Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 106.327 | EURUSD 1.28096 | EURJPY 136.197 | AUDUSD 0.87562 | NZDUSD 0.79492 | USDCAD 1.12574 | EURCHF 1.20732 | USDCHF 0.94248 | GBPUSD 1.60885 | EURGBP 0.79611 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               106.50 | 106.135

EUR/USD             1.2815 | 1.2794

EUR/JPY               136.40 | 135.81

AUD/USD            0.8792 | 0.8734

NZD/USD             0.7958 | 0.7878

USD/CAD             1.1270 | 1.1244

EUR/CHF              1.20755 | 1.2072

USD/CHF             0.9435 | 0.94215

GBP/USD             1.6110 | 1.6069

EUR/GBP             0.79695 | 0.79525

 

For today

  • EUR: A quieter day so far with the market holding around the 1.2800 levels, and early dip into the 1.2790’s was slowly reversed heading back through the figure to only fail in the 1.2815 areas, the market continued in that range for a good portion of the session. Chatter on the Greek situation and the fact that ABS is no likely to be implemented any time soon and the Nov meeting will likely see ineffectual chatter on the subject. So with no tier 1 data from Europe today we will be beholden to rumours and commentary from whomever decides to stand in front of a mic. Topside offers around the 1.2840 are likely to be building how much remains to be seen but without impetus the 1.2900 level is a good way off, with stronger offers the closer you move to the level. Stops beyond the 1.2920 levels are likely to be reasonable in size and opening a possible test of the 1.3000 levels however, is the sentiment correct? Downside has light support through the 1.2720 levels and a push through quickly opens the market to a deeper move into the 1.2640-50 areas and reasonable support for the short term with those bids likely to be down into the 1.2600 area before giving way to a more mixed market. A break through 1.2590 is likely to see stops appear and an opening to test the lows of the year towards the 1.2500 level.
  • GBP: While the numbers over the past few weeks have been a little mixed with concern about a falling inflationary number, which really is down to the strength of the USD and its reserve currency status when measured against commodities. Opening around the 1.6080 area the market stabbed higher on the Tokyo opening to around the 1.6115 level in GBPJPY buying and limited EURGBP selling only to drift off from the highs to the opening levels and touching through to 1.6070 before holding in a tight range for the session. Light bids into the 1.6060 levels with patches of bids running down to the 1.6020 level, weak stops likely below the 1.5980 levels and before a mixed market ensues. A move to the topside through the offers into 1.6120 level sees only limited stops mixed with further offers, a strong push through 1.6140 does see the mixture favour stops and an opening to the 1.6150 however the topside is then dominated by offers through to 1.6200 before a clear break above 1.6220 opens further gains.
  • JPY: With a drop off of yield buying and concerns about the US, and European economies flows seem to be moving to the safe haven areas again, whether this is the damage by limited media panic remains to be seen but one poor set of numbers is just that and confirmation is awhile away. USDJPY opened higher with GBPJPY buying going through into the Tokyo session and taking the market into the mid 106.40’s before starting a steady slip lower in quiet trading to dip below the 106.20 areas. The market has now made a couple of attempts to break back through the 106.50 levels a push through the level is likely to see some light stops, this would open up a test to the 107.00 levels however, with a lack of data today the market is likely to take a breather from the hectic trading we’ve seen over the course of this weak. Downside risk seems more immediate with the yield plays side lined for the moment with a push through the 105.50 level likely to open up a deeper move however, through that level sees bids from the 105.20 levels and through there likely to continue to the 104.80’s before opening for a deeper test on 104.00.
  • AUD: Overall a fairly quiet range with the carry trade plays from the opening to take the market to its highs around 0.8790 as well as AUDNZD bounces as the RBNZ releases the same unjustified levels commentary from the 25th Sep and its warnings to boot by accident, why they announced they had released it by accident amazes me and I’d have stuck to the story anyway as it did exactly what it was meant to do however, they corrected the release and both antipodean currencies rose steadily higher. Once the market had finished with mistakes USD buying moved into the market and the Oz again dipped lower. Topside light offers around the 0.8760 level and all the way through to the better offers from 88 cent onwards with very little in the way of stops likely until beyond 0.8840. Downside has bids from the 87 cent level onwards increasing in size to 0.8660 key level with a likely stop fest below 0.8650.

 

Overnight News

IMF/CNY:

Property sector poses biggest risk to China

JPY:

Kuroda reiterates view that BoJ to continue easing until the 2% inflationary target is met

Kuroda states too early to discuss specific exit strategies

Japan business confidence sags, outlook weak

EUR:

Merkel backs Eurozone’s rules over budget submissions by France and Italy

ECB will provide Greek banks with more funding: Greek CB

USD:

Market nervousness has caused chatter by media sources on QE4

 

Today’s data

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

12:30     CAD       CPI M/M Sep C 0.00% | P 0.00%

12:30     CAD       CPI Y/Y Sep C 2.00% | P 2.10%

12:30     CAD       BoC CPI Core M/M Sep C 0.10% | P 0.50%

12:30     CAD       BoC CPI Core Y/Y Sep C 2.00% | P 2.10%

12:30     USD       Housing Starts Sep C 1.02M | P 0.96M

12:30     USD       Building Permits Sep C 1.04M | P 1.00M

13:55     USD       U. of Michigan Confidence Oct (P) C 84 | P 84.6

 

Harry Hindsight              

  • EUR: The early market saw the market slip back from the opening around the 1.2840 levels to push below 1.2820 holding that range for the most part through Asia. Volumes were reasonable given the flows during the previous 24hrs. The move into the grey hours saw light selling moving in from early Europeans testing below 1.2800 and briefly penetrating the 1.2780 levels and into the London session. London seemed to be at a loss to what to do with the pair deciding to hold off with the Eurozone Trade Balance better than expected and no real change on the CPI numbers to note. Movement came on a weak Spanish auction, sharp rise in the cost of funding Greek debt and the testing of Eurozone rules by both France and Italy as they submitted there budgets. Volumes increased and the market dropped to below 1.2720 in a quick stab lower, a steady rise then ensued before weak stops through the 1.2780 level were triggered and the market was once again testing the 1.2840 levels. The end of the London session saw light profit taking and the market settling down to trade around the 1.2800 levels for the remainder of NYK and into the close.
  • GBP: Cable struggled from the opening slipping from the 1.6020 areas with light buying in EURGBP holding any attempts higher. The market slipped to the 1.5980 levels and although we ranged back to the 1.6000 level the market moved into the grey hours again on its lows. A lack of numbers didn’t really help the Cable however; strong EURGBP selling into the London session did, with the market moving back above the 1.6020, an early indication of more to come! The fall back in the Euro dragged the Cable lower however, it could only manage a move to 1.5960 outperforming the Euro and the EURGBP began to see more selling in the pair, Cable rose from that point ignoring US numbers and steadily heading to the 1.6080 level in a tight channel, the rally stalled and the market remained in a 1.6060-90 range for the move into the close.
  • JPY: USDJPY struggled for direction through the Asian session gradually moving from the opening 106.00 areas to just above the 106.30 levels into the London session opening, early London players were sellers into the market however, reasonable support appeared around the 105.60 levels with plenty of two way plays occurring deep into the NYK market before the market rejected the lows and headed back higher to push through to the 106.40’s into the close.
  • AUD: The Oz opened on its highs around the 0.8835 area and with the release of consumer inflation expectations saw the market gradually ease back through the 0.8780 levels before levelling out and heading to the London session with the market ranging around the 88 cent level, Early London were good sellers and again we saw AUDJPY stops and margins hit squeezing out the retail players holding the carry trades and the Oz dipped to below the 0.8700 level, each dip was met with HFT willing to buy against the real money sellers and the market after a few failures moved quickly higher triggering weak stops through the 0.8740 areas and pushing the market back to the 0.8780 levels with offers now holding that line, as with the lows the market rejected the level somewhat and slipped into the close to around the 0.8760 levels.

 

Yesterday’s premiership results

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

NZD       Business NZ Manufacturing Index Sep A 58.1 | C 56.5 | P 57

AUD       Consumer Inflation Expectation Oct A 3.40% | P 3.50%

CHF        SECO Economic Forecasts

EUR        Eurozone Trade Balance (EUR) Aug A 15.8B | C 13.3B | P 12.2B | R 12.7B

EUR        Eurozone CPI M/M Sep (F) A 0.40% | C 0.40% | P 0.10%

EUR        Eurozone CPI Y/Y Sep (F) A 0.30% | C 0.30% | P 0.30%

EUR        Eurozone CPI – Core Y/Y Sep (F) A 0.80% | C 0.70% | P 0.70%

CAD       Manufacturing Shipments M/M Aug A -3.30% | C -1.80% | P 2.50% | R 2.90%

CAD       International Securities Transactions (CAD) Aug A 10.28B | C 4.31B | P 5.30B | R 5.20B

USD       Initial Jobless Claims (OCT 11) A 264K | C 285K | P 287K

USD       Industrial Production Sep A 1.00% | C 0.40% | P -0.10%

USD       Capacity Utilization Sep A 79.30% | C 79.00% | P 78.80%

USD       Philly Fed Survey Oct A 20.7 | C 20 | P 22.5

USD       NAHB Housing Market Index Oct A 54 | C 59 | P 59

USD       Crude Oil Inventories A 8.9M | C 2.3M | P 5.0M

USD       Net Long-term TIC Flows Aug A $36.5B | P -$18.6B

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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