Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 103.273 | EURUSD 1.37396 | EURJPY 141.893 | AUDUSD 0.91084 | NZDUSD 0.82662 | USDCAD 1.06269 | EURCHF 1.22341 | USDCHF 0.89043 | GBPUSD 1.64276 | EURGBP 0.83634 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               103.40 | 103.165

EUR/USD             1.37685 | 1.3734

EUR/JPY               142.12 | 141.82

AUD/USD            0.9118 | 0.9075

NZD/USD             0.8303 | 0.8271

USD/CAD             1.0643 | 1.0627

EUR/CHF              1.2238 | 1.2225

USD/CHF             0.89075 | 0.8884

GBP/USD             1.6468 | 1.642

EUR/GBP             0.8365 | 0.83545

 

For today

  • EUR: A follow on from the previous day with very little happening until into the Tokyo session with only a slightly stronger Yuan upsetting the apple cart a little. Euro’s pushed and eventually broke through the 1.3750 level with a quick move to the upper 1.3760’s before like the previous session settling back to trade around the 1.3760 level another step higher as it were. The market is very mixed now to the topside with the market seemingly unsure of the next moves, with offers and stop entries as well as calls in the market, but no clear indications, one would think a clear out is required.
  • GBP: Having finished the day quietly after a day of steady gains the market dipped only slightly to just below the 1.6420 levels before a substantial amount came to market and triggered stops along the way as it moved from the 1.6425 level to above the 1.6465 level in a quick move before settling down to range between the 1.6450 level and the highs.
  • JPY: Another quiet session for the USDJPY opening around the mid 103.20’s and apart from a slight push towards the 103.40 level struggled from then on touching below 103.20 in mid-session it has since been holding just below 103.30 where we are currently as we move to London. While the market talks about a mixed set of orders we fail here each time and one suspect the offers thicken up as we move higher so momentum or a day of grinding would be required to move to the 104.00. Downside see’s weak stops appearing on a move through 102.80 and gathering pace as we move lower. With very little in the way of bids until the low 102’s
  • AUD: The market opened around the 0.9110 area and traded quickly lower as AUDNZD selling hit the market post NZD numbers, taking the AUD to below the 0.9080 levels quickly before finding some minor support and a steady move into Tokyo. The market then started to move back higher with minor AUD numbers coming in as expected having made daily highs above the 0.9115 levels the market has been drifting and holding around the opening levels ever since in a quiet day for the AUD volume wise.  A break through the highs should see some light stops triggered however, offers while light are likely to limit any move to the 92 cent area. Downside seems to be dominated with bids in front of the yearly lows and until they are out of the way the market seems to be caught in a tight range.

Overnight News

CNY:

China Raises Yuan Reference Rate to Strongest Since July 2005

China Leaders Meet to Set 2014 Economic Targets: Xinhua

China Jan-Nov property investment up 19.5 pct y/y

China Nov factory output up 10 pct y/y, retail sales up 13.7 pct

USD:

Fed’s Fisher: steeper yield curve means markets expecting taper

JPY:

Aso: Can’t Say If FY14 New Bond Issuance Will Exceed FY13 Level

Japan Plans Two-Step Tax Increase for High-Income Earners: Kyodo

Japan MOF Big Company Mood Index Slightly Worse on Quarter in Oct-Dec

Suga Says He Wants Cabinet to Approve Japan Energy Plan in Jan.

GBP:

UK house price growth expectations hit 14-year high in Nov RICS

BOE’s Carney Says Needs to Provide a Lot of Stimulus to U.K.

AUD:

Australian Housing Finance Rises on Investment Surge

 


Today’s data

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

JPY         Japan Money Stock M2+CD Y/Y Nov A 4.30% | C 4.30% | P 4.10%

JPY         Tertiary Industry Index M/M Oct A -0.70% | C 0.30% | P -0.20% | R 0.00%

GBP       RICS House Price Balance Nov A 58% | C 59% | P 57%

AUD       Home Loans Oct A 1.00% | C 1.30% | P 4.40% | R 3.50%

AUD       NAB Business Confidence Nov A 5 | P 5 | R 6

JPY         Consumer Confidence Nov A 42.5 | C 44.2 | P 41.2

CNY        Industrial Production Y/Y Nov A 10.00% | C 10.10% | P 10.30%

CNY        Fixed Assets Ex Rural YTD Y/Y Nov A 19.90% | C 20.10% | P 20.10%

CNY        Retail Sales Y/Y Nov A 13.70% | C 13.20% | P 13.30%

JPY         Machine Tool Orders Y/Y Nov (P) A 15.4% | P 8.40%

09:30     GBP       Industrial Production M/M Oct C 0.40% | 0.90%

09:30     GBP       Industrial Production Y/Y Oct C 3.20% | P 2.20%

09:30     GBP       Manufacturing Production M/M Oct C 0.40% | P 1.20%

09:30     GBP       Manufacturing Production Y/Y Oct C 2.90% | P 0.80%

09:30     GBP       Visible Trade Balance (GBP) Oct C -9.1B | P -9.8B

15:00     GBP       NIESR GDP Estimate Nov P 0.70%

15:00     USD       Wholesale Inventories Oct C 0.30% | P 0.40%

 

Harry Hindsight

  • EUR: Euro’s steadily rose over the course of the day opening around the 1.3710 area and trading to a high above 1.3720 in Asia before drifting quietly into London. The market bought on the official opening and the market managed to move up to the 1.3730 levels. With numbers in line with expectations broadly there was very little movement in the market and volumes were much reduced from previous sessions. The move into NYK was little different and only comments from Fed’s Bullard had any real effect with the USD weakening after he said that the FOMC needed to be credible on the inflation target. The market had moved up to the 1.3740 levels and we didn’t vary much from that point staying close to the levels till the close.
  • GBP: Cable had a better day, with some renewed selling appearing in the market of the EURGBP cross, which drifted lower from early Tokyo having touched above the 0.8395 levels. Cable drifted lower in the early part of Tokyo to touch close to 1.6320 before a drift higher throughout Asia to move above the 1.6360’s, early buyers in the grey hours, with talk of GBPJPY macro buyers into the London session helping Cable to above the 1.6390 levels. As with the Euro the move into early NYK was a quiet affair and we held around the 1.6380 for a good 6 hours before the comments helped to restart the move higher pushing it above the 1.6410 and a follow through beyond 1.6420 to settle just off its highs for the day. EURGBP broke down to trade below the 0.8365 level close to the previous day’s ranges however, the market was only just a little more exciting that the Euro’s overall.
  • JPY: The USDJPY opened with a strong move to the topside from 102.90 to trade above the 103.20 however, from this point on the market struggled to make any headway, and slipped back to the opening levels during Asia, a stronger than expected current account seemed to be the key and although GDP was a little weaker than expected the topside offers held the market through London. London didn’t improve and the market was caught between the 103.00/103.20 levels for all of London and only the comments from Bullard finally squeezed the market a little higher to push above the 103.30 levels where it remained into the close.
  • AUD: While the AUD feels as if it wants to go up every time we push above the 0.9120/30 area its sold back as with today, opening above Friday’s close it soon filled the gap from the 0.9124 level back to 91 cent before starting to rise again in the Tokyo session with USDJPY unable to hold its early gains and a rebalance of the AUDJPY bought the AUD back to the 0.9130 level, the market in Asia then died a death after the CPI figures for China, and AUD then started to drift steadily lower through the session and into the London opening to touch the 0.9070 levels. London did nothing with it and on a very quiet day the market held around the 0.9080 for a great period of time. Bullard weakened the USD and the AUD slowly made a recovery to the 0.9110 areas for a slow finish to a slow day.

Yesterday’s premiership results

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

NZD       Manufacturing Activity Q3 A 4.70% | C -2.00% | P -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

CHF        Unemployment Rate Nov A 3.20% | C 3.20% | P 3.20%

EUR        German Trade Balance (EUR) Oct A 16.8B | C 17.4B | P 18.8B

CHF        Retail Sales (Real) Y/Y Oct A 1.20% | C 1.70% | P 1.00%

EUR        Eurozone Sentix Investor Confidence (Dec) A 8 | C 10.5 | P 9.3

EUR        German Industrial Production M/M Oct A -1.20% | C 0.80% | P -0.90% | R -0.70%

CAD       Housing Starts Nov A 192K | C 195K | P 198.3K
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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