Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 102.665 | EURUSD 1.37675 | EURJPY 141.347 | AUDUSD 0.88996 | NZDUSD 0.82512 | USDCAD 1.06071 | EURCHF 1.21836 | USDCHF 0.8850 | GBPUSD 1.62634 | EURGBP 0.84645 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               103.04 | 102.56

EUR/USD             1.3775 | 1.3762

EUR/JPY               141.89 | 141.25

AUD/USD            0.8929 | 0.8893

NZD/USD             0.8285 | 0.8242

USD/CAD             1.0620 | 1.0602

EUR/CHF              1.2190 | 1.2181

USD/CHF             0.88525 | 0.8845

GBP/USD             1.6290 | 1.6262

EUR/GBP             0.8465 | 0.8455

 

For today

  • EUR: With only slightly better volumes entering the market the Euro continues to hold towards the highs of this week’s ranges around the 1.3775 area having opened around the 1.3765 levels. There have not been any noticeable flows with only light EURJPY selling during the Tokyo fix. Offers from the current levels rising to 1.3800, and then thickening above that level. The majority of which is likely to disappear before we reach the FOMC if the market plays true. Downside still sees stops building below the 1.3700 levels and again thickening as it moves lower so for the moment that sets the tone for the day, well until NYK opens.
  • GBP: Cable was very quiet moving from the opening 1.6260 areas to just below 1.6290 as some light EURGBP selling entered the market, however, it was light and for the moment the 1.6290 level is the place to break, with 1.6250 still to be really tested that being the top of a congested area from October. Failing that 1.6200 and then around the 1.6150 level for the best support.
  • JPY: USDJPY did next to nothing in the pre Tokyo session moving around the opening 102.65 levels. Once Tokyo opened we immediately started moving higher pushing to the 102.90 levels into the fix, stalling as cross selling appeared and then starting again to rise once the fix was over with. We pushed to above the 103.00 levels and have pretty much stayed in a 102.90-103.05 areas since with volumes light for the session. Some light offers rest on top holding this market to close to 103.00 and are likely to be back to the 103.30-40 area where we have stalled a few times in previous sessions this month. Finally suspect good offers from the 103.70-104.00 area, downside is a mixture for the most part however, I would favour the stops being the strongest in the run in to FOMC as retail Japan are long everything against the JPY so don’t be surprised if USDJPY trades contrary to the rest of the market.
  • AUD: The market opened around the 89 cent area and was fairly strong into the pre Tokyo session moving steadily higher to just short of 0.8930 with comments from Stevens helping the early market, yes he did mention intervention however, in my opinion they have neither the will or inclination to do so from these current levels, weakness in the Yen turned the market lower in later trading and the market moved from its highs to match the early lows just below 89cent and we hold just above the area for the time being. Looking forward there are obviously still offers to plough through until probably above the 0.8950 levels but with FOMC there seems to be gaps from then on with 0.9000-0.9030 showing as the next line of resistance and after that is anyone’s guess as the FOMC will put paid to anything I say to far away. Downside having hit new lows yesterday for the year we suspect weak stops through the lows however; there is always the chance of bottom pickers from then on.

 

Overnight News

JPY:

Japan Posts Biggest November Trade Deficit as Imports Climb

Hosoda Expects Japan Casino Bill to Pass in Next Diet Session

AUD:

Stevens Says RBA Has Kept Open Mind on Cuts as Low Rates Working

Australia CB says A$ above 90 U.S. cents not suitable for economy

Australia’s CB says had thought of intervening to weaken A$

Pimco Sees Aussie Dollar Weakening, RBA Rates Remaining Low

CNY:

China November home prices rise 9.9% YoY

China Nov. FDI Rises 2.35% Y/Y to $8.48b: Market News

Mofcom’s Shen: Can’t Be Overly Optimistic on China Dec. Exports

China to Expand Consumption Tax to Include Resources -Report

NZD:

NZ business confidence skyrockets to near 15-yr high in Dec -ANZ survey


Today’s data

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

NZD       Current Account Balance Q3 A -4.780B | C -4.600B | P -1.252B

AUD       Westpac Leading Index M/M Nov A -0.10% | P 0.10%

JPY         Trade Balance (JPY) Nov A -1.35T | C -1.13T | P -1.07T | R 1.09T

NZD       NBNZ Business Confidence Dec A 64.1 | P 60.5

CNY        Conference Board Leading Index Nov A 1.40% | P 0.60%

09:00     EUR        German IFO – Business Climate Dec C 109.5 | P 109.3

09:00     EUR        German IFO – Current Assessment Dec C 112.5 | P 112.2

09:00     EUR        German IFO – Expectations Dec C 106.5 | P 106.3

09:30     GBP       BoE Minutes C 0–0—9 | P 0–0–9

09:30     GBP       Jobless Claims Change Nov C -35.0K | P -41.7K

09:30     GBP       Claimant Count Rate Nov C 3.80% | P 3.90%

09:30     GBP       ILO Unemployment Rate 3M Oct C 7.60% | P 7.60%

10:00     CHF        ZEW (Expectations) Dec P 31.6

11:00     GBP       CBI Reported Sales Dec C 10 | P 1

13:30     CAD       Wholesale Sales M/M Oct C 0.30% | P 0.20%

13:30     USD       Housing Starts Nov P 950K

13:30     USD       Building Permits Nov C 990K | P 1034K

15:30     USD       Crude Oil Inventories P -10.6M

19:00     USD       FOMC Rate Decision C 0.25% | P 0.25%

19:30     USD       Fed’s Bernanke Press Conference

 

Harry Hindsight

  • EUR: Another slow day with the Asian session being particularly slow, whether this is solely due to today’s FOMC meeting or whether the festive season is already starting to kick in. The market opened around the 1.3760 levels and slowly moved up from a low in the mid 1.3750’s to above the 1.3780 as we entered the London session, with a good set of ZEW numbers the market failed to stop a slide during London, with suspected position cutting ahead of the FOMC. While this is expected to be no change and any tapering likely to be in the New Year the fact it will be mentioned is a forgone conclusion thus leaving the market unsure if we are likely to get some decent movement in the USD. We moved down steadily to below the 1.3725 levels before finding support however, from the NYK option cut the market seemed just as determined to recapture its losses and a steady move to the 1.3750’s saw some weak stops being triggered on the move back through 1.3760 to set the day to a quiet close around the 1.3770 levels.
  • GBP: With suspect liquidity as we roll into the festive season and end of year adding to the FOMC, Cable struggled, quietly moving from the opening 1.6290 levels to a high in the early part of London above 1.6335 the market saw successive 20-40 pip drops as weak stops were triggered at different levels, with inflationary news looking for all intents and purposes to be on the good side having averaged way above expectations for several years the market has now decided that the slide lower is something to worry about. Once the headline figure RPI fails to stop at 2.00% is more a time to worry however, as noted it may all be exaggerated by the time of year. We broke down through the 1.6290 areas and then held around the 1.6260 levels in the move into NYK before breaking again and falling into the mid-teens before finding some impetus for a recovery from then on finishing the day around the 1.6270 levels with resistance now that 1.6290 level that took so long to fold. GBP was not able to contend with the Euro as it moved deeper to the downside than the Euro and recovered less into the close the cross had began the London session heading lower however from the mid 0.8430’s
  • JPY: USDJPY drifted for a good portion of the day, moving from the opening 103.000 areas to touch briefly above 103.10 the market then moved quietly for several hours before dipping from the 103.05 centre of range to base around the 102.95 levels. As we moved into NYK with very little change the market began to drift again around the NYK option cut period and then dropped quickly from the break through 102.85 trading to a low just above the 102.50 level. The market then held around the 102.65 levels into the close just above there in quiet trading.
  • AUD: The Oz was a volatile as the rest of the market, having opened around the 0.8945 levels early Japanese were quiet buyers in the carry trade with the Oz rising to its highest point during the Tokyo fix just short of the 0.8960 levels before slowly drifting lower and finally moving through the 89 cent level mutely to trade around the 0.8885 levels. The market held the levels and the selloff is more than likely in front of coming comments from Steven’s at an informal meal down the local Ruby. Once the market had hit the lows we steadily moved to the close holding around the 89cent area again to finish only just above.

 

Yesterday’s premiership results

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

AUD       Conference Board Leading Index Oct A 0.50% | P 0.30%

GBP       DCLG UK House Prices Y/Y Oct A 5.50% | C 4.10% | P 3.80%

GBP       PPI Input M/M Nov A -0.70% | C -0.50% | P -0.60%

GBP       PPI Input Y/Y Nov A -0.20% | C -1.00% | P -0.30%

GBP       PPI Output M/M Nov A -0.20% | C 0.00% | P -0.30%

GBP       PPI Output Y/Y Nov A 0.80% | C 0.90% | P 0.80%

GBP       PPI Output Core M/M Nov A -0.10% | C 0.00% | P 0.10%

GBP       PPI Output Core Y/Y Nov A 0.70% | C 0.90% | P 0.90%

GBP       CPI M/M Nov A 0.10% | C 0.20% | P 0.10%

GBP       CPI Y/Y Nov A 2.10% | C 2.20% | P 2.20%

GBP       Core CPI Y/Y Nov A 1.80% | C 1.80% | P 1.70%

GBP       RPI M/M Nov A 0.10% | C 0.10% | P 0.00%

GBP       RPI Y/Y Nov A 2.60% | C 2.70% | P 2.60%

EUR        German ZEW (Economic Sentiment) Dec A 62 | C 55 | P 54.6

EUR        German ZEW (Current Situation) Dec A 32.4 | C 29.9 | P 28.7

EUR        Eurozone ZEW (Economic Sentiment) Dec A 68.3 | C 60.9 | P 60.2

EUR        Eurozone CPI M/M Nov (F) A -0.10% | C -0.10% | P -0.10%

EUR        Eurozone CPI Y/Y Nov (F) A 0.90% | C 0.90% | P 0.90%

EUR        Eurozone CPI – Core Y/Y Nov A 0.90% | C 1.00% | P 1.00%

GBP       CBI Trends Total Orders Dec A 12 | C 11 | P 11

CAD       Manufacturing Shipments M/M Oct A 1.00% | C -0.30% | P 0.60%

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

USD       CPI Y/Y Nov A 1.20% | C 1.30% | P 1.00%

USD       CPI Core M/M Nov A 0.20% | C 0.10% | P 0.10%

USD       CPI Core Y/Y Nov A 1.70% | C 1.70% | P 1.70%

USD       NAHB Housing Market Index Dec A 58 | C 55 | P 54
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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