Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 102.156 | EURUSD 1.35787 | EURJPY 138.72 | AUDUSD 0.90803 | NZDUSD 0.8128 | USDCAD 1.05949 | EURCHF 1.23235 | USDCHF 0.90758 | GBPUSD 1.62868 | EURGBP 0.83373 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.28 | 101.94

EUR/USD             1.3588 | 1.3564

EUR/JPY               138.83 | 138.33

AUD/USD            0.9141 | 0.9075

NZD/USD             0.8176 | 0.8131

USD/CAD             1.0598 | 1.0575

EUR/CHF              1.2328 | 1.2322

USD/CHF             0.9086 | 0.9071

GBP/USD             1.6329 | 1.6277

EUR/GBP             0.8337 | 0.8322

 

For today

USDJPY:
Topside: 102.25-102.60 decent offers 102.90-103.20 102.60-102.90 medium offers large buy stops
Downside: 101.60-102.00 decent bids 101.30-101.60 light bids

EURUSD:
Topside: 1.3610-1.3640 light buy stops 1.3650-1.3680 light mix
Downside: 1.3470-1.3550 light mix

EURJPY:
Topside: 139.60-140.00 medium buy stops
Downside: 137.80-138.10 light sell stops

AUDUSD:
Topside: 0.9140-0.9170 light offers 0.9180-0.9210 light buy stops
Downside: 0.9020-0.9060 light mix

 

  • EUR: The Euro struggled in early trading dropping from the opening levels around the 1.3580 area to below 1.3564 into early Tokyo. The market saw some light exporter trading coming out of Japan selling EURJPY to its lows 138.35 areas and both legs took the pressure, once the selling was completed the Euro has steadily risen, pushing up through the opening levels to stretch to the 1.3588 level and holding in the mid 80’s as we start the move towards the grey hours. Volumes have been reasonable and the moves in AUDUSD helped to some extent however, the US bank holiday weekend may have some bearing on the subject as USD has been particularly weak throughout the session although the ranges don’t really show it.
  • GBP: Cable performed a little better than the Euro, moving from the opening levels around the 1.6285 area it touched below 1.6280 in early Tokyo before seeing some GBPJPY buying in the market taking it quickly through the 1.6300 levels and rallying for a second time to above the 1.6325 levels, EURGBP slipped back a little trading to the 0.8320 areas as Euro lagged a little. It would seem that Cable is attracting more attention with decent numbers and one assumes this can’t be good for a fledgling recovery and something to watch in the New Year. For the moment the market holds just off the highs with EURGBP recovering a little in the last hours before the grey period.
  • JPY: USDJPY opened up steadily around the 102.15 area and traded towards the 102.30 area in the first hour, the move into Tokyo saw the market just off the highs and looking fine until the Oz 3Q Business investment number hit and with a large 3.6% increase the Oz moved higher and the carry trade was pushed into offers and held the 93.10-93.20 areas, this forced USDJPY lower and the USDJPY dropped through the 102.00 levels. It wasn’t all one way traffic and the market saw some reasonable flows, eventually the market gave up trying to push any lower and while the offers in AUDJPY seem to have held the USDJPY has remained above the 102.00 level since. We currently hold above the 102.10 level just short of the opening areas however, the market has already started to quiet down as we run to the London opening.
  • AUD: Ozzie 3Q business investment numbers and China industrial profits helped to put a bid tone to the OZ, opening around the 0.9080 area the market struggled into the Tokyo session holding around the same levels when the Oz number was released and the market saw a quick reaction, taking the pair to the 0.9115 level before pausing a while and then the China data finished it off hitting a high just short of 0.9140, while the market has fallen a little we struggle around the 0.9120 area. The AUDJPY opened up have struggled around the 92.50 area for a good portion of NYK and then early trading however, having broken it again exposes the topside with only Japanese retail willing to really sell. With the US out for the day it could go either way however, I don’t think there will be many USD buyers in the market until Monday, so London will set the tone.

 

Overnight News

AUD:

Australia business investment surprisingly strong in Q3

JPY:

Japan Oct Overall Retail Sales +2.3% on Year

Japan Casino Bill Doesn’t Require Opposition Approval: Maehara

Japanese Bought Net 1405.6 Billion Yen Overseas Debt Last Week

Suga: U.S., Japan Defence Ministers Agreed To Respond Resolutely To China’s Moves

CNY:

China Oct industrial profits up 15.1 percent YoY

NZD:

New Zealand Central Bank Bought Net NZ$7 Mln in October

NZ Business Confidence on Upward March

 


Today’s data

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

JPY         Retail Trade Y/Y Oct A 2.30% | C 2.10% | P 3.10%

06:45     CHF        GDP Q/Q Q3 C 0.40% | P 0.50%

07:00     EUR        German Import Price Index M/M Oct C -0.30% | P 0.00%

08:55     EUR        German Unemployment Change Nov C 0K | P 2K

09:00     EUR        Eurozone M3 Y/Y Oct C 1.70% | P 2.10%

10:00     EUR        Eurozone Economic Confidence Nov C 98 | P 97.8

10:00     EUR        Eurozone Industrial Confidence Nov C -4.5 | P -4.8

10:00     EUR        Eurozone Services Confidence Nov C -3.5 | P -3.7

10:00     EUR        Eurozone Consumer Confidence Nov (F) C -15.4 | P -15.4

13:00     EUR        German CPI M/M Nov (P) C 0.10% | P -0.20%

13:00     EUR        German CPI Y/Y Nov (P) C 1.20% | P 1.20%

13:30     CAD       Industrial Product Price M/M Oct C -0.40% | P -0.30%

13:30     CAD       Raw Materials Price Index M/M Oct C -2.00% | P -1.50%

 

Harry Hindsight

  • EUR: Euro’s opened quietly around the 1.3570 areas moving slowly through the early part of the session to a low below 1.3560 before finding support from agreements on spending and tax issues in Germany to solidify the coalition. The market took this for a good sign and on the whole with a positive tax receipt what can be the harm for Germany, the market headed higher triggering some weak stops through the 1.3580 levels and again halted just below the 1.3600 levels and then into the grey hours. Early reports in Europe suggested an introduction of further LTRO action to help promote banks into lending and the market reversed the early moves high and we rested just above the opening levels when London officially opened. London focused on the breach of the EURJPY 138 level in early trading and the Euro was again moving higher this time pushing through the 1.3600 level to trigger weak shorts and touch above the 1.3610 levels to set the highs. With German consumer confidence higher than expected Euro’s seemed set to move even further however, the UK releases put paid to this as GDP stayed in line with expectations and the EURGBP kicked in sending the cross from its highs tumbling to below the 0.8335 levels from the highs above 0.8385. This move halted the move in Euro’s higher and we fell back below the 1.3600 levels. We struggled into the NYK session just below the figure and while NYK opening saw buyers in the market we never quite made the highs again. With the Thanksgiving holidays starting tomorrow in the US we saw some longs taken out of the market and this supressed the Euro from the highs and we’ve stayed in a tight declining channel towards the opening ranges for a close not much different to the opening levels. With institutions buying USD hedges either to cover positions or as straight hedges the market looks set to move over the next couple of days quietly.
  • GBP: Cable traded quietly for the most part in the Asian session opening just below 1.6220 and slipping back to just below the figure level before moving to above 1.6220 areas after the German news, from that point onwards the market continued holding the 1.6220 into the grey hours. GDP figures were in line with expectations and boosted buying of GBP across the board with EURGBP falling back some 50 pips and the Cable moving quickly to the 1.6270 levels. The market continued to rise after the figures if what at a slower rate and once we moved into the NYK session the US seemed to be early buyers taking the market to close to the 1.6330 levels for the highs. As with the Euro the market seems to be dominated by long covering in front of the Thanksgiving holidays which start tomorrow although the official day is Friday its expected that much of the US players will be out until Monday and are likely to look at this as a risk free punt closing now and then picking it back up on Monday hopefully at a slightly better price. Cable moved back to the 1.6260 area where the market stopped its quick rise earlier and seems for the moment to be the holding area as we close around 1.6280.
  • JPY: USDJPY opened around the 101.30 area and initially dipped lower in Sydney hours before early Japanese started to step into the market buying USDJPY and EURJPY, there seemed to be plenty of interest in the EURJPY as the market pushed higher and eventually cleared the barriers in front of 138.00 having cleared those it left the topside vulnerable for further pushes through the day. The market in USDJPY paused around the 101.40/45 area before starting on a steady rise higher into the NYK session moving from the pausing areas to above the 101.80 levels. With EURJPY cleared the move up came in the US session and while the USDJPY moved quickly to above the 102.10 area it was the EURJPY that did most of the work, moving from 138.40-134.80 quickly. Unlike the other currencies the market then stalled and held 102.10-102.20 into the close.
  • AUD: A reasonably choppy day for the Oz with cross trading doing plenty while the day traders successfully picked the bottom a few times, the market opened around the 0.9128 areas and traded lower as USDJPY moved steadily higher through Asia, with the carry trade struggling in the first part of the session to move up, however with the Oz flirting with the 0.9100 level the market eventually moved to the opening levels and held steady into the London session, early European buyers soon found themselves caught long and the market moved again to the lows where the market again saw leveraged buyers willing to pick the bottom and the market again ran to the 0.9135 area and they reversed the positions for the second time. Carry trade at this point had broken through the resistance level of 92.50 which had caused a problem in both NYK and early Asia to move to the 93.00 level. NYK open saw longs paring back positions with thanksgiving arriving and the market quickly moved to new lows below the 0.9070 level before running out quietly only 10 pips higher. The market continues to talk about intervention however, for myself this again was a mixture of USDJPY rising and AUDJPY sellers cutting positions in front of a coming long weekend in the US.

Yesterday’s premiership results

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

NZD       Trade Balance (NZD) Oct A -168M | C -350M | P -199M | R -216M

CHF        UBS Consumption Indicator Oct A 1.28 | P 1.56

EUR        German GfK Consumer Sentiments Dec A 7.4 | C 7.1 | P 7 | R 7.1

GBP       GDP Q/Q Q3 (P) A 0.80% | C 0.80% | P 0.80%

GBP       Index of Services 3M/3M Sep A 0.70% | C 0.70% | P 0.60%

GBP       CBI Reported Sales Nov A 1 | C 10 | P 2

USD       Initial Jobless Claims (NOV 23) A 316K | C 330K | P 323K | R 326K

USD       Durable Goods Orders Oct A -2.00% | C -1.50% | P 3.70% | R 3.80%

USD       Durables Ex Transportation Oct A -0.10% | C 0.40% | P -0.10% | R -0.20%

USD       Chicago PMI Nov A 63 | C 60 | P 65.9

USD       U. of Michigan Confidence (Nov (F) A 75.1 | C 73 | P 72

USD       Leading Indicators Oct A 0.20% | C 0.00% | P 0.70%

USD       Crude Oil Inventories A 3.0M | C 0.5M | P 0.4M
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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