Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 102.842 | EURUSD 1.37607 | EURJPY 141.514 | AUDUSD 0.91495 | NZDUSD 0.83243 | USDCAD 1.0603 | EURCHF 1.22126 | USDCHF 0.88744 | GBPUSD 1.64444 | EURGBP 0.8368 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.95 | 102.565

EUR/USD             1.3765 | 1.37465

EUR/JPY               141.695 | 141.16

AUD/USD            0.9152 | 0.9125

NZD/USD             0.8313 | 0.8270

USD/CAD             1.0609 | 1.0602

EUR/CHF              1.2216 | 1.2207

USD/CHF             0.8884 | 0.8871

GBP/USD             1.6458 | 1.6432

EUR/GBP             0.8372 | 0.8364

 

For today

  • EUR: Euro’s initially drifted from its opening levels around the 1.3760 areas with fixing supply for EURJPY accounting for the bulk of the move lower and trading to a low around the 1.3750 levels at that point. The market did dip just slightly lower on a follow through later in the session touching the 1.3747 levels however, with very little news out and another quiet session the market moved quietly back to the starting levels where we currently hold heading into the grey hours. Topside still remains heavy towards yesterday’s highs however, stops from short term guys are probably just behind the 1.3810/20 area and stop entries around the 1.3860 level onwards. Downside has some light stops below yesterday’s lows and likely to be building through 1.3690 areas.
  • GBP: Cable opened around the 1.6445 levels and traded quietly with some light buying coming in towards the Tokyo opening and on the opening to make the high for the day above 1.6458, the market quickly reversed and with little interest until below 1.6430 to halt the slide to 1.6434 low, since then it’s been a very quiet range with the market trading from the lows to the 1.3446 levels close to where the market enters the grey hours.
  • JPY: USDJPY has stayed reasonably quiet in a tight range holding around the 102.58/102.95 levels. The market opened around the 102.75 level and some GBPJPY buying helped the USDJPY move into the Tokyo opening at its highs however, EURJPY supply into the fix and weak stops helped the USDJPY to its lows. For the moment the market has moved back to the opening levels, with the moves yesterday the market still seems to be stuck for the moment in tight ranges, however, the market seems to have light stops above yesterday’s highs and the offers remain in front of the 104.00 levels. Downside one suspects is accumulating stops below the 102.00 areas from those willing to buy over the past 24hrs and nothing of note on the bid side until probably a big figure from where we are at 102.75 as we move into the grey hours.
  • AUD: The Oz has drifted low throughout the session with some light offers appearing around the 0.9200 levels and a poor confidence number, we saw some reasonable margin selling of AUDJPY throughout the day however, other than that the market has been reasonably quiet. The Oz dipped from the opening 0.9150 area to the 0.9130 over the course of the session. For the moment there is very little on the downside until you reach the monthly lows where we see macro types on the bid, stops as you’d expect thicken as you reach the year lows however, don’t be surprised by a bear trap appearing.

Overnight News

Asia:

ADB Raises China GDP Growth Forecasts, Lowers Southeast Asia

CNY:

China Raises Yuan Reference Rate to Strongest Since July 2005

China legislature drafting reforms on securities, futures

China cuts more red tape, paves way for NDRC slim-down

China Should Drop Proactive Fiscal Policy: Sec. Journal

USD:

Murray-Ryan Budget Deal Eases Spending Cuts Over Two Years

JPY:

Japan Oct core machinery orders rise 0.6% MoM

Japan Nov wholesale prices rise 2.7% YoY

NZD:

Fonterra slashes dividend, earnings forecast on high dairy prices

New Zealand Home-Loan Approvals Decline Accelerates, RBNZ Says

AUD:

Australia consumer sentiment sags in Dec-survey

USD/AUD:

GM says to end manufacturing in Australia by end-2017

JPY/AUD:

Toyota says GM exit puts pressure on its ability to make cars in Australia

 


Today’s data

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

AUD       Westpac Consumer Confidence (Dec) A -4.80% | P 1.90%

JPY         Machine Orders M/M Oct A 0.60% | C 0.90% | P -2.10%

JPY         Domestic CGPI Y/Y Nov A 2.70% | C 2.70% | P 2.50%

07:00     EUR        German CPI M/M Nov (F) C 0.20% | P 0.20%

07:00     EUR        German CPI Y/Y Nov (F) C 1.30% | P 1.30%

15:30     USD       Crude Oil Inventories P -5.6M

19:00     USD       Monthly Budget Statement Nov C -154.6B | P -91.6B

20:00     NZD       RBNZ Rate Decision C 2.50% | P 2.50%

 

Harry Hindsight

  • EUR: Euro’s opened quietly trading around the 1.3740 area from the opening into early Tokyo, before moving quickly to above the 1.3765 levels with a stronger fix number for the Yuan triggering the move. Some weak stops were triggered through the 1.3750 levels. From there it was a slow drift lower in to the London session, with only UK numbers the market was more or less dead in the water until the US opening, The market started to pick up as suspicions on the Inventory number seeped into the market and by the time the number was released the Euro had already moved past the previous high to the 1.3770 levels and then quickly moved to 1.3795 on the number which showed a large gain, the market ran into some stiff offers although it was there only briefly before dropping back to those 1.3770 levels and drifting from there into the close around the 1.3760 levels. The market was reasonably quiet apart from that brief move and all eyes are focused on next weeks FOMC meeting which may decide when tapering will occur.
  • GBP: Having finished the previous day with reasonable gains we started with a small dip before the rally continued taking if from the 1.6420 levels to above the 1.6465 triggering weak stops on the move and holding towards the highs into the grey hours. Early Europeans sold the market back down to the 1.6450 and as soon as the official market opened the Cable was back to the starting areas losing ground against the Euro also. With a mixed set of numbers the market moved briefly to the topside before drifting for the day and holding a 1.6430-1.6450 into the close as interest waned, The EURGBP having had a brief spike higher as the Euro ran away finished the day only slightly higher as Cable held its levels.
  • JPY: USDJPY held its levels in Asia moving from an opening around the 103.25 area and trading close to the 103.40 levels and just below the 103.20 for the low, with offers to the topside and weak stops to the downside it was always vulnerable to dip lower however, the market was fairly static until the London open and then the market dropped quickly to the 103.08 level from close to the highs, the market held the levels for a couple of hours before it again started to move lower and while it moved through the stops it was by no means one way traffic taking several hours to move to a low below 102.65 and then extended the low late into the session in NYK. The market moved slowly higher to finish around the 102.85 area but overall the volumes were not overly impressive.
  • AUD: With the USDJPY struggling, the AUD found room to move having tumbled in the early part on strong numbers in New Zealand having an adverse effect on the AUDNZD cross which came off quickly before the Tokyo open. Once we moved into Tokyo the slow decline of USDJPY allowed the AUD to move higher slowly from the lows below 0.9080 back through the opening 0.9110 levels and there it held on a slow session into the grey hours, the market drifted back to the lows again as Europeans sold the market back down. USDJPY started to move lower quickly and the AUD immediately moved higher in compensation leaving the carry trade in a pinned to a tight range for most of the day, The AUD paused into the NYK session around the 0.9120 levels before again moving higher this time just short of 0.9170, before slipping back smalls into the close.

 

Yesterday’s premiership results

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%

GBP       Industrial Production M/M Oct A 0.40% | C 0.40% | 0.90%

GBP       Industrial Production Y/Y Oct A 3.20% | C 3.20% | P 2.20%

GBP       Manufacturing Production M/M Oct A 0.40% | C 0.40% | P 1.20%

GBP       Manufacturing Production Y/Y Oct A 2.70% | C 2.90% | P 0.80% | R 0.70%

GBP       Visible Trade Balance (GBP) Oct A -9.7B | C -9.1B | P -9.8B | R -10.1B

GBP       NIESR GDP Estimate Nov A 0.80% | P 0.70%

USD       Wholesale Inventories Oct A 1.40% | C 0.30% | P 0.40%
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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