Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 108.077 | EURUSD 1.27342 | EURJPY 137.64 | AUDUSD 0.88402 | NZDUSD 0.78005 | USDCAD 1.11084 | EURCHF 1.21207 | USDCHF 0.95182 | GBPUSD 1.61685 | EURGBP 0.78763 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               108.32 | 107.795

EUR/USD             1.2760 | 1.2719

EUR/JPY               137.85 | 137.44

AUD/USD            0.8886 | 0.8791

NZD/USD             0.7952 | 0.7891

USD/CAD             1.1115 | 1.1090

EUR/CHF              1.2128 | 1.2118

USD/CHF             0.9532 | 0.9499

GBP/USD             1.6198 | 1.6151

EUR/GBP             0.7887 | 0.7871

 

For today

  • EUR: A mixed session with the USDJPY struggling to regain its positioning after the FOMC, but with the market reluctant to give up on the idea of a stronger USD. The market opened around the 1.2735 areas and has ranged from the 1.2720 up to the high 1.2760’s, good volumes in the crosses as well as straight Euro and while the range has been ok it’s gone nowhere. Offers at the top of the range hold the long term downward trend in place however, a push through 1.2760 will open up some weak stops and the 1.2800 level is less likely to be as well defended. The downside has a lot of congestion on the 1.2600 handle with initial bids around the 1.2680 area and running down to 1.2650, with the ECB monthly today one would not be surprised in hearing concerns over the strength of the Euro as a reply to the FOMC’s commentary yesterday.
  • GBP: Cable has been buffeted by USD movements one way and Euro movements the other, holding around the 1.6160 levels in early trading the move higher into the later part of the session has been a steady affair to push to just below the 1.6200 levels. Offers on the topside above 1.6200 quickly turn into stops however; the market sees plenty of congestion over the 50 pips above that level and will struggle without any surprises from the BoE, and/or a big swing in the initial claims figure. Downside sees light bids until into the 1.6100 level where weak stops are likely to trigger into a run to 1.6050.
  • JPY: USDJPY held the 108.10-30 levels in early trading pushing from the opening 108.10 level to steadily climb from the fixing demand to the 108.30 level, with the fix and USD weekend buying over with the market eased back again and a good JPY machine orders helped the JPY to strengthen against the USD, strength in the AUD also lent weight the JPY as the AUDJPY ran into offers below the 96.00 level pushing at the USDJPY leg and through the 108.00 levels again, and as with the 4 previous attempts through the 108.00 level the market saw reactive buyers appearing. Downside sees 107.80 for the moment acting as the support level with yield players willing to buy into any dips however, the USD is now struggling whereas 24hrs ago it only a minor setback with envisaged moves higher still on the cards. A move through the 107.70 level will likely see some stronger stops than we’ve seen in awhile and an opening to test the 107.00-106.80 levels with momentum on the side of the sellers. Beware the yield buyers.
  • AUD: No fundamental change for the Oz, with the reaction to the Employment/Unemployment numbers a moot point as the market was well aware that there was some problem in the calculation last month. With revisions of previous months documented the -29.7K almost offset the revised figure for August, and the market remains confused. Opening around the 0.8840 areas the market eased back slightly before testing to 0.8850 and then the release, the initial move lower was then completely reversed in a short period of time moving from the highs to the 0.8790 areas before pushing straight back to above the highs. USDJPY weakness and offers in AUDJPY only kicking in late in the session gave room for the Oz to move to above the 0.8880 level as the market approached the grey hours. Topside offers into the 0.8920 areas with the market opening up to weak offers every 20 pips or so on its way to 90 cents so a very open topside. Downside light bids into 88 cent however a push through the 0.8750 level should see some speculative stops selling into a very strong downside key support area around the 0.8660 levels.

 

Overnight News

JPY:

Kuroda Says Many Options Available for Any Increased Easing

Kuroda: Japan Economy on Path to Achieve 2% Price Target

Japan Aug core machinery orders rise 4.7% MoM

Japanese Sold Net 179 Billion Yen Overseas Debt Last Week

Japan Mulls Higher Dividend Tax to Offset Corp. Tax Cut: Nikkei

AUD:

Australia employment falls in Sept, data in doubt

CNY:

Premier Says China Prefers Reform to Stimulate Economy

China Sets Yuan Reference Rate at Strongest Since Sept. 19

China Targets Local Govt. Debt in New Budget Action Plan: Xinhua

GBP:

U.K. Sept. RICS House Price Index at 30 vs Est. 36

 

Today’s data

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

GBP       RICS House Price Balance Sep A 30.00% | C 38.00% | P 40.00%

JPY         Machine Orders M/M Aug A 4.70% | C 1.10% | P 3.50%

AUD       Employment Change Sep A -29.7K | C -29.6K | P 121.0K | R 32.1K

AUD       Unemployment Rate Sep A 6.10% | C 6.20% | P 6.10% | R 6.00%

06:00     JPY         Machine Tool Orders Y/Y (SEP P) P 35.50%

06:00     EUR        German Trade Balance (EUR) Aug C 18.4B | P 22.2B

08:00     EUR        ECB Monthly Bulletin

11:00     GBP       BoE Rate Decision C 0.50% | P 0.50%

11:00     GBP       BoE Asset Purchase Target Oct C 375B | P 375B

12:30     USD       Initial Jobless Claims (OCT 4) C 291K | P 287K

12:30     CAD       New Housing Price Index M/M Aug C 0.20% | P 0.00%

14:00     USD       Wholesale Inventories Aug C 0.30% | P 0.10%

 

Harry Hindsight              

  • EUR: Doves rule or so it would seem, what changed. The market opened around the 1.2665 levels before rising into the early session to above the 1.2680 however, as rallies goes that was it for Asia and the Euro spent the rest of the session on the defence. Reasonable strong EURJPY selling in the face of a rising USDJPY supressed the Euro through the Tokyo session and the market moved to the grey hours holding just above the 1.2620 levels with only minor support below that area. Early buyers appeared in the run to the London opening and the market again attempted the topside, with little data in Europe the market was open to movements as positions were closed into the FOMC. Although the market did rise steadily in was a long winded affair and the 1.2680 level broadly held until the US release. A dovish tone with growth concerns, and growing worries over the strength of the USD, swings and roundabouts give it a few days and the ECB will be on the same page. The market leapt from the 1.2660 levels to above the 1.2720 level before find some type of resistance however it was too little too late and the market managed to push to the 1.2750 levels as the market pushed through offers.  The market ran out of time and drifted a little into the close unable to push higher or move below the 1.2720 levels
  • GBP: With only peripheral news in the UK the market was pushed around by far flung events, again a strong USD into early Asia sent the Cable from its lows of 1.6102-03 and back through the figure to push to the 1.6060 and remain around that area for deep into the NYK session, in fact of all the pairs this was the quietest, NYK open saw the market test the 1.6100 level for the second time in the day before again rejecting the level and slipping back to the 1.6060 levels however, at this point weak stops opened the market to below 1.6040 and the market before the FOMC seemed to be fixated on a hawkish commentary. As we found out that couldn’t have been further from the truth and as mentioned in the Euro section deep concerns over current strength in the USD and concerns on growth now and in the future leant an uneasiness and willingness to believe any interest hikes for the most part have been put back for awhile. The market in Cable headed straight higher trading initially a little beyond the 1.6160 levels before further limited movement touched about the 1.6180.
  • JPY: USDJPY had a choppy day with the market buffeted by USD weakness in the face of yield buyers. Initial sellers appeared in the market taking the market from the 108.15 level to test down through the NYK lows and into the high 107.70’s before the buying appeared and quickly took the market through 108.20’s and pushing in waves to above 108.50 as the market ran to the grey hours. London had other ideas and while the market repeatedly showed USD weakness each dip below the 108.00 levels was met with strong buying. Eventually London got the idea and gave up on the moves and the market moved into the NYK session around the 108.10 level and unchanged on the day. NYK traded the pair higher pushing steadily through the highs and above the 108.70 before the FOMC release, as with the rest of the majors the market quickly retraced its gains however, unlike the rest it didn’t move into a negative holding in the 108.15 areas to the close.
  • AUD: The Oz stood up for itself reasonably well considering the gradual climb of the USDJPY, trading from the 0.8810 levels the market slipped back with a USD rise. Moving into the grey hours some 50 pips lower around the 0.8760 level with weaker PMI numbers from CNY the only number hit the number that affected the Oz. Early London bought the Oz however, it was short lived and the days lows were set deeper into the session around the 0.8740 levels as the FOMC was released taking it quickly higher through the opening and the highs to trade above the 0.8840 level before touching briefly through the 0.8850 levels closing only slightly off the highs.

 

Yesterday’s premiership results

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

GBP       BRC Shop Price Index Y/Y Sep A -1.80% | P -1.60%

JPY         Current Account (JPY) Aug A 0.13T | C 0.19T | P 0.10T

CNY        HSBC China Services PMI Sep A 53.5 | P 54.1

JPY         Eco Watchers Survey: Current Sep A 47.4 | C 48.2 | P 47.4

CHF        Unemployment Rate Sep A 3.20% | C 3.10% | P 3.20%

CAD       Housing Starts Sep A 197K | C 195K | P 192.4K | R 196K

USD       Crude Oil Inventories A 5.0M | C 2.1M | P -1.4M

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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