Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 107.648 107.60-63 | EURUSD 1.26286 1.2635-40 | EURJPY 135.943 135.85-136.75 | AUDUSD 0.86838 0.8693-95 | NZDUSD 0.78158 0.7803-30 | USDCAD 1.12011 1.1168-75 | EURCHF 1.20866 1.2085-90 | USDCHF 0.95707 0.9560-80 | GBPUSD 1.60759 1.6075-95 | EURGBP 0.78552 0.7851-58 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               107.63 | 107.06

EUR/USD             1.2698 | 1.26205

EUR/JPY               136.06 | 135.56

AUD/USD            0.8750 | 0.8652

NZD/USD             0.7887 | 0.7795

USD/CAD             1.1206 | 1.1168

EUR/CHF              1.2091 | 1.2081

USD/CHF             0.95705 | 0.95205

GBP/USD             1.6126 | 1.6064

EUR/GBP             0.78765 | 0.7854

 

For today

  • EUR: The market opened around the 1.2625 areas and was quickly bid moving the market to the 1.2645 areas after commentary from the IMF/World bank meeting over the weekend, concerns that the rising USD will have some effect on the US economy led to several comments on the subject from the US, needless to say we’ve seen the same comments from different members of the Eurozone so claims by the US have some grounding however, they could be accused of doing the same. With Japan out for Sports day and the US, Canada for Columbus day the market while seeing plenty of flow was a little thinner than normal liquidity, the release of the China numbers saw the Oz jump and consequently with the thin market the Euro jumped quickly through the 1.2650 level triggering weak stops continuing from the 1.2665 levels in a more steady manner to above the 1.2690 and the range from the early part of Friday. The move towards the grey hours holds around the 1.2690 and little in the way to hold the market down. Some light offers through the 1.2700 levels are likely to see weak stops through the 1.2710 areas. Topside is then open to just below the 1.2800 levels with the market becoming heavy with offers into the area and likely to be a struggle given the bank holidays. Downside has light bids from the leveraged range traders from the 1.2640-00 areas with weak stops below the level from those longs. A move below is likely to see the market open for another attempt at the 1.2500 levels.
  • GBP: Cable opened around the 1.6070 levels pushing quickly after the weekend news in the same manner as the Euro, moving to above the 1.6090 levels the market held for a short period before again pushing higher hitting weak stops above 1.6100 and to above the 1.6120 levels in a steady rise. The market moves into the London session after an over exaggerated rise the market holds just short of the highs. Topside 1.6130 holds light offers going back into the 1.6150 areas and while there may be weak stops through the level offers continue into the 1.6200 areas and likely to be it for the day. Downside has very light support now around the 1.6100 levels with bids from that point on in patches down through 1.6050. Better bids appear towards the 1.5950 levels and the lows for the year.
  • JPY: The market opened lower around the 107.60 in pre-markets and on the official opening was around the 107.50 areas before continuing to trade lower, you could surmise with the Japanese holiday in full swing the market was lacking the bids seen on Friday and the market slid back to the 107.10 level over the course of the session with only resting bids in the market to keep the slide from going through the 107.10 levels. Downside bids 107.10 through to 106.80 hold the market for the moment dating from the middle of last month’s move up to the 109.00 levels a push through the 106.70 level will likely see a steady decline back to 106.00 areas which is the top of another of those steps higher from the beginning of last month. Topside sees the market willing to fade any rises however, with bank holidays today the market is likely to be choppy but confined generally to the 107.00 handle.
  • AUD: The Oz started the day under pressure with weekend comments suggesting worries for the Chinese economy or not depending on which news media you listened too. The carry trade was much in focus from the opening with the AUDJPY pushing immediately lower as margins came under review with the low opening in USDJPY. The cross pushed through the 93.00 levels before what would normally be the Tokyo opening stemmed the tide and the cross held its ground. From this point the Oz held its levels on the 0.8660 level a level we’ve visited before over the past few weeks. With the release of the CNY numbers showing an increase in trading the Oz started a quick rise through the 87 cent level and pushing to above the NYK range from Friday to touch the 0.8750 levels before settling back into a 0.8730-40 range. Topside see’s light offers to the 0.8750 remaining in the market, weak stops likely through that level, before running into better offers building from the 0.8760 levels and getting stronger towards the 88 cent level. Downside is again open to that key supportive 0.8660 with 4 separate attempts to push through this month. Distinct possibility that if the market can break through the 0.8650 level with conviction the downside will open up for a far deeper move.

 

Overnight News

AUD:

Coalition MP Kelly O’Dwyer flags first possible steps toward tightening foreign investment laws for housing.

NZD:

NZ Sept Home price index rises to 3,933.5 vs. 3926.5

NZ Sept Home sales fall 12.0% YoY

NZ Sept House price index rises 4.1% YoY

NZ Sept House price index rises 0.2% MoM

CHF:

SNB is prepared for negative rates if necessary.

CNY:

Hong Kong police start removing protest barricades, patience sounds sorely tested over the weekend.

Trade balance slips below expectations as exports expand and imports increase further

CNY Exports YoY Sep 15.3% vs. expectations 12% previous 9.4%

CNY Imports YoY Sep 7% vs. expectations -2.0% previous -2.4%

EUR:

Germany is seeing internal and external pressure to inject liquidity into its own economic system.

Eurozone seeks to soften German opposition to stimulus spending

 

Today’s data

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

CNY        Trade Balance Sep A $31.0B | C $41.41B | P $49.84B

16:30     USD       Fed’s Evans Speaks

 

Weekend News

CNY:

PBoC’s Jun Ma, No major stimulus needed in foreseeable future

PBoC has confidence that growth would continue at a steady pace while inflation remains low.

CAD:

BoC’s Stephen Poloz monetary policy will be focused on Canada’s own economy

USD:

FED’s Evan’s wants zero rates until 2016 despite stronger growth.

FED’s Fischer said global economic weakness could cause US monetary policy tightening to be delayed

US Treasury’s Sec Lew calls on the International community to stick to their prior FX commitments and avoid devaluations.

EUR:

Draghi reiterated the mantra from the past months

Draghi denies ECB is deliberately attempting to weaken the Euro.

JPY:

Largest Labour organisation calls for 2% wage increase in the upcoming collective bargaining session.

RUB/UAH:

Putin again order troops away from the border areas.

USD/RUB:

US sanctions may start to ease with the next few weeks if tensions continue to cool

IRAQ:

Iraq asks for US ground troops as ISIS threatens Baghdad.

OPEC:

Rift between members continues to widen as the price weakens

 

 

Harry Hindsight

  • EUR: Friday was a drab affair to be honest with a reasonable range as the market slid into a long weekend with both the US, Canada and Japan out for the Monday. Opening around the 1.2690 areas the market moved quietly through the 1.2700 triggering only light stops in a run to the 1.2717 area before starting a steady drift lower and holding around 1.2700 through into the grey hours. Early Europeans sold steadily in the grey hours and the London session continued the move through the 1.2660 levels. The market held the market in slow trading until NYK entered the market and the steady declines continued taking the market to 1.2620 for the London close and a quiet finish to the session holding around the 1.2620 level for several hours. With little data for the day and the IMF/World bank meeting likely to not provide anything other than platitudes and hot air.
  • GBP: A quiet Asian session with the Cable opening around the 1.6120 levels pushing slowly to just short of 1.6140 before slipping back to the opening levels into the grey hours. London opening saw the market moving steadily lower before the visible trade deficit, once released with a better figure than expected the market hardly reacted however, the revision of the previous month balanced the good number. The market moved off the lows briefly at the low 1.6040’s but soon continued drifting lower after the slight rise and moved into the NYK session drifting slowly lower. The market hit lows below 1.6010 as the London session ended and moved up from those lows. The market managed a meagre rise into the back end of the day to the 1.6060 levels and short covering ended the day around the 1.6075 levels.
  • JPY: The USDJPY struggled throughout the day with the market battling yield players against USD sellers as consensus on the movement of interest rates wanes in the US. Opening around the 107.80 area the market traded around this level for the day, each attempt below the 107.70 levels was met with some reasonable buying interest taking it back to above the 107.80 pushing during the Asian session to above the 107.90 with very little conviction. The market again drifted off into the grey hours, the early European session rallied again from the 107.70 levels this time pushing into the London session to trade above the 108.10 levels before again reversing and again pushing lower as USD selling across the board moved into the market and took the USDJPY back to below 107.70. A gradual move off the lows to the 108.00 levels during the NYK hours, this time the market saw slow selling into the close drifting back through the 107.70 levels into the close and set the low of the day.
  • AUD: A steady move higher over the course of the day for the USD left the Oz drifting from the opening 0.8780 levels, trading quietly through the Asian session moving in a tight 0.8760-80 range. The move into the grey hours and early London sent the pair to the 0.8720 area which remained fairly well supported to the 0.8700 throughout the day, dipping a couple of times through the 87 cent levels until the closing couple of hours to leave the day around the 0.8680’s.

 

Friday’s premiership results

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

JPY         Tertiary Industry Index M/M Aug A -0.10% | C 0.20% | P 0.00% | R -0.30%

AUD       Home Loans Aug A -0.90% | C 0.20% | P 0.30%

JPY         Consumer Confidence Sep A 39.9 | C 42.2 | P 41.2

GBP       Visible Trade Balance (GDP) Aug  A -9.1B | C -9.6B | P -10.2B | R -10.4B

GBP       Construction Output M/M Aug A -3.90% | C 0.50% | P 0.00% | R 1.90%

CAD       Net Change in Employment Sep A 74.1K | C 20K | P -11.0K

CAD       Unemployment Rate Sep A 6.80% | C 7.00% | P 7.00%

USD       Import Price Index M/M Sep A -0.50% | C -0.60% | P -0.90%

 

Stay lucky

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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