AUDUSD 0.91261 | NZDUSD 0.81855 | USDCAD 1.05414 | EURCHF 1.2304 | USDCHF 0.90648 | GBPUSD 1.62168 | EURGBP 0.83697 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               101.65 | 101.17

EUR/USD             1.3600 | 1.35575

EUR/JPY               138.16 | 137.32

AUD/USD            0.9133 | 0.9100

NZD/USD             0.8204 | 0.8167

USD/CAD             1.0555 | 1.0539

EUR/CHF              1.2317 | 1.2305

USD/CHF             0.90795 | 0.9056

GBP/USD             1.6231 | 1.6198

EUR/GBP             0.8385 | 0.8368

 

For today

USDJPY:
Topside: 101.70-102.00 light mix 102.00-102.30 medium mix
Downside: 100.80-101.10 medium bids 100.50-100.80 medium sell stops

EURUSD:
Topside: 1.3600-1.3610 light offers 1.3610-1.3640 light mix 1.3640-1.3670 light buy stops
Downside: 1.3500-1.3530 medium bids 1.3470-1.3500 light mix

EURJPY:
Topside: 138.20-138.40 light mix
Downside: 136.80-137.10 light sell stops

AUDUSD:
Topside: 0.9170-0.9200 light offers 0.9220-0.9240 light buy stops 0.9250-0.9280 light offers
Downside: 0.9050-0.9090 light bids 0.9000-0.9030 light bids

 

  • EUR: A quiet start to the day with the Euro opening just above the 1.3570 area and a steady drift lower down to the 1.3560 level. News that Merkel and SPD have reached an agreement; increasing spending on key topics such as the minimum wage and pensions without raising taxes seemed to buoy the market. Moving off the lows as the news spread the market jumped to above the 1.3590 levels triggering some light stops along the way. EURJPY broke through the barriers in front of 138.00 and cleared a substantial hurdle for the pair that up till today had been limiting some of the attempts higher. For the moment offers are keeping a lid on any further movement through the 1.3600 level. Fundamentally nothing has changed and the state of affairs in Europe still leaves a lot to be desired. For the moment we hold just below the 1.3600
  • GBP: Much the same for Cable with the market opening around the 1.6215 levels and dropping steadily through the figure into the Tokyo session, the market held those lows for a good few hours before the German news appeared on the scene to drag the GBP with it. GBP lost minor ground against the Euro with the EURGBP rising to above the 0.8380 levels before the market calmed a little, Cable touched above the 1.6230’s before drifting back to the 1.6220 levels and currently holds around those levels.
  • JPY: USDJPY again made a respectable run higher however; it was again limited by topside take profits and regional concerns. With the crosses playing more of a part than USDJPY to some degree the USDJPY moved from the opening levels around the 101.30 areas to make the lows initially around the 101.18 levels before surging into the Tokyo session and pushing quickly to above the 101.45 before pausing for a few hours. The news out of Germany gave rise to good EURJPY buying and the 138.00 level broke to leave lighter topside and a clearer run to the 139.20-50 key areas. However, with that in mind would you buy JPY with the current tensions, while we’ve seen this behaviour heated discussions over these islands before and indeed not only China, it is the first time that a no fly zone has been incorporated and then broken. For this reason the market was limited again on the topside to the 101.65 area similar to yesterday’s moves to the highs. We’ve since fallen back the pause area around the 101.45 with the EURJPY just below 138 again.
  • AUD: The AUD struggled to make any waves with the market opening around 0.9130 and slipping to a low just above the figure in some weak selling, before recovering to the 0.9120 area. With the downside already penetrated yesterday the market feels a little soggy and fresh out of ideas.

Overnight News

JPY:

BOJ’s Shirai warns of uncertainty towards meeting price target

Panasonic to sell 3 Japan chip factories to Israel’s TowerJazz sources

USD/JPY/CNY:

U.S., Japan Defence Ministers to Discuss China Over Phone: Kyodo

CNY:

China’s CB to create deposit insurance system – vice governor

CNY/TWD:

Second mainland China bank to enter Taiwan yuan bond market

EUR:

Merkel Agrees SPD Coalition to Raise Spending Without New Taxes

NZD:

Fonterra eyes record high milk price, volatility to sting margins

AUD/IDR:

Australia PM seeks security dialogue with Indonesia after spy row

 


Today’s data

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

NZD       Trade Balance (NZD) Oct A -168M | C -350M | P -199M

07:00     CHF        UBS Consumption Indicator Oct P 1.56

09:00     EUR        German GfK Consumer Sentiments Dec C 7.1 | P 7

09:30     GBP       GDP Q/Q Q3 (P) C 0.80% | P 0.80%

09:30     GBP       Index of Services 3M/3M Sep C 0.70% | P 0.60%

11:00     GBP       CBI Reported Sales Nov C 10 | P 2

13:30     USD       Initial Jobless Claims (NOV 23) C 330K | P 323K

13:30     USD       Durable Goods Orders Oct C -1.50% | P 3.70%

13:30     USD       Durables Ex Transportation Oct C 0.40% | P -0.10%

14:45     USD       Chicago PMI Nov C 60 | P 65.9

14:55     USD       U. of Michigan Confidence (Nov) (F) C 73 | P 72

15:00     USD       Leading Indicators Oct C 0.00% | P 0.70%

15:30     USD       Crude Oil Inventories P 0.4M

 

Harry Hindsight

  • EUR: With no data and very little news for the Euro over the sessions, the market was dominated by the flows in JPY and USD to a great extent with early movement higher with the USDJPY moving steadily lower. Euro’s opened around the 1.3520 levels and rose steadily into Tokyo and lifted to the 1.3540 area before stalling the rest of the session was around the 1.3530 areas into the grey hours. Early Europeans picked up the baton and moved the market steadily higher with chatter on the street of no real consensus between the Eurozone members of a way forward. This came after USD weakness in London sent the market to above the 1.3570 levels for the first time. The market drifted lower into the NYK session and moved down to the opening levels before finding sufficient support to prop the pair up and a steady rise from the range bottom to the highs again into the closing run, with USD weakness again showing through after a poor consumer confidence number in the US.
  • GBP: Cable struggled during the Asian session moving off the opening 1.6160 levels to push above 1.6175 into early NYK helped by a drop back in the USDJPY, while some still keep calling this a USD move it seems rather obvious that is all JPY with real money specifically importers trying to hedge in to a weakening Yen while retail are taking profits from longer term positions, thus lightening the short Yen positions in the market. Once we’d hit the 1.6175 area the market quickly reversed with the drag of a falling Euro at the time however, Cable continued a little further and while the Euro remained fairly buoyant in Asia the Cable was quickly sold again to the 1.6150 area which is around where we entered the grey hours. With GDP expectations high the move in London higher was no real surprise as people position themselves for the number, with news items already hinting at things they could not possibly know. BoE’s Bean made comments along the lines that 7% employment may not mean a shift in rates and the target may be moved one assumes if interest rates are suitably in line, which to my mind is the same plan the US has, I’ll not knock it as it seems to be working so far. Weakness in the Euro just after the official London opening initially dragged on the Cable however, the poor consumer US sentiment reversed the loses down to 1.6140 and sent the pair back over the course of the NYK session to above the 1.6200 level to finish just off the 1.6220 highs for the day.
  • JPY: With the market now feeling a little jaded after the strong run in the previous 24hr period, technical guys are eyeing the double top formation, and for once the volumes would suggest that a third failure would be right up their street however, we still have option barriers remaining in the market and while we’ve seen the market struggle to break through 102.00 those barriers still are likely to attract attention if we move too close. For the day though the market opened on its highs around the 101.70 levels and struggled to maintain the levels as initial Sydney selling took the market down to 101.35 as Tokyo opened and the rest of the session was a mixture of cross plays with the market holding the 101.45/55 levels for a good portion of Asia. The move into London again saw some light selling and a follow through as other majors started to rise against the USD however again it was more JPY orientated than USD and the downside was limited to 101.35 through London and deep into the NYK session. A move quickly higher to above the 101.65 was quickly countered by weak US numbers and we quickly moved to the previous range. As we approach the close the USD has begun to show as the weakest link and USDJPY pushed to below 101.20 and currently holds just off those lows as we approach the end of the day.
  • AUD: The Oz was out there on its own today with nothing of note hitting the wires and only the AUDJPY carry showing through strongly during the Asian session in particular, early buyers of Oz as USDJPY weakened seemed to confirm for some a general USD weakness however, this for the Oz was discounted once the market started to aggressively sell the pair lower from the London opening onwards, the fact that AUDJPY failed to push through on the topside accelerated the market in the carry lower and we saw strong retail selling as well as tech selling come to market for the pair to push down to the 92.40 some big figure lower from the Asian highs. USDJPY held steady during the period for the most part and it was the AUDUSD leg that did most of the movement, with comments on intervention again doing the rounds one is a little surprised that this verbal intervention is becoming a convenient tool, where as in the past this would have been a sure figure for the opposite to happen. With the retail market firmly in control of the carry the Oz was taken down to below the 91cent area to push deeply into the Jly/Sep congestion before finding some limited support and a bounce back above the 0.9120 levels from the 0.9090 lows. The market goes out around the 0.9130 area and some early buying helping to hold the levels.

Yesterday’s premiership results

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

JPY         Corporate Service Price Y/Y Oct A 0.80% | C 0.90% | P 0.70%

USD       Building Permits Sep A 0.97M | C 0.94M | P 0.93M

USD       Building Permits Oct A 1.03M | C 0.94M | P 0.97M

USD       S&P/Case-Shiller Composite-20 Y/Y Sep A 13.30% | C 13.00% | P 12.80%

USD       House Price Index M/M Sep A 0.30% | C 0.40% | P 0.30%

USD       Consumer Confidence Nov A 70.4 | C 72.1 | P 71.2
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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