Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 104.235 | EURUSD 1.36617 | EURJPY 142.405 | AUDUSD 0.8867 | NZDUSD 0.81701 | USDCAD 1.06643 | EURCHF 1.22658 | USDCHF 0.89783 | GBPUSD 1.63745 | EURGBP 0.83443 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               104.60 | 104.22

EUR/USD             1.3667 | 1.3625

EUR/JPY               142.585 | 142.24

AUD/USD            0.8888 | 0.8855

NZD/USD             0.8217 | 0.8184

USD/CAD             1.0680 | 1.0661

EUR/CHF              1.2270 | 1.2250

USD/CHF             0.8994 | 0.8976

GBP/USD             1.6390 | 1.6352

EUR/GBP             0.83465 | 0.8331

 

For today

  • EUR: The market dropped off from the opening and while it wasn’t a big surprise one wonders what initially drove it, having drifted for much of the previous day, the movement lower from the opening in Sydney was nothing unusual, even the sudden move from the 1.3655 to the 1.3630’s was not really a surprise, not given the FOMC and then a quiet period, one would have been forgiven for thinking anything other than EURJPY, EURAUD selling going through however, the corresponding legs don’t match, Having opened above 1.3660 it wasn’t until late in the session that the real reason became apparent with S&P downgrading the European Union to AA+ from the AAA, while on the whole we shouldn’t be surprised as the only AAA rated power in Europe are the Germans one suspects this has been on the cards for a while but it’s a bit late in the day as Europe starts to see shoots of recovery creeping into some sectors. If S&P’s use of copper cabling is to continue one would suggest a Faraday cage would be of use. So once the news was out the market again dipped to the 1.3625 areas similar to yesterday’s moves and only slightly lower than the initial move in Tokyo.  Which you would say is a respectful range for Asia. 1.3690 sees the first set of offers which was a struggling point on the way down with plenty more stacked up all the way up. Downside has limited interest and one assumes that may be for the best.
  • GBP: Cable opened after a quiet day and slowly moved to make the highs in the early plays only to be turned around as the drag of the Euro kicked in moving the market from the highs above 1.6378 to a run in Tokyo below the 1.6352 level, not a large range, but again shows how focused the Euro selling was. The market moved back to the 1.6360’s from that point on and has remained in the area ever since with only a slight weakening of the EURGBP cross.
  • JPY: Steadily continues its rise moving from the opening 104.25 areas to stretch above the 104.56 levels as we move into the grey hours. Much of the day was a struggle with volumes much reduced as the markets just held their own and manufactured little in the way of ideas. The release of the S&P news to the general market late in the session helped the pair to rise further to the mid 104.50’s lifted volumes somewhat on a quiet day. With suspected option barriers to the topside the market is likely to find the topside a struggle and to some extent similar action on the downside may trap the pair for the remainder of the year between 103.00-105.00 on the wide, with accumulation of bids showing around the 103.50 and decent stops behind.
  • AUD: Limited action in the Oz however, the market lifted off the opening 0.8660 levels once the market moved into the Tokyo session trading to above the 0.8885 levels before drifting and holding the 0.8865 areas. Very weak volumes overall in the AUD, with AUDJPY being the limited action going through. Moving into the grey hours the market holds around the mid 0.8675’s with a potential to reach above the 0.8900 with only limited resistance above the figure. Downside still shows some decent bids around the lows however, weak stops below this area.

Overnight News

JPY: Japan’s Abe says 2014 Q3 GDP key to second sales tax increase

BOJ stands pat on policy, keeps economic view intact

Japan to Trim Debt Offerings in Fiscal 2014 -Nikkei

Heizo Takenaka to Be Adviser on Special Economic Zones: Suga

Japan fund managers raise global stock weighting to 2-yr high

EUR:

European Union Downgraded at S&P; Loses Top Credit Rating

GBP:

British consumer morale slips for third month in December – GfK


Today’s data

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

GBP       GfK Consumer Sentiment Dec A -13 | C -11 | P -12

07:00     EUR        German PPI M/M Nov C -0.10% | P -0.20%

07:00     EUR        German PPI Y/Y Nov C -0.80% | P -0.70%

07:00     EUR        German GfK Consumer Sentiment Jan C 7.4 | P 7.4

09:30     GBP       GDP Q/Q Q3 (F) C 0.80% | P 0.80%

09:30     GBP       Public Sector Net Borrowing (GBP) Nov C 13.4B | P 6.4B

09:30     GBP       Index of Services 3M/3M Oct C 0.90% | P 0.70%

13:30     USD       GDP (Annualized) Q3 (F) C 3.60% | P 3.60%

13:30     USD       GDP Price Index Q3 (F) C 2.00% | P 2.00%

13:30     CAD       BoC CPI Core M/M Nov C 0.10% | P 0.20%

13:30     CAD       BoC CPI Core Y/Y Nov C 1.20% | P 1.20%

13:30     CAD       CPI M/M Nov C 0.10% | P -0.20%

13:30     CAD       CPI Y/Y Nov C 1.00% | P 0.70%

13:30     CAD       Retail Sales M/M Oct C 0.20% | P 1.00%

13:30     CAD       Retail Sales Less Autos M/M Oct  C 0.10% | P 0.00%

15:00     EUR        Eurozone Consumer Confidence Dec (A) C -15 | P -15.4

 

Harry Hindsight

  • EUR: After yesterday’s shake down with the taper in the US the Euro struggled in a tight downward trend, even though it was only slight. Opening around the 1.3680 area the market saw early sellers and by the time the Tokyo market opened and the retail types joined in the market steadily made its lows with some real money bids holding the market at the 1.3650 levels, there was a slight recovery to the opening levels once we moved into London and only when NYK opened did we see the Euro start to drift towards the lows again finishing the day around the 1.3665 levels in a quiet session outside of Asia. The market eventually finished the day around those 1.3660 levels with mixed results from the US numbers doing very little to change the day.
  • GBP: It would seem like the Euro, Cable did very little holding a very tight range for the day opening around the 1.6380 level and meandering in a tight range, and for the moment the movement in the USD has stalled as the market assesses its next step however, the decision making may be in the New Year. Volumes dropped back to normal for a holiday period after the previous days moves. NYK eventually set the lows moving the market from their opening to below 1.6340 which more or less looked like a EURGBP set of buying than much else. The day saw the market finish only 10 pips from where it started around the 1.6370 levels.
  • JPY: The USDJPY rose slightly over the course of the day however, it was slow going and after opening in Asia around the 104.20 the market struggled initially to hold those gains slowly slipping back as we saw profit taking kicking in over the early part of Tokyo trading down to the 103.80 levels before holding in a tight range into London, the new session reversed the losses steadily and once the NYK market joined we had moved to the highs once more in a lacklustre session. The market finished only just off those 104.35 highs, but given yesterday’s moves one would have expected a little more at least.
  • AUD: No real difference for the Oz either over the course of the day, with the market continuing its decline at the start of the session dropping from the opening levels around 0.8860 to just below 0.8835 and then sold again after a slight bounce in Tokyo to touch the below the 0.8825 level for another attempt for the lows of the year. The failure set the market into a steady rise into the London session trading to above the 0.8875 level in early London. While early NYK sold the Oz off again the market remained in a reasonably tight range and only just more movement than the rest of the pairs discussed holding for the most part a 0.8840-65 range into a quiet close at the top of that.

 

Yesterday’s premiership results

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

NZD       GDP Q/Q Q3 A 1.40% | C 1.10% | P 0.20%

JPY         All Industry Activity Index M/M Oct A -0.20% | C -0.30% | P 0.40%

CHF        Trade Balance (CHF) Nov A 2.11B | C 2.80B | P 2.43B | R 2.28B

EUR        Eurozone Current Account (EUR) Oct A 21.8B | C 14.2B | P 13.7B

GBP       Retail Sales M/M Nov A 0.30% | C 0.30% | P -0.70%

USD       Initial Jobless Claims (DEC 14) A 379K | C 332K | P 368K | R 369K

USD       Philly Fed Survey Dec A 7 | C 10 | P 6.5

USD       Existing Home Sales Nov A 4.90M | C 5.02M | P 5.12M

USD       Leading Indicators Nov A 0.80% | C 0.70% | P 0.20%

 

Have a good festive period and I will be back on line on the 29th December
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

Any opinions, news, research, analyses, prices or other information ("information") contained on this Blog, constitutes marketing communication and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the information contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. LMAX Group has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

LMAX Group will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the produced information was obtained from sources deemed to be reliable, LMAX Group does not provide any guarantees about the reliability of such sources. Consequently any person acting on it does so entirely at his or her own risk. It is not a place to slander, use unacceptable language or to promote LMAX Group or any other FX and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.