Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close Wellington open

USDJPY 102.901 102.45-89 | EURUSD 1.37046 1.3679-1.3745 | EURJPY 141.02 140.14-141.39 | AUDUSD 0.91032 0.9130-35 | NZDUSD 0.82839 0.8280-94 | USDCAD 1.06382 1.0634-50 | EURCHF 1.22259 1.2220-43 | USDCHF 0.89197 0.8912-49 | GBPUSD 1.63479 1.6334-99 | EURGBP 0.83832 0.8395 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               103.23 | 102.45

EUR/USD             1.3748 | 1.3700

EUR/JPY               141.55 | 141.00

AUD/USD            0.9145 | 0.9088

NZD/USD             0.8321 | 0.8278

USD/CAD             1.0660 | 1.0631

EUR/CHF              1.2236 | 1.2225

USD/CHF             0.8928 | 0.8910

GBP/USD             1.6353 | 1.6316

EUR/GBP             00.8395 | 0.83835

 

Overnight News

CNY:

China Raises Yuan Reference Rate to Strongest Since July 2005

China CB says to liberalise rates, widen yuan band-paper

China May Set 2014 GDP Target at About 7.5%: Securities Journal

China Nov CPI up 3% YoY, PPI down 1.4%

China sees 2011-15 retail sales growth target as achievable

JPY:

Japan Jul-Sep Revised Real GDP +0.3% Q/Q; Prelim +0.5%

Japan Oct Current Acct Deficit Y127.9B; Expected Surplus Y160.3B

Japan manufacturers’ confidence hits 3-year high -Reuters Tankan

Japan’s Abe to Speak on Secrecy Bill, S. Korea Air Zone: Jiji

Japan Nov bank loans rise 2.2% vs. year ago

Japan service sector sentiment improves in Oct

JPY/KRW:

Japan Govt Suga: South Korea’s New ADIZ Not Immediately Problematic

AUD:

Australian job advertisements dip in Nov – ANZ

For today

  • EUR: The market opened above Fridays close at around the 1.3715 levels and touched a high just above the 1.3720 area in early trading before dropping back in to the Tokyo opening as USDJPY rallied. The move lower filled in the gap on the charts having moved to the 1.3702 areas and we’ve struggled between 1.3702/11 ever since in a quiet start to the week. With some light mix above the 1.3730 levels the market looks congested to about the 1.3770 areas before we opening up to clear stop buying however, there are probably option barriers floating around above so it may well struggle for a time in front of 1.3800. Downside is all pretty light with nothing major showing above the 1.3600 handle and longs seem to be deep in the money at the moment.
  • GBP: Cable moved higher on the opening but dropped back reasonably quickly from those 1.6354 areas to trade below the 1.6324, unlike the Euro though we opened pretty much in line with Friday’s close so having seen the lows we are in touch with those opening areas around the mid 1.6345 as we move towards London. With the topside still open there seems little in its way to moving higher apart from the Euro connection, downside sees the support area around the 1.6300 area and again around the 1.6250 and with the run into Christmas real money is likely to dry up so the pair could be bullied around by big players.
  • JPY: USD was bid overall from the start of the session and USDJPY was no different opening around the 103.00 level and trading in the pre-Tokyo portion to above the 103.20 areas again, with no change on the current account and GDP slightly worse than expected the markets move was only reversed into the Tokyo session with some fixing supply coming into play however, the market has been really pinned within  a 30 pip range with the low being around the 102.90 areas where some light bids were seen, with a similar set up on the topside it will require greater momentum to break through to the stops suspected around the 103.60-90 areas, but again I’d suspect option barriers to the topside.
  • AUD: Uncertainty abounds in the Oz or it does in my head, the market has played a reasonable range in Asia with no direct news to help it along, opening higher than Fridays close the market almost immediately took it lower and filled the gaps on the charts tumbling to just below the 91cent level after highs above the 0.9125. Tokyo pondered the moves and once the CNY numbers had been released the Oz moved smartly back to just below 0.9130 to set the highs. Since then the market has been under pressure, with the belief that the downside is the weak link for the moment as light offer stack up on top every 10 pip or so all the way back to 92 cent. The downside still looks to be suspect with bids in front of the yearly lows around the 0.8975 from bottom pickers however, one suspects that a move through the low could trigger retail Japan out of straight Oz positions. For the moment we hold the lows as we move towards the London session.

 

Today’s data

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

NZD       Manufacturing Activity Q3 A 4.70% | P -2.00% | R -1.20%

JPY         Current Account (JPY) Oct A -0.06T | C 0.12T | P -0.13T

JPY         GDP Q/Q Q3 (F) A 0.30% | C 0.40% | P 0.50%

JPY         GDP Deflator Y/Y Q3 (F) A -0.30% | C -0.30% | P -0.30%

CNY        CPI Y/Y Nov A 3.00% | C 3.20% | P 3.20%

CNY        PPI Y/Y Nov A -1.40% | C -1.50% | P -1.50%

JPY         Eco Watchers Sentiment Nov A 53.5 | C 52.3 | P 51.8

06:45     CHF        Unemployment Rate Nov C 3.20% | P 3.20%

07:00     EUR        German Trade Balance (EUR) Oct C 17.4B | P 18.8B

08:15     CHF        Retail Sales (Real) Y/Y Oct C 1.70% | P 1.00%

09:30     EUR        Eurozone Sentix Investor Confidence (Dec) C 10.5 | P 9.3

11:00     EUR        German Industrial Production M/M Oct C 0.80% | P -0.90%

13:15     CAD       Housing Starts Nov C 195K | P 198.3K                     

 

Weekend News

CNY:

China Exports Top Estimates with Surplus at Four-Year High
China to Keep Expanding QDII, QFII Programs, PBOC’s Pan Says
China Forex Regulator to Crack Down on Fake Trade Financing
JPY:

BOJ to Continue Easing until Inflation Stable: Kuroda
Japan to Ease Rules on Infrastructure Investment: Nikkei
Japan Electrical Workers Union Seeks Base Pay Increase: NHK
Japan to Permit Partial Entertainment Expense Write-Off: Yomiuri
Japan’s Abe Secures Passage of Secrecy Law as Opposition Revolts
Ishiba Urges Japan Parliament Oversight of State Secrecy: Asahi
JPY/CNY:

Abe Calls for China Talks Citing 2006 Trip as Tensions Rise

JPY/PHP:

Japan, Philippines to Deepen Defence Ties Amid China Zone Risks
EUR:

Samaras Secures Vote on Greece’s 2014 Budget with 153 Lawmakers
Greek 2014 Budget Wards Off Danger of Default, Stournaras Says
Full Negotiating Team to Go to Athens in Jan.: EC ECB, IMF
USD:

Volcker Rule Will Force U.S. Banks to Comply With Five Regimes
AUD:

Rio Uranium Mine Spills Radioactive Acid near Kakadu

 

Harry Hindsight

  • EUR: The Euro opened around the 1.3670 area and slowly moved lower through the Asian session with very little going through the market with NFP to be released later in the day, by the time we reached London we were just off the lows around the 1.3660 levels and London was a light seller. The market lifted a little, back to the opening levels however, there was never anything serious. On the move into the NYK session the Euro began to weaken and the release of a good NFP number sent the pair to a low of 1.3620 before quickly recovering to push through the highs and turn the market on its head, with the other data released being nothing special the talk about tapering started to do the rounds. For some reason though all though the talk was of  a December tape the USD continued to lose ground whether this was a result of treasury movements remains a guess with yields improving. While the ECB cut inflation forecasts they increased growth forecasts for 2013 and 2014. The market continued to rise throughout the NYK session with the market closing just above the 1.3700 levels with reasonable volumes going through on the push through.
  • GBP: As with everything else the Cable moved through Asia quietly moving from the opening 1.6335 areas to trade on a base line of 1.6320 into the London market, London were early buyers and the market ran steadily to the 1.6370 levels before holding steady into the NYK session and the release of NFP. Early expectations in NYK showed through with USD buying appearing nothing strong but enough to set the market moving lower into the numbers, the drop lower was matched with a short squeeze from a low just below 1.6300 taking the market straight to the 1.6392 levels to make the high and low in a very short period of time. The market moved in a choppy fashion over the next 3 hours or so, before trading back to the 1.6320 levels before settling down to a steady finish around the 1.6350.  Early gains in London over the Euro, were lost in the late NYK session as we moved off the lows around the 0.8350 levels to trade just below 0.8390.
  • JPY: USDJPY opened around the 101.80 levels and spent the session rising slowly pushing to just below the 102.00 level in the first half of trading, and again moving higher into Tokyo lunch pushing to the 102.20’s and into London, with volumes below normal the market struggled for several hours around the highs before the NFP were released. The market quickly moved higher to the 102.90 running into some reasonable offers and holding the areas with an ever decreasing range into the close just above the area.
  • AUD: The market opened around the 0.9060 levels and it would seem any excuse at the moment will send it lower, in this case with an article on the Airline Qantas causing movement in the market with a 20 pip quick dip to set the early low below 0.9040, the market regained the opening levels however struggled from that point and rose to above the 0.9070 level in the run up to the NFP. The release in the numbers had a very savage effect on the market with it immediately dropping to the 0.8990 levels before rising just as quickly to new highs around 0.9110, before settling down to a steady rise making a new high just short of 0.9120 and moving to a close just above the 91 cent levels.

Friday’s premiership results

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

JPY         Leading Index Oct (P) A 109.9 | C 109.8 | P 109.2

CHF        Foreign Currency Reserves Nov A 435.7B | P 434.7B

CHF        CPI M/M Nov A 0.00% | C -0.20% | P -0.10%

CHF        CPI Y/Y Nov A 0.10% | C -0.10% | P -0.30%

EUR        German Factory Orders M/M Oct A -2.20% | C -0.90% | P 3.30% | R 3.10%

CAD       Net Change in Employment Nov A 21.6K | C 7.5K | P 13.2K

CAD       Unemployment Rate Nov A 6.90% | C 7.00% | P 6.90%

CAD       Labour Productivity Q/Q Q3 A 0.20% | C 0.50% | P 0.50%

USD       Change in Non-farm Payrolls Nov A 203K | C 183K | P 204K | R 200K

USD       Unemployment Rate Nov A 7.00% | C 7.20% | P 7.30%

USD       Personal Income Oct A -0.10% | C 0.30% | P 0.50%

USD       Personal Spending Oct A 0.00% | C 0.20% | P 0.20%

USD       PCE Deflator Y/Y Oct A 0.70% | C 0.70% | P 0.90%

USD       PCE Core M/M Oct A 0.10% | C 0.10% | P 0.10%

USD       PCE Core Y/Y Oct A 1.10% | C 1.10% | P 1.20%

USD       U. of Michigan Confidence Dec (P) A 82.5 | C 76.2 | P 75.1

 

Stay lucky

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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