Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 106.845 | EURUSD 1.27523 | EURJPY 136.247 | AUDUSD 0.87719 | NZDUSD 0.78818 | USDCAD 1.11978 | EURCHF 1.20876 | USDCHF 0.94792 | GBPUSD 1.60851 | EURGBP 0.79282 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               107.305 | 106.76

EUR/USD             1.2770 | 1.2714

EUR/JPY               136.55 | 136.15

AUD/USD            0.8813 | 0.8736

NZD/USD             0.7917 | 0.7857

USD/CAD             1.1214 | 1.1190

EUR/CHF              1.2092 | 1.2085

USD/CHF             0.9506 | 0.9470

GBP/USD             1.6095 | 1.6062

EUR/GBP             0.7935 | 0.7915

 

For today

  • EUR: The sudden rise in late NYK saw the market open and immediately start to fade in early trading, while the rise was quick the movement from the 1.2760 levels has been a steady decline into the Tokyo session with the market moving into the mid-teens on the 1.27 handle early in the session, from that point onwards though the market has been unable to make any headway to the topside holding in a tight range for the moment as we move towards the grey hours. Topside sees strong offers likely to be building above the 1.2770 levels and into the 1.2800 area. A push through that level will likely see weak stops however, the 1.2850 level is the next offering areas and we will need a fair bit of momentum to move through that and open 1.2950. To the downside sees plenty of room for movement with the 1.2715/00 levels lightly bid however, it has been sufficient for the Asian session, below will likely see some weak stops and then a mixture from then to 1.2680, a push through will in all likelihood open up fresh tests to the 1.2620 level yesterday’s opening area.
  • GBP: With Cable limited reactions to the USD move in late NYK the market has been particularly quiet in the pair with the opening 1.6075/80 being the central point of the range for the most part with the market extending in both directions by little more than 10 pips. Topside offers start above the 1.6120 areas with likely range play sellers willing to fade the market a push through there opens a push to the 1.6200 levels where better sellers are likely however, this is all dependent on the inflationary numbers today, Downside has bids into the 1.6060 areas where the market holds a push through the 1.6040 levels will attract stop interest but it will be limited with 1.6000-1.5950 possibly a strong buying zone however, with the number today nothing is certain.
  • JPY: USDJPY spent the day recovering with those that have been squeezed out by the bank holiday moves and yield players steadily coming back into the market, moving from the NYK lows the market has moved off the 106.80 area steadily rising through the session to 107.30 before trading sideways for the bulk of the session. Downside bids from the 106.80 areas would need to be cleared for any further movement lower with weak stops likely behind the 106.60-70 areas now, from there the market is open to the 105.50 areas where the next step higher occurred at the beginning of last month and I’d be more inclined with the 105.20 levels being the strong point. Topside 107.70-108.00 is the stronger offering areas however as has been seen over the past couple of months momentum is everything and with the exporters quiet the offer side is likely to be limited to some extent.
  • AUD: Much of the movement in the USD was contained by two-way flows in the Oz with the market drifting in early trading to the 0.8740 levels from the opening, several comments over the session from different functionaries however, RBA’s Debelle was the plainer speaker in stating that a lower Oz would be helpful in achieving a balanced growth, of course this is in the face of retail Japan recovering their carry trades and the Oz has been bid since the Tokyo session opened driving the Oz to above the 88 cent level before drifting in late session to just below the level. The 88 cent level has been a sticking point over the past month and apart from the one move through the level on a push for 89 cents the market has risen above the level but unable to push too far. Offers from the 0.8820 areas possibly through to 0.8840 before the likelihood of stops, a push through there will open up a new attempt at 89 cent however, the verbal intervention is likely to pick up momentum with it. Downside has light bids into the 0.8770 areas before giving way to weak stops and a movement back to the 0.8720 areas where the market is likely to see better bids and profit taking, through there though we are close to the 0.8660 key support levels and only a strong break through there is likely to push it any further.

 

Overnight News

EUR:

Beppe Grillo’s Five Star movement is driving for a withdrawal from the Euro

CNY/HKD:

Hong Kong overtook the US in Sep as top destination for Chinese shipments, casts doubt on figures

 

Today’s data

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

GBP       BRC Sales Monitor Y/Y Sep A -2.10% | C 1.00% | P 1.30%

JPY         Japan Money Stock M2+CD Y/Y Sep A 3.00% | C 2.90% | P 3.00%

AUD       NAB Business Confidence Sep A 5 | P 8 | R 7

07:15     CHF        Producer & Import Prices M/M Sep C 0.30% | P -0.20%

07:15     CHF        Producer & Import Prices Y/Y Sep C -1.40% | P -1.20%

08:30     GBP       CPI M/M Sep C 0.20% | P 0.40%

08:30     GBP       CPI Y/Y Sep C 1.40% | P 1.50%

08:30     GBP       Core CPI Y/Y Sep C 1.80% | P 1.90%

08:30     GBP       RPI M/M Sep C 0.30% | P 0.40%

08:30     GBP       RPI Y/Y Sep C 2.30% | P 2.40%

08:30     GBP       PPI Input M/M Sep C -0.50% | P -0.60%

08:30     GBP       PPI Input Y/Y Sep C -6.70% | P -7.20%

08:30     GBP       PPI Output M/M Sep C -0.10% | P -0.10%

08:30     GBP       PPI Output Y/Y Sep C -0.30% | P -0.30%

08:30     GBP       PPI Output Core M/M Sep C 0.00% | P 0.10%

08:30     GBP       PPI Output Core Y/Y Sep C 0.90% | P 0.90%

09:00     EUR        German ZEW (Economic Sentiment) Oct C 0 | P 6.9

09:00     EUR        German ZEW (Current Situation) Oct C 15 | P 25.4

09:00     EUR        Eurozone ZEW (Economic Sentiment) Oct C 7.1 | P 14.2

09:00     EUR        Eurozone Industrial Production M/M Aug C -1.60% | P 1.00%

 

Harry Hindsight              

  • EUR: Tit for Tat comments as FinMins discuss the world economy and such over the weekend and the meeting of the IMF/World bank sent the market higher during the closed Tokyo session with the market probably a little exaggerated in movement. The market opened just above the 1.2620 levels and comments from the US about rate increases likely to be delayed due to the sharp rise in the USD over the past month led to a sell off of the USD, with the Euro rising steeply early in the session to just below the 1.2700 level where sufficient offers appeared to dampen the excess. The market then drifted once the flow diminished which would suggest only a limited number of long term USD longs exited the market. By the time we’d moved into the London session the market had dipped to the 1.2660 areas and remained in a 1.2660/95 range until the last hour of the day. The official opening of the S&P contract saw a large move down and the USD selling resumed this time driving the Euro through the 1.2700 and triggering weak stops, the market pushed for 30 minutes or so to above the 1.2760 levels before petering out and drifting to a 1.2750 close on the day. Some reports on the movements into the close are on several Ebola scares in the Boston area, which don’t seem to have been substantiated.
  • GBP: Cable opened around the 1.6070 levels and unlike the Euro was bid from the opening trading steadily higher to above the 1.6120 level in early trading and holding deep into the non-existent Tokyo market, having moved comfortably above the 1.6100 levels the market remained in a tight range for several hours before moving towards the grey hours and dropping back as the Euro dropped back lower in the face of some reasonable EURGBP cross buying, this cross buying continued into London and the market was back to the opening levels. With no data for the day the Cable was the poor man out dipping below the open and trading for a good portion of the day in the 1.6050-70 range until the late selloff of the USD, even then the upside was contained within the days range with the Cable only briefly making it back above 1.6100 with the market less exposed to GBPUSD shorts than the EURUSD.
  • JPY: The USDJPY market opened down from Fridays close around the 107.50 levels and continued to drift through the early part of the session pushing to the 107.10 levels, this could be explained by the fact that the US had a few things to say about currency manipulation, not quite as blunt as I’ve put it but the market got the point and the fact with Sports day for Japan the usual yield players were non-existent, so limited support, even so the market was unable to push any lower through the session until just before the close. The reopening of the S&P led to strong selling of the USD and the move caught the market by surprise with USDJPY dropping through the 107.00 level to trigger some margins by surprise and tumbling the market to the stronger support areas around the 106.80 levels.
  • AUD: Although the Trade balance number saw a decline the actual importer and export numbers both grew, this underpinned a weak performing Oz in early trading with the market having opened around the 0.8680 level, falling to the supportive 0.8660 level before quickly making its way higher over the next couple of hours through the 87 cent level and triggering light stops and pushing to the 0.8740 level. With Tokyo, US and Canada out for the day the market slowed and the move into London was quiet with only limited selling in the Oz, strong AUDJPY carry trade selling was curtailed after the fall on Friday and from the opening and the market once fully in London started a steady climb to trade above the 0.8780 levels but spending a good portion of the day around 0.8760 in an expected quiet session.

 

Yesterday’s premiership results

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

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

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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