Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 106.946 | EURUSD 1.27997 | EURJPY 136.891 | AUDUSD 0.87836 | NZDUSD 0.79693 | USDCAD 1.12855 | EURCHF 1.20676 | USDCHF 0.94274 | GBPUSD 1.61636 | EURGBP 0.79192 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               107.005 | 106.29

EUR/USD             1.2825 | 1.27885

EUR/JPY               136.89 | 136.335

AUD/USD            0.8828 | 0.8759

NZD/USD             0.8036 | 0.7954

USD/CAD             1.1297 | 1.1258

EUR/CHF              1.20695 | 1.20625

USD/CHF             0.9435 | 0.94075

GBP/USD             1.6186 | 1.6153

EUR/GBP             0.7925 | 0.7917

 

For today

  • EUR: With European economic squabbles at the fore again with discussions between Berlin and Paris in a fudge to appease one or the other over the budgets presented to the ECB from both France and Italy threaten the Stability and Growth pact. In the meantime the Euro holds on to the 1.2800 levels, moving from the opening areas just below the 1.2800 levels the market moved slowly lower with cross selling dominating the market, moving deeper into the Tokyo session the crosses had less dominance in the market and the market in Euro pushed back to the highs of NYK, trading into the 1.2820’s before stalling into the grey hours.   Offers above the 1.2840 levels hold the market in play still with a strong move through the level likely to trigger stops and an opening for a test to 1.2900 levels even through that level the offers are likely to continue through to the 1.2950 levels. Downside bids thicken towards 1.2750 however, overall the market is much less populated one suspects until closer to the 1.2650 areas then it is all bids for the moment. With another day devoid of data the market again is likely to be a little less sparkling than last weeks.
  • GBP: Market movement in the Cable was identical to that of the Euro dipping from the NYK highs through to the 1.6155 levels before steadily making its way back to above the 1.6180 level as the market moved towards the JPY numbers, Cable struggled at the level and was unable to push to far through. Topside offers into and slightly through the 1.6200 levels holds the market if the market remains quiet, through the 1.6220 level the market becomes a little looser and a potential to break to the 1.6250 levels and a stronger level of offers suspected. Downside has some stubborn bids appearing into the 1.6100 levels extending to the 1.6050 levels before weak stops appear through the level.
  • JPY: the USDJPY moved off the 106.85 levels pushing back to the 107.00 levels into the NYK session, concern about the trade deficit and the weak Yen’s part in that situation, of course things have changed a little since the last time the market ran into this scenario with most of the major companies operating abroad and escaping the Yen’s weakness and rising raw material costs however, this still leaves the smaller companies paying ever increasing costs. A better than expected all industry activity number strengthened the JPY and sent the market USD bearish. The market had steadily made its way lower trading to a holding 106.80 level before the release of the numbers and a quick move through 106.70 and then 106.60 as weak stops are triggered to trade down to the 106.30 levels. The move lower in USDJPY triggered minor corrections in the USD across the board with several currencies pushing through levels such as NZD however, a possible explanation for the move in USDJPY and the weakening of the USD is reports of a document on the GPIF investment strategy surfacing over the weekend at Nikkei offices,  a report that should only have been released after a study by experts, this was said to have caused the major shift higher in the market yesterday leaving the space for the market to move lower again as Govt. officials try to contain the situation, taking this into  context is likely to cause a raising of margin levels as the exchanges monitor the risks involved. Light bids from the 106.20 area give way to weak stops through the 105.80 levels with suspected strong bids before 105.50 levels become vulnerable to further declines to the Sep lows. Topside sees offers again from the 106.80 levels through to the 107.40 levels with patches of mixed orders between those levels.
  • AUD: The market held its closing areas moving into the Tokyo session with a narrow range before the release of a mixed batch of numbers from China to chase the market higher and through the 0.8790 levels, with growth slowing the market drifted off the highs flowing back down through the lows to touch the 0.8760 areas. Sentiment for the USD changed quiet dramatically with the NZD leading the way and Oz moving with it as the market tried to rebalance the crosses and carry trades. The Oz jumped to above the 0.8810 levels before trading solidly through to just below the 0.8830 levels into the grey hours. The RBA’s minutes were to some extent limited in effect with reiteration of prudent course of rate stability, less help than normal in achieving growth and balanced against commodity pricing. Offers from the 0.8840-60 levels are the initial resistance to a move to 89 cents where stronger offers are seen through with suspected stops above the 0.8920-30 levels. Downside sees light bids to the 0.8750 levels and these grow in size towards the 87cent level, below that level is likely to see very strong bids for the moment with only a strong push through the 0.8650 likely to negate them.

 

Overnight News

CNY:

China Third-Quarter GDP Slows

China September Industrial Output Growth Picks Up

China May Set Lower GDP Growth Target for 2015: Bus. News

China to Unleash Vitality of Market, Fin. Minister Says: Daily

PBOC Should Encourage Yuan Rate 2-Way Flexibility: Sec. Journal

China 3Q Housing Sales Fall 10.8%

SGD/JPY:

GIC Said to Buy Tokyo Office Property for $1.7 Billion

JPY:

Shiozaki: Bringing Forward GPIF Asset Review under Discussion

Japan Cabinet Approval Rating Falls 2.7 Ppts to 53%: Sankei

Sumitomo Life to Increase Japan Bond Holdings in FY 2H

AUD:

RBA Sees Period of Rates Stability, Says Currency Remains High

Australia ANZ Weekly Consumer Sentiment Falls 1.9% to 111.6

NZD/AUD:

N.Z. Emigration to Australia Falls to 20-Year Low

 

Today’s data

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

CNY        Fixed Assets Ex Rural YTD Y/Y Sep A 16.10% | C 16.30% | P 16.50%

CNY        Retail Sales Y/Y Sep A 11.60% | C 11.70% | P 11.90%

CNY        Industrial Production Y/Y Sep A 8.00% | C 7.50% | P 6.90%

CNY        GDP Y/Y Q3 A 7.30% | C 7.20% | P 7.50%

4:30        JPY         All Industry Activity Index M/M Aug A -0.10% | C -0.30% | P -0.20% | R 0.40%

6:00        CHF        Trade Balance (CHF) Sep C 2.43B | P 1.39B

8:30        GBP       Public Sector Net Borrowing (GBP) Sep C 9.3B | P 10.9B

14:00     USD       Existing Home Sales Sep C 5.10M | P 5.05M

 

Harry Hindsight              

  • EUR: Asia remained in a fairly tight range over all with the market moving lower from the opening from the 1.2760 levels to hold on the 1.2740 into the Tokyo session. USDJPY was the driving force during most of the session and the EURJPY offers pressurized the Euro lower as USDJPY pushed higher, once the market in EURJPY broke higher the Euro was able to regain its losses and also push through to the 1.2770 levels. Failure to continue to push left the market vulnerable to the German and Eurozone numbers with an indifferent set of PPI figures and a lower current account number for the Eurozone left the market slipping to its lows in a move through the 1.2740 level to just above 1.2730 before correcting as the market rejected the downside and moving steadily higher throughout the session from that point on. Volumes were limited however; the buys had the day with light real money buying driving the market higher. Better offers were seen moving into the market above the 1.2800 levels holding the levels into the closing period below 1.2820.
  • GBP: Cable was limited in range moving from the opening 1.6100 levels to touch through the 1.6090 levels before the market lifted in the second half of Asia to push to the 1.6110 levels and holding there into London opening. Weak Euro numbers dragged the Cable lower before the market bounced off the 1.6080 levels and traded in a tight channel through to the 1.6150 level where light offers held the market for several hours. The move into NYK struggled at the levels before a break through and triggering of weak stops to the 1.6180 levels.
  • JPY: The market gapped open higher than Fridays close holding around the 107.10 levels touching above 107.20 in early trading and basing off the 107.10 into the Tokyo session. The market moved steadily higher as news of resignations and talk of Abenomics reaching a crucial tipping point. Holding the 107.30 level into the London session the market started to give ground however, while technically that seemed a likely result giving ground to fill the gap created on the opening the market saw weak stops triggered on the drop back through the 107.00 levels into NYK. The market then slowed and traded in a very tight range through the NYK session into a close just below 107.00.
  • AUD: With USDJPY moving higher on the open the Oz was forced to open below Fridays close to a holding level eventually in line around the 0.8760 levels trading down to the 0.8750 on a couple of occasions before the carry trade pushed through offers and the Oz was allowed to rise, Oz pushed quickly to the 0.8775 levels before rising quietly from there to above the 0.8785 levels and stalling for the first time. The move into the London session saw the market been sold by leveraged types for a range play and triggering weak stops through the 0.8770 levels and a move back to the 0.8750 levels, this narrow range continued into the NYK session before moving eventually off the low side to rise steadily through to the 0.8800 into the closing period.

 

Yesterday’s premiership results

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

GBP       Rightmove House Prices M/M Oct A 2.60% | P 0.90%

EUR        German PPI M/M Sep A 0.00% | C 0.00% | P -0.10%

EUR        German PPI Y/Y Sep A -1.00% | C -1.00% | P -0.80%

EUR        Eurozone Current Account (EUR) Aug A 18.9B | C 21.3B | P 18.7B | R 21.6B

CAD       Wholesale Sales M/M Aug A 0.20% | C 0.20% | P -0.30%

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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