Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 108.782 | EURUSD 1.2655 | EURJPY 137.667 | AUDUSD 0.8763 | NZDUSD 0.78012 | USDCAD 1.11332 | EURCHF 1.21276 | USDCHF 0.95828 | GBPUSD 1.60815 | EURGBP 0.78692 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               109.25 | 108.69

EUR/USD             1.26645 | 1.2605

EUR/JPY               137.755 | 137.35

AUD/USD            0.8780 | 0.8727

NZD/USD             0.7855 | 0.7782

USD/CAD             1.1184 | 1.1129

EUR/CHF              1.2130 | 1.2124

USD/CHF             0.96195 | 0.9576

GBP/USD             1.6086 | 1.6027

EUR/GBP             0.78705 | 0.78625

 

For today

  • EUR: The Euro opened around the 1.2660 levels and was under pressure from the start as the USD started to reverse some of the losses. The market moved into the Tokyo session and the selling increased with the Euro dropping steadily through the ranges to below 1.2610 before holding the level and slowly rising to the 1.2620 level. Good two way flows throughout the session but particularly below the 1.2620 level. Bids into the 1.2600 before giving way to a more open playing field with a mix down to yesterday’s opening areas of 1.2520 with strong bids from there until below the 1.2470 levels. Topside offers around the 1.2680 levels protect the 1.2700 with lighter offers just behind and then weak stops opening the market to a test of the 1.2750 areas.
  • GBP: USD selling in the previous session left the market vulnerable to a reversal when the USDJPY started to rally into the Tokyo session. Cable opened around the 1.6080 closing levels and held into the Tokyo session before the push lower started. Moving from the highs the market slipped back in the first couple of hours in Tokyo to the 1.6050 levels with a brief period holding the level the market eventually dipped again as it ground through the limited bids to touch below 1.6030 before holding and moving back through 1.6040 as the USDJPY gave ground. Offers into the 1.6100 level then open up to weak stops and a similar pattern to the Euro with the next set of offers around the 1.6150 level and weak offers from there to the 1.6200 level were the offers increase in size. Downside has limited bids through to the 1.6000 with bids increasing as the market moves through to the lows from Friday. Beyond that sees some margin stops and opening up of more downside potential.
  • JPY: USDJPY rose from the opening in Tokyo as the market waited for the monetary policy statement, pushing from the 108.70 levels to rise steadily to 109.20 however, with a fairly dovish commentary and Abe telling the market contrary to previous comments from others that “weak Yen hurting small companies and households” the market turned quickly dropping back through the 109.00 and back to the lows from the previous session. Kuroda also mentioned the costs of imports for small non-manufacturers in the policy statement. Early buyers were across the board with fund/real money/retail buyers of USD’s. USDJPY now sees light offers into the 109.20 areas which are likely to continue through to 109.40-50 areas before breaking for a fresh attempt through 109.80 and the stronger offers into 110.00-20. Downside has light bids at the lows and into the 108.60 before giving way to light stops and a mixture beyond, whether the yield players are willing to enter the market given the volatility of the past few day’s remains to be seen, if so then the downside will see increasing interest coming to market to smooth any decline.
  • AUD: The Oz started the day touching the 0.8780 levels as strong JPY selling entered the market pushing the Oz higher as the carry trade moved into focus early. The move in the USDJPY though became more of a USD move and the other currencies as well as the Oz were subsequently driven lower and in the Oz’s case taken quickly to the 0.8750 before becoming a little choppy as the market positioned itself for the expected no change from the RBA on interest rates. The move back was no less strong with the market moving into the grey hours having recovered around the 0.8770 level and pushing onwards. Topside offers from the 0.8800-20 areas now holds the market with weak stops on a push through the 0.8830 area opening up a test to the next levels in front of the 89 cent level. Downside really is a struggle and the market looks quiet until it approaches the 0.8660 supportive levels before opening up further downside moves.

 

Overnight News

JPY:

BOJ’s Kuroda: Will Add Stimulus If Downside Risks Materialize

Abe Says Weak Yen Hurting Small Japanese Companies, Households

Japan PM: exports undershooting due to shift in production overseas

Nothing Decided on How to Announce GPIF Asset Review: Shiozaki

Japan GPIF portfolio shift delayed until Nov or later sources

BOJ stands pat on policy, revises down view on output

Japan Govt. Should Consider Monetary Policy Exit Strategy: Nikai

Japan’s Suga says weak yen has not boosted exports as expected

BOJ Majority Said to Favour Ditching Two-Year Inflation Timeframe

Japan Needs Sales Tax Increase, Economist Ito Says: Nikkei

JPY/KRW:

Aso: Not So Worried About S. Korea’s Park’s Comments on Weak Yen

USD:

George Says Inflation Has Remained Low and Is Relatively Stable

NZD:

N.Z.’s English Says Currency Remains Challenge for Exporters

New Zealand 2014 Budget Deficit Wider Than August Projection

AUD:

Australia CB holds rates, says A$ still high

Hockey Says Falling Commodity Prices to Hurt Federal Budget

 

Today’s data

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

AUD       RBA Rate Decision A 2.50% | C 2.50% | P 2.50%

JPY         Leading Index Aug (P) A 104 | C 104.2 | P 105.4

06:00     EUR        German Industrial Production M/M Aug C -1.40% | P 1.90%

07:00     CHF        Foreign Currency Reserves Sep P 453.8B

07:15     CHF        CPI M/M Sep C 0.20% | P 0.00%

07:15     CHF        CPI Y/Y Sep C 0.00% | P 0.10%

08:30     GBP       Industrial Production M/M Aug C 0.00% | P 0.50%

08:30     GBP       Industrial Production Y/Y Aug C 2.60% | P 1.70%

08:30     GBP       Manufacturing Production M/M Aug C 0.10% | P 0.30%

08:30     GBP       Manufacturing Production Y/Y Aug C 3.40% | P 2.20%

12:30     CAD       Building Permits M/M Aug P 11.80%

14:00     GBP       NIESR GDP Estimate Sep P 0.60%

 

Harry Hindsight              

  • EUR: After a quiet start in Asia rising from the opening levels around 1.2515 areas the market stormed through to the London session breaking through 1.2520. The grey hours started to see strong buying appearing with talk of profit taking moving in however, I’d be more inclined to think the move was a more general USD selloff as the USDJPY moved steadily lower from the outset. The market moved up through the London session topping around the 1.2570 level. NYK continued the move and the market continued rising steadily before seeing weak stops triggered through the 1.2620 levels, running to 1.2650 before slipping back and returning to more steady trading, the market eventually topped above the 1.2670 before holding in the 1.2650-60 levels with good volumes. The market ignored the German poor factory orders and Eurozone numbers; it also ignored the several commentaries from assorted ECB dignitaries who oppose any number of technicalities.
  • GBP: Cable was a little more robust after a stuttering start, moving from the opening 1.5980 areas to dip to below 1.5960 before starting its own steady climb to 1.5990, before moving into the grey hours. Early selling from Europeans pushed the market back towards the lows however, EURGBP buying helped drag the Cable higher and it tagged along. NYK session saw further strong buying as the market moved higher at a greater rate with cross buying kicking in, as the market moved towards the end of the session Cable failed on a quick move towards the 1.6100 levels before slipping back to hold the 1.6080 areas. While the Euro led the way the overall tone was one of a retracement of the USD on a broad level as people revaluate their positions after a couple weeks of intense news.
  • JPY: The USDJPY was unable to capitalize on the gains made over the course of the session on Friday, and although the market opened around the closing levels and traded into the mid 109.80’s, then it was all one way over the rest of the day, trading steadily lower moving into the London session around the 109.40. By the time the market reached the end of the day it had pushed easily through the levels with the gap on the charts from Friday filled and creating some buying before dipping through the 109.00 levels and trading quickly through the 108.70 level before stabilizing into the close.
  • AUD: As you would expect with a falling USDJPY the market in the Oz moved steadily higher having dipped below the 0.8660 levels the market into Tokyo however, reversed the losses and it was one way traffic into the London session holding around the 0.8730 levels and trading sideways into NYK for the final rise to trade above the 0.8780 levels and settling into a 0.8760 close.

 

Yesterday’s premiership results

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

AUD       TD Securities Inflation M/M Sep A 0.10% | P 0.00%

EUR        German Factory Orders M/M Aug A -5.70% | C -2.40% | P 4.60% | R 4.90%

EUR        Eurozone Retail PMI Sep A 44.8 | P 45.8

EUR        Eurozone Sentix Investor Confidence Oct A -13.7 | C -11.8 | P -9.8

CAD       Ivey PMI Sep A 58.6 | C 53.4 | P 50.9

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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