Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 107.055 | EURUSD 1.26584 | EURJPY 135.515 | AUDUSD 0.87138 | NZDUSD 0.78509 | USDCAD 1.12964 | EURCHF 1.20731 | USDCHF 0.9537 | GBPUSD 1.59053 | EURGBP 0.79592 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               107.42 | 107.045

EUR/USD             1.26625 | 1.26245

EUR/JPY               135.705 | 135.25

AUD/USD            0.8724 | 0.8675

NZD/USD             0.7846 | 0.7808

USD/CAD             1.1345 | 1.1290

EUR/CHF              1.2075 | 1.20705

USD/CHF             0.95615 | 0.9538

GBP/USD             1.5913 | 1.5878

EUR/GBP             0.79605 | 0.7948

 

For today

  • EUR: The market continued to decline into the early part of the Asian session moving from the opening levels to push slowly to below the 1.2630 levels. With a mixture of cross plays in the market the after effect of the Fitch announcements on France and yesterday’s lowering of German GDP expectations, with plenty of volume in the move lower the market struggled before starting to rise slowly as the market rejected the level for the first time. Bids to the downside around the 1.2620 levels into the 1.2600 with lighter bids moving through to the 1.2580 levels, a push through opens a test to the 1.2500 supportive levels again. Topside offers are a little scarce with weak offers for the moment around the 1.2700 levels a push through 1.2740 will see some light stops and an opening of only a few pips to the 1.2760 levels and then strengthening offers into the 1.2800 levels.
  • GBP: Cable drifted from the opening with the new lows to the 1.5880 levels touched before the market started to recover a little, the move lower was more to do with the dip in Euro one would guess as there was little conviction in the move and then moved off the lows to push back above the 1.5900 levels. Of course this leaves the 1.5880 level as the imaginary support level for the moment and while yesterday’s inflationary news may deflect interest rate rises in the short term may be. This said if GDP continues and retail sales improve it will negate the issue to some extent. Topside is likely to have offers around the 1.5940 level with patches extending to 1.5980 before weak stops appear and the 1.6040 level opens up for a test.
  • JPY: The rise from the NYK session continued into the Asian session moving off the 107.00 levels and driving higher into the 107.30 level and waiting offers, the move into Tokyo saw the final push during the Tokyo fix and the market moved briefly to above the 107.40. The market once through the fix saw little interest in pushing higher and held briefly before slipping slowly lower and towards the 107.10 areas, weak Industrial production numbers helped the market to move back towards the highs but continued to struggle around the 107.30 levels. Offers on the topside run from the current highs into the 107.50 area with weak stops through the level opens up a test of the 108.00 level however, strong offers in front of that level would need strong US numbers for a break above. Downside bids continue to the 106.70 levels before the market gives way to weak bids and the market opening to 106.20.
  • AUD: The Oz dipped in the early session as the USDJPY rose and the carry trade remained steady through the early part of the session, dipping below the 0.8700 levels to around 0.8680 the market moved off the lows as the carry trade began to pick up. The Oz pushed steadily higher as the USD began to weaken into the later part of the session and into the grey hours. Topside offers above the 0.8750 level offer the first line in the sand before struggling over the next few pips and stronger offers from the 0.8770 levels into 88 cent and although we’ve been through the level in the past 24hrs the topside offers are likely to be range plays, weak stops through the 0.8820 level are likely to be protected for the moment. Downside bids congregate around the 0.8660 key support level and there would have to be a strong break lower to dent it.

 

Overnight News

EUR:

Fitch keeps France on negative watch

Fitch sees France Govt. debt to GDP ratio of 99.7% in 2017

JPY:

BoJ senior official says a weak Yen is positive for exports and companies operating globally

He obviously made the observation that it was conversely so for small firms and importers

BoJ Gov. Kuroda thinks that as long as FX moves in line with fundamentals, weak Yen is positive.

USD/GBP:

Abbvie/Shire acquisition reconsidering after weaker consumption data

CNY:

China’s housing inflation slowed to 1.6% in Sep least since 2012

AUD:

Suspected strong demand for today’s Bond auction

 

 

Today’s data

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

AUD       Westpac Consumer Confidence Oct A 0.90% | P -4.60%

CNY        CPI Y/Y Sep A 1.60% | C 1.70% | P 2.00%

CNY        PPI Y/Y Sep A -1.80% | C -1.50% | P -1.20%

JPY         Industrial Production M/M Aug (F) A -1.90% | C -1.50% | P -1.50%

06:00     EUR        German CPI M/M Sep (F) C 0.00% | P 0.00%

06:00     EUR        German CPI Y/Y Sep (F) C 0.80% | P 0.80%

08:30     GBP       Jobless Claims Change Sep C -35.0K | P -37.2K

08:30     GBP       Claimant Count Rate Sep C 2.80% | P 2.90%

08:30     GBP       ILO Unemployment Rate (3M) Aug C 6.10% | P 6.20%

09:00     CHF        ZEW (Expectations) Oct P -7.7

12:30     USD       Empire State Manufacturing Oct C 20 | P 27.54

12:30     USD       Advance Retail Sales Sep C -0.10% | P 0.60%

12:30     USD       Retail Sales Less Autos Sep C 0.20% | P 0.30%

12:30     USD       PPI M/M Sep C 0.10% | P 0.00%

12:30     USD       PPI Y/Y Sep C 1.80% | P 1.80%

12:30     USD       PPI Core M/M Sep C 0.10% | P 0.10%

12:30     USD       PPI Core Y/Y Sep C 1.70% | P 1.80%

14:00     USD       Business Inventories Aug C 0.30% | P 0.40%

18:00     USD       Federal Reserve Beige Book

 

Harry Hindsight              

  • EUR: Unconfirmed reports of an Ebola outbreak turned out to be several people with colds on a plane however, the damage was done and the S&P crashed through the 200 DMA and USD followed shortly after to finish NYK with sharp moves, the move into Asia saw the market drifting from the highs around the 1.2760 levels as the market settled down and the move into Tokyo had seen the market drift to the 1.2740 levels. Tokyo initially bought into the market with EURJPY cross buying before the selling reappeared pushing to below the 1.2720 levels. The market in Asia then stalled in the Euro and pottered around the 1.2720-30 levels into the grey hours. Early Europeans sold into the London session and weak stops were triggered below 1.2710 before holding the 1.2690 levels and then the European numbers, all of which missed the consensus levels and Euro’s continued the move dropping quickly to the 1.2650 levels and some reasonable support to hold the market for the rest of the session, there was brief moves to 1.2640 however, movements to the topside were mostly limited to just above the 1.2660 levels. Fitch maintained a negative outlook for France.
  • GBP: Cable was far more stable through the Asian session ranging between the 1.6060-80 levels after the highs above 1.6115 in late NYK. Early Europeans sold quietly into the London session before the inflationary numbers were released. A surprise core CPI drop set the tone and the rest of the numbers were really no better, of course this puts back the date of any interest rises or so the market believes. The market dropped quickly from the 1.6040 areas triggering stops through the 1.6020 levels and dipping to 1.5960 before slowing its decent, it did not stop declining it just slowed trading through the rest of the session to finish around the 1.5900 levels.
  • JPY: A reasonable range over the course of the day rising steadily from the opening levels below 107.00 pushing from the lows of 106.80 and steadily moving higher through the 107.30 levels, with the retail players and yield buyers entering the market from the start, AUDJPY carry trade saw plenty of movement to the topside. The market stalled at the 107.30 levels with offers now holding leaving the market to move through into the London holding above the 107.00 levels but struggling on each move to the 107.30. UK numbers saw strong GBPJPY selling causing strong selling in the cross as the GBP weakened. USDJPY quickly dipped to the 106.80 levels before holding and breaking free of the GBP run. The move into NYK saw a weak attempted to push the market lower again however, USD was recovering from the day before selloff and the market made a little headway to push back through the 107.00 levels. The run to the close was limited in action with the market centred around 107.00 level before the market picked up for the close.
  • AUD: The Oz was a little subdued while the market dipped for the USD and slid slowly lower in the early part of the session before the Tokyo market entered the fray with plenty of two way flows, retail buyers in AUDJPY took both legs higher and the Oz moved steadily higher pushing from the 0.8740 levels to touch briefly above 0.8810. Once the highs were made and the retail market had finished with the carry trade the market started a steady decline moving back to the lows into the London session before ranging for several hours from the 0.8720 level to 0.8750 with profit taking causing the topside from the opening in NYK, a late dip and a quick stab at the 87 cent levels failed to result in any meaningful move and the market finish around the 0.8710 on a good range.

 

Yesterday’s premiership results

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

CHF        Producer & Import Prices M/M Sep A -0.10% | C 0.30% | P -0.20%

CHF        Producer & Import Prices Y/Y Sep A -1.40% | C -1.40% | P -1.20%

GBP       CPI M/M Sep A 0.00% | C 0.20% | P 0.40%

GBP       CPI Y/Y Sep A 1.20% | C 1.40% | P 1.50%

GBP       Core CPI Y/Y Sep A 1.50% | C 1.80% | P 1.90%

GBP       RPI M/M Sep A 0.20% | C 0.30% | P 0.40%

GBP       RPI Y/Y Sep A 2.30% | C 2.30% | P 2.40%

GBP       PPI Input M/M Sep A -0.60% | C -0.50% | P -0.60% | R -1.20%

GBP       PPI Input Y/Y Sep A -7.40% | C -6.70% | P -7.20% | R -7.70%

GBP       PPI Output M/M Sep A -0.10% | C -0.10% | P -0.10%

GBP       PPI Output Y/Y Sep A -0.40% | C -0.30% | P -0.30%

GBP       PPI Output Core M/M Sep A -0.10% | C 0.00% | P 0.10%

GBP       PPI Output Core Y/Y Sep A 0.80% | C 0.90% | P 0.90%

EUR        German ZEW (Economic Sentiment) Oct A -3.6 | C 0.2 | P 6.9

EUR        German ZEW (Current Situation) Oct A 3.2 | C 15 | P 25.4

EUR        Eurozone ZEW (Economic Sentiment) Oct A 4.1 | C 7.1 | P 14.2

EUR        Eurozone Industrial Production M/M Aug A -1.80% | C -1.60% | P 1.00% | R 0.90%

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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