Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 109.28 109.20-25 | EURUSD 1.26833 1.2688-93 | EURJPY 138.611 138.59-64 | AUDUSD 0.87668 0.8760-65 | NZDUSD 0.78669 0.7860-65 | USDCAD 1.11564 1.1153-58 | EURCHF 1.20677 1.2061-66 | USDCHF 0.95138 0.9505-10 | GBPUSD 1.62436 1.6243-48 | EURGBP 0.78073 0.7809-14 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               109.52 | 109.16

EUR/USD             1.2700 | 1.2667

EUR/JPY               138.80 | 138.50

AUD/USD            0.8770 | 0.8693

NZD/USD             0.7872 | 0.7708

USD/CAD             1.1177 | 1.1151

EUR/CHF              1.2072 | 1.2066

USD/CHF             0.9526 | 0.95115

GBP/USD             1.6251 | 1.6210

EUR/GBP             0.7818 | 0.7800

 

For today

  • EUR: After Friday’s selloff the market continued moving lower from the opening in pushing from the opening 1.2685 areas to just below 1.2670 before running out of steam and trading higher as the market moved into the Tokyo fix. The market managed to extend slightly further than the opening but it was slight and has remained around the 1.2680 level for a good portion of the day so far before drifting off towards the 1.2670’s as we move towards the grey hours. With the market through the 2013 lows and just above the lows for Nov 2012 where the market broke, with bids to the 1.2660 levels before the market becomes weak, light mixture through the area is likely to find better support towards the 1.2600-20 areas however, with outflows from Europe at its high’s over the past month the downside looks particularly weak and German CPI figures need to be watched. Topside offers around the 1.2710-30 area with patches to the 1.2750 level were reasonable resistance is likely; the market is likely to see some mild mixture from then on.
  • GBP: Cable ranged in early trading between the 1.6230-50 areas opening towards the lows before pushing to the highs into the Tokyo session, since then the market has weakened as the Euro drifted, light EURGBP buying supporting the market and exaggerating the GBP movement. Light bids into the 1.6200 levels and better support from the 1.6170 area down to around 1.6150 the market continues to be affected by the Euro rather than anything else, national politics are causing minor stirs however, it is minor and there is little in the way of a deeper move into the mid 1.60’s. Topside offers are strong through the 1.6240-50 area before weak stops make an appearance and the market opens up a little to 1.6280-1.6300 where sentimental offers are likely with light profit taking.
  • JPY: USDJPY moved into the opening with a move to the 109.35 before moving steadily towards the 109.50 levels, the market held the 109.40 once the highs were made with plenty of cross buying going through against the Yen. Having broken through the 109.50 level the market is now vulnerable to a move higher and as I type this move has started, offers from the 109.80 are likely in strength with option barriers, those offers are likely to go to the 110.20 areas before any stops are likely to appear. Downside will now likely have bids from the 109.50 area being light in nature with some light weak stops through the level; while 109.00-20 is likely to hold some bids I would not expect anything too strong until the 108.50 areas, with expected stops through the level, of course this all depends on there not being interest from yield players entering the market.
  • AUD: With comments over the weekend and further comments coming from John Key NZ PM who agrees with RBNZ that the NZD is overvalued started the day off for the AUD with the market slipping back from the opening to the 0.8750 area and triggering stops as it moved through, the weekend news that the AUD government is call RBA to task after the swift reversal in its talks on the economy has left the market vulnerable also and this added to flows lower and the market pushed steadily to 0.8730 before again breaking and testing through 87 cents for the first time since the beginning of the year, before holding in the area for the move into the grey hours. Light topside offers around the 0.8730-50 area are likely with weak stops through the level and into the 0.8760. Downside will likely see bids all the way down towards the lows from Jan becoming stronger the closer you get to the 0.8640 areas.

Overnight News

NZD:

RBNZ Reports Biggest Currency Sale Since 2007 as Kiwi Weakens

Key Says NZD’s Goldilocks Level about 65 U.S. Cents: Interest.co

Fonterra to Step up Support for N.Z. Farmers With ‘Farm Source’

New Zealand’s Key Announces Confidence Agreement with ACT Party

N.Z.’s Key Announces Confidence Agreement with United Future

CNY:

China May Issue Targeted Measures amid Slow Growth: Sec. Journal

PBOC Official Says 6.7% Growth Can Meet 2020 Goal: Daily

CBRC’s Yan Urges Commercial Banks to Speed up Bad-Loan Write offs

HKD:

HKMA Says All Bank Operations Remain Normal Today Amid Protests

Hong Kong Escalation May Be Rating Negative: Fitch Official

JPY:

Kuroda: Japan Financial System Is Stable, Resilient to Shocks

Abe Says Japan Economy Remains Top Priority as Parliament Opens

Japan Post Said to Settle $6.4 Billion in Pensions Before IPO

Abe Cabinet Support Drops 7% to 53%, Nikkei Poll

JPY/USD:

Daiichi Sankyo to Buy Ambit to Strengthen Cancer Drug Pipeline

USD:

Obama Says U.S. Role in Iraq ‘Not America Against’ Islamic State

GBP:

U.K. Growth Slowed in 3Q, CBI Composite Survey Shows

 

 

Today’s data

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

08:30     GBP       Mortgage Approvals Aug C 65.0K | P 66.6K

08:30     GBP       M4 Money Supply M/M Aug C 0.40% | P 0.30%

09:00     EUR        Eurozone Economic Confidence Sep C 99.9 | P 100.6

09:00     EUR        Eurozone Industrial Confidence Sep C -5.8 | P -5.3

09:00     EUR        Eurozone Consumer Confidence Sep (F) C -11.4 | P -11.4

09:00     EUR        Eurozone Services Confidence Sep C 2.5 | P 3.1

09:00     EUR        Eurozone Business Climate Indicator Sep C 0.1 | P 0.16

12:00     EUR        German CPI M/M Sep (P) C -0.10% | P 0.00%

12:00     EUR        German CPI Y/Y Sep (P) C 0.80% | P 0.80%

12:30     USD       Personal Income Aug C 0.30% | P 0.20%

12:30     USD       Personal Spending Aug C 0.40% | P -0.10%

12:30     USD       PCE Deflator M/M Aug C -0.10% | P 0.10%

12:30     USD       PCE Deflator Y/Y Aug C 1.40% | P 1.60%

12:30     USD       PCE Core M/M Aug C 0.00% | P 0.10%

12:30     USD       PCE Core Y/Y Aug C 1.40% | P 1.50%

14:00     USD       Pending Home Sales M/M Aug C -0.50% | P 3.30%

 

Weekend News

EUR:

ECB Willing to Consider More Stimulus If Necessary, Coene Says
Catalonia’s Mas Challenges Rajoy as Referendum Decree Signed
Ifo’s Sinn Urges Germany to Act against ECB ABS Purchases: WiWo
CNY:

China Industrial Profits Drop in August as Slowdown Deepens
Shanghai FTZ Allows Wholly Foreign-Owned Rail Equipment Makers

HKD/CNY:

Hong Kong-Shanghai Link Limits Buy Orders to Curb Quota Hogging
Hong Kong-Shanghai Stock Connect May Start Oct. 27: SCMP
HKD:

Occupy Hong Kong Starts Early After Clashes Lead to 74 Arrests
GBP/HKD:

U.K. Parliament Set to Debate Hong Kong Democracy: SCMP

KRW/CNY:

South Korea Asset Management Firms Apply for China RQFII Status
South Korea Monitoring Yen Weakness Against Won: Yonhap News
JPY/USD:

Son’s Softbank Said to Discuss Buyout of DreamWorks Animation
Amari Says U.S. Approach to TPP Talks Not Sincere: Yomiuri
JPY:

Japanese Volcano Erupts Leaving One Woman Dead, Dozens Injured
GBP:

U.K. Set to Strike Islamic State After Parliament Backs Action
USD:

Pimco’s New Chiefs Seek to Calm Investors after Gross Departure
NZD:

N.Z. Opposition Labour Leader Cunliffe Resigns, Will Stand Again

 

Harry Hindsight

 

Friday’s premiership results

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

JPY         National CPI Core Y/Y Aug A 3.10% | C 3.20% | P 3.30%

JPY         Tokyo CPI Core Y/Y Sep A 2.60% | C 2.70% | P 2.70%

CNY        Conference Board Leading Economic Index Aug A 0.70% | C 1.30% | P 1.20%

EUR        German GfK Consumer Sentiment Oct A 8.3 | C 8.5 | P 8.6

USD       GDP (Annualized) Q2 (T) A 4.60% | C 4.60% | P 4.20%

USD       GDP Price Index Q2 (T) A 2.10% | C 2.10% | P 2.10%

USD       U. of Michigan Confidence Sep (F) A 84.6 | C 85 | P 84.6

 

Stay lucky

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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