Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 103.372 | EURUSD 1.3753 | EURJPY 142.17 | AUDUSD 0.89373 | NZDUSD 0.82481 | USDCAD 1.0640 | EURCHF 1.22312 | USDCHF 0.88927 | GBPUSD 1.63504 | EURGBP 0.84114 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               103.925 | 103.36

EUR/USD             1.37595 | 1.37425

EUR/JPY               142.82 | 142.22

AUD/USD            0.8963 | 0.8913

NZD/USD             0.8251 | 0.8198

USD/CAD             1.0651 | 1.0624

EUR/CHF              1.2241 | 1.22235

USD/CHF             0.8906 | 0.8888

GBP/USD             1.6360 | 1.6333

EUR/GBP             0.84145 | 0.841

 

For today

  • EUR: Euro’s has been fairly quiet with the market dominated by a little two way battle in the AUDUSD and the ever rising USDJPY taking the spotlight, the market opened around the 1.3750 area and dropped to below 1.3745 and then ranged between the low and the 1.3760 area in a very narrow play. With resistance again around the same areas as yesterday having failed to move through the 1.3800 with any conviction short term players back the no break out. The offers are likely to be a little thicker above there as this is now the near term resistance levels. Downside sees a mixture all the way from the present areas to the 1.3700, after that I’d not be surprised to find nothing of significance with nothing showing on the chart and the market short term players willing to sell into a rally. However, this doesn’t account for real money and until the market gets to the FOMC it’s likely to be slow going.
  • GBP: The picture for Cable is exactly the same as the Euro no real movement overnight and a tight range with the market basing off the 1.6335 areas and peaking at the 1.6360 level mid-way through the session. The market continues to hang around the highs and really only a significant break below the 1.6300 area would possibly tease the break traders into doing anything. With the market waiting for the FOMC it’s likely to be quiet again and Christmas party time is upon us to weight on the market one way or the other.
  • JPY: USDJPY continued rising in pre-Tokyo however, once Tokyo moved into the market we stalled a little and struggled around the 103.60 area having risen the 20 pips or so to get there, the pressure continued to build though and reasonable two way flow was seen at the level until the offers were totally exhausted and we popped higher to the 103.80 levels triggering weak stops. However, having reached this level we again ran into some decent levels of offers with exporters and speculators selling again into the rally, we currently hold on the highs and as with before it’s likely to be a bit of a tussle to push it through 104.00 and even then one suspects further offers from real money and longer term profit taking are waiting around the corner. Downside will now have a mixture of light bids and weak stops below the 103.50 area however it is light and possibly will cancel each other out. Pushing below the 102.80 areas will see stronger reasons to sell and with the FOMC still a few days away the support is not likely to be forthcoming for the time being and the market has the possibility to slop around between several big figures.
  • AUD: Early trading was reasonably quiet with some local players selling the AUD from the opening 0.8940 areas to the 0.8915 levels however, the support around the 0.8920 area has been tested a number of times and it allowed the same players to enter the market again, this time though comments from the RBA helped to boost the market higher initially as they made statements along the lines of preferring the price in the market to fall away rather than lowering interest rates. Not a sensible comment if that is what you want to happen and the market set the highs above the 0.8960 levels. With resistance now to the 0.8970 level the market failed to the topside through a lack of impetus and has since drifted back to the lows as USDJPY continues to climb and AUDJPY holds below the 93.00 level with again some reasonable profit taking topping that cross. While the talk in the market is of Johnny come lately offering above the 0.8975-0.9000 levels I’m more inclined to suspect weak stops are in the mix there from the breakout players and a definite push above the 90 cent should see some reaction. Downside bids from the 0.8920 through for a further 40 or 50 pips see medium term buyers appearing with them placing weak stops just slightly lower. Support in real form is not really seen until around the 0.8800 levels so a bit of a gap.

Overnight News

JPY:

Govt Panel: GPIF Could Joint Invest With Foreign Fund to Diversify Asset Classes

GPIF’s infrastructure investment abroad to be less than 1% of assets-Govt panel

JPY/IDR/PHP:

Aso: Japan to Double Currency Swaps with Indonesia, Philippines

JPY/PHP:

Japan, Philippines committed to assuring freedom of flight over Intl skies-Aquino

KRW:

North Korea State Media Says Uncle of Kim Jong Un has been executed

S. Korea Says It Sees No ‘Unusual’ N. Korea Military Movements

USD/KRW:

U.S. consulting allies after reports of North Korea execution

NZD:

Non-resident holdings of NZ debt edge higher in November – RBNZ


Today’s data

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

NZD       Business NZ Manufacturing Index Nov A 56.7 | P 55.7

08:15     CHF        Producer & Import Prices M/M Nov C 0.20% | P -0.40%

08:15     CHF        Producer & Import Prices Y/Y Nov C -0.10% | P -0.30%

13:30     USD       PPI M/M Nov C 0.00% | P -0.20%

13:30     USD       PPI Y/Y Nov C 0.60% | P 0.30%

13:30     USD       PPI Core M/M Nov C 0.10% | P 0.20%

13:30     USD       PPI Core Y/Y Nov C 1.40% | P 1.40%

 

Harry Hindsight

  • EUR: With speculative selling early in the session the market dipped from a slow start, opening around the 1.3786 area we dropped quickly to below 1.3775 before a slow rise higher, triggered by Cross selling in EURAUD. Having reached the starting point we saw a little move on the back of weak stops generated by the earlier selling and the market moved to above the 1.3795 and into light offers sufficient to hold the market into the grey hours. Early Europeans sold the market lower in pre-London to just below the opening levels only for the market to reverse immediately before the opening pushing the high to just above the 1.3800 levels for the high on the day. London opened and as like me there never seems to be anything concrete of the ECB just platitudes and the general consensus seemed to be the same with early day traders selling the market to the 1.3765 levels before the IP figures. With a number well below expectations one would have been surprised with the reaction, a combination of cross buying seemed to hold the Euro from any declines and we eventually tried the topside for the final time. The move into NYK saw the USD broadly stronger from the opening, while the ECB spoke about liquidity concerns as usual they fluffed it with general comments without solidifying any type of plan and we know it’s all going to end in tears or the USD post tapering might in fact give them some breathing space however, they’re seemingly putting their eggs in one basket. The USD rose steadily throughout the NYK session and the Euro traded down to the 1.3740 areas before finding some limited support to finish the day above the 1.3755 levels. Volumes were again low and look to be remaining that way until the FOMC meeting is out of the way.
  • GBP: Cable had a mixed day with a quiet Asian session dominated by a little AUD flow in the crosses after a very dull couple of hours into the Tokyo portion of the session. Moving from the opening 1.6380 areas to the mid 1.6350’s before finding support in the area. The EURGBP cross had plateaued around the 0.8430 area in the later part of Asia however, London was clearly unhappy with the level and pre London selling hit straight away and the market dropped over the next four hours or so to the 0.8390 levels and remained around the 0.8400 into the NYK session, this help the Cable to rise to its highs just short of 1.6420 and holding in the area into the NYK session, a broad based USD rally and a set of numbers better than expected, that is apart from the inventory numbers pushed Cable back almost a big figure to leave it struggling just above the 1.6320 level and a steady rise into the close to 1.6350. This reversed the moves in EURGBP as the GBP lost ground through thin liquidity more than anything and no data out of the UK to change anyone’s mind.
  • JPY: USDJPY was a steady tight channelled rise throughout the day, moving from the 102.50 area triggering some light stops to 103.00 and then just grinding away to the topside as USD strength kept the market bubbling, and while volumes were not overly large there seemed to be a lot changing hands from above the 103.00 area as we finished on the highs around 103.40.
  • AUD: The Oz was reasonably quiet for the most part opening around the 0.9040 and a minor flurry after the employment numbers to trade to the 0.9080 levels and into some reasonable offers, the market moved back just as quickly and followed through as those weak buyers were turfed out unceremoniously and the market hit the 0.9020 levels, I was expecting then for London to enter the fray and the day traders to push it lower as we had emptied the market to the lows at least however, I’d was wrong and they bought rather than look for the break and the market moved to the 0.9060 levels. The opening in NYK and the IMM opening however, didn’t waste any time and we were quickly back down and through the bids with a pause around the years lows as a short battle between break traders and day traders broke out before the market slipped through, even though I was wrong the move lower was slower than you’d have expected if it was all one way and we took a couple of hours to reach a decent bidding area around the 0.8920 level and the years lows have been made. The market then died a death unable to move higher and unwilling to drop any further even though USD continued to gain against the other currencies.

 

Yesterday’s premiership results

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

AUD       Consumer Inflation Expectation (Dec) A 2.10% | P 1.90%

AUD       Employment Change Nov A 21K | C 10.3K | P 1.1K

AUD       Unemployment Rate Nov A 5.80% | C 5.80% | P 5.70%

CHF        SNB Rate Decision A 0.25% | C 0.25% | P 0.25%

EUR        Eurozone Industrial Production M/M Oct A -1.10% | C 0.40% | P -0.50% | R -0.20%

CAD       New Housing Price Index M/M Oct A 0.10% | C 0.30% | P 0.00%

USD       Advance Retail Sales Nov A 0.70% | C 0.30% | P 0.40% | R 0.60%

USD       Retail Sales Less Autos Nov A 0.40% | C 0.20% | P 0.20% | R 0.50%

USD       Initial Jobless Claims (DEC 6) A 368K | C 321K | P 298K | R 300K

USD       Import Price Index M/M Nov A -0.60% | C -0.80% | P -0.70% | R -0.60%

USD       Business Inventories Oct A 0.70% | C 0.40% | P 0.60%
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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