Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 102.347 | EURUSD 1.35933 | EURJPY 139.13 | AUDUSD 0.90298 | NZDUSD 0.81882 | USDCAD 1.0682 | EURCHF 1.22666 | USDCHF 0.90242 | GBPUSD 1.63834 | EURGBP 0.8297 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.445 | 101.99

EUR/USD             1.3615 | 1.3578

EUR/JPY               139.28 | 138.81

AUD/USD            0.9049 | 0.9014

NZD/USD             0.8219 | 0.8193

USD/CAD             1.0684 | 1.0664

EUR/CHF              1.2270 | 1.2250

USD/CHF             0.9033 | 0.9000

GBP/USD             1.6389 | 1.6370

EUR/GBP             0.83075 | 0.82935

 

For today

  • EUR: Euro’s was subdued in the early part of Asia drifting from the opening 1.3590 levels to the 1.3580 in early Tokyo, with topside offers starting around the 1.3520 area and every 10 pips seeming to have something to offer it struggled for several hours. A brief move triggered weak stops through the 1.3610 level and the market touched 1.3615 on a spike before moving back to below the 1.3605 level, volumes were brisk for the short period of the move however, the downside doesn’t seem that open either with bids showing every few pips down to 1.3500.
  • GBP:  Cable was dead in the water with the market opening around the 1.6385 area and pushing to a low of 1.6370 levels with fixing supply in GBPJPY. The market for the most part stayed glued to the 1.6380 level, with the occasional clip driving the market to the 1.6388/89 area.
  • JPY: USDJPY saw a follow through from NYK rally into the closes and having opened around the 102.35 area we traded to just above the 102.40 levels before stalling and fixing supply turning the market lower, to the 102.20 levels. The market from that point was extremely quiet with volumes off from yesterday, as we ran towards Tokyo lunch we started to see the market dropping away after comments on the subject of GDP boost from the expected stimulus package and the reported job creation being around 250k. The helped the Yen to strengthen and we started to move into the bid zone with light bids every few pips to the 102.00 levels where we held on the dip and currently hold just above.
  • AUD: With a worse than expected trade balance the market moved down from the opening levels around 0.9030 to 0.9015 before rushing back to trade above the 0.9048 levels as suspected algo’s hit the wrong side just for a change (not). Since that fluctuation the market has looked tired and on pause for today’s ECB and BoE announcements, and not to mention tomorrows NFP numbers. With the market looking a little empty to the topside the market concentrates for the moment on a breach of the previous lows around the 0.8975 are with stops likely to hanging around in size.

Overnight News

JPY: Japan to ease public offering rules Nikkei

Komeito’s Yamaguchi: Stimulus to Boost Japan GDP by About 1 Ppt

USD/CNY:

Biden says China’s airspace zone has caused apprehension

AUD/KRW: Australia-S.Korea Reach Free-Trade Agreement, Abbott Says

 


Today’s data

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

AUD       Trade Balance (AUD) Oct A -529M | C -375M | P -284M | R -271M

12:00     GBP       BoE Rate Decision C 0.50% | P 0.50%

12:00     GBP       BoE Asset Purchase Target C 375B | P 375B

12:30     USD       Challenger Job Cuts Y/Y Nov P -4.20%

12:45     EUR        ECB Rate Decision C 0.25% | P 0.25%

13:30     EUR        ECB Press Conference

13:30     CAD       Building Permits M/M Oct P 1.70%

13:30     USD       Initial Jobless Claims (NOV 29) C 322K | P 316K

13:30     USD       GDP (Annualized) Q3 (S) C 3.10% | P 2.80%

13:30     USD       GDP Price Index Q3 (S) C 1.90% | P 1.90%

15:00     USD       Factory Orders Oct C -1.00% | P 1.70%

15:00     CAD       Ivey PMI Nov C 60 | P 62.8

 

Harry Hindsight

  • EUR: The market was quiet for the most part in Asia with reasonable volumes passing through however, the range remained tight, opening around the 1.3590 levels the market hardly moved before the Tokyo session and we saw early selling with some decent amounts of EURAUD buying with the Euro leg being dragged lower as the AUD dropped quickly. Once the movement in the AUD settled down the Euro slowly moved to its former levels trading quietly into the grey hours. During the pre-London opening the market dropped to below the 1.3570 level for the first time. The London market saw the Euro recovering quickly as the day traders moved in to the fray and we rose steadily over the next few hours to above the 1.3600 levels, with Eurozone numbers mixed at best but a lift in the PMI number with Spain showing well.  NYK opened and it was quiet until  a better than expected ADP number hit the wires and the USD moved quickly across the board, the decent in Euro’s started to slow once we’d moved through the 1.3550 level as some profit taking and light bids appearing in the market. The market eventually bottomed just below the 1.3530 areas and a slightly weaker than expected ISM number set the market for a rally, while it wasn’t as quick as the decent the market moved steadily to the 1.3565 levels and then hit weak stops which moved the market to the highs and briefly through the 1.3605 area. The market became subdued in the later stages of NYK with London out of the door we slowly moved to the 1.3595 area for a close almost unchanged on the day. No particular group appeared, and while the volumes were ok one suspects the market is set for Thursdays announcements.
  • GBP: Not quite the same reactions as the Euro, with the Asian session been contained in a 1.6380-97 range for the most part and little going through, The move in to the grey hours saw the market dipping slowly and the opening in London had the EURGBP dominating a quiet period, with the pair moving off its then lows around 0.8283 rallying over a couple of hours too above the 0.8320 on a quick spike before dipping back to the 0.8305 areas into the NYK session. Early numbers in the US had little effect on the pair and it wasn’t until the ISM number that the cross dipped to make new lows on the day at 0.8275 before finishing the day only slightly higher just below the 0.8300 levels. The spike lower in Cable seemed to be cross related as the pair moved through 0.8310 triggering weak stops and forcing the Cable leg to just above the 1.6320 areas for the low on the day. The market recovered into mid NYK once the London market had left for the day with comments from S&P’s Kraemer that if growth remained sustainable then the agency would review the current standing. This allowed Cable to move back to close to the opening levels and finish the day only slightly off.
  • JPY: USDJPY saw mixed fortunes with both Euro and the USD dominating the JPY at different stages during the day. Early Asia saw the market move higher with a weakness in the Oz spurring some buying of the carry trade however, it was short lived and USDJPY quickly found itself under pressure having struggled on the topside and comments from Sato impacting the market. The market moved fairly quickly off its highs and traded down to below the 102.30 level with near term support showing around the 102.20 level the market again ground to a halt. A gradual recovery from the lows saw the market moving into London little changed on the day and Euro started to dominate the market with cross buying helping USDJPY to reach above the 102.80 levels and into waiting offers. The market drifted from this point into the NYK session and while the market lifted on the ADP numbers the ISM numbers did the damage as USD dropped quickly and the cupboard was bear until the support levels, which proved insufficient and we had a deeper move to the 101.85 levels. Having hit the lows the market gradually recovered to above the 102.00 levels and finished the day around 102.30, so negating any technical benefit from the move below the support.
  • AUD: The Oz opened around the 0.9135 area and traded quietly into the GDP numbers, the release saw the pair drops from the opening levels to the 0.9070 and near support however, this was limited and after an hour or so the market again moved to the next level around the 0.9050. That for the most part was the end of Asia with the grey hours starting around the 0.9060 level early players again sold on the news and we moved to the next level of bids and moved in three waves roughly 10 pips apart to touch the 0.9010. With the market being close to the 90 cent level one would have been surprised by the fact that it didn’t attempt a move for a yearly low however, it appeared that having done a lot of work to get where it was the day traders started to cover their shorts and vacate the market place. The Market struggled into the NYK session pushing to the 0.9040 levels but the market now read this area as resistance and we failed to move above the level for the whole session. Lows were extended with IMM futures driving towards the 90 cent level just nudging through unconvincingly before the market moved back to finish around the 0.9030 areas.

Yesterday’s premiership results

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

GBP       BRC Shop Price Index Y/Y Nov A -0.30% | P -0.50%

AUD       GDP Q/Q Q3 A 0.60% | C 0.70% | P 0.60% | R 0.70%

EUR        Eurozone PMI Services Nov (F) A 51.2 | C 50.9 | P 50.9

GBP       PMI Services Nov A 60 | C 62 | P 62.5

EUR        Eurozone GDP Q/Q Q3 (P) A 0.10% | C 0.10% | P 0.10%

EUR        Eurozone Retail Sales M/M Oct A -0.20% | C 0.20% | P -0.60%

USD       ADP Employment Change Nov A 215K | C 173K | P 130K | R 184K

CAD       Trade Balance (CAD) Oct A 0.1B | C -0.65B | P -0.44B | R -0.3B

USD       Trade Balance Oct A -$40.6B | C -$40.2B | P -$41.8B | R -43.0B

CAD       BoC Rate Decision A 1.00% | C 1.00% | P 1.00%

USD       ISM Non-Manufacturing Composite Nov A 53.9 | C 55.1 | P 55.4

USD       New Home Sales Sep A 354K | C 427K | P 421K

USD       New Home Sales Oct A 444K | C 430K | P 354K

USD       Crude Oil Inventories A -5.6M | C -0.5M | P 3.0M
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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