Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 106.998 | EURUSD 1.2716 | EURJPY 136.06 | AUDUSD 0.87806 | NZDUSD 0.79675 | USDCAD 1.12218 | EURCHF 1.20691 | USDCHF 0.94912 | GBPUSD 1.61149 | EURGBP 0.78917 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               107.125 | 106.825

EUR/USD             1.27305 | 1.2706

EUR/JPY               136.205 | 135.985

AUD/USD            0.8798 | 0.8746

NZD/USD             0.7985 | 0.7957

USD/CAD             1.1232 | 1.1216

EUR/CHF              1.2072 | 1.2066

USD/CHF             0.9497 | 0.9480

GBP/USD             1.6130 | 1.6107

EUR/GBP             0.7892 | 0.7887

For today

• EUR: The Euro moved off the lows around the 1.2710 areas as weak but steady buying moved into the market, with the SNB standing ready to support the EURCHF cross while busy discussing the idea of increasing gold holdings rather than reserves of foreign currency’s one has to wonder to what point. Likely impact of budgets in front of the ECB from France, Italy and 3 others that break the rules. This is likely to continue to weight on the market until resolved, if a resolution can be found. After a quiet Asian session the market remaining for several hours in the 1.2720-30 range for a good period of time the market limps quietly into the grey hours. Bids from the 1.2680 levels to the current lows of the day support the market with profit taking as well as range play bids through the 1.2680 level the market still sees patches of strength into the 1.2620 levels however, given the ECB’s perchance for fudging there is nothing to say that the downside will remain strong. To the topside now light offers from the 1.2730 areas gives way to weak stops as the market moves through 1.2750 and the to the 1.2800 level and the strong offers that have kept the market from rising to the more important 1.2900 areas.
• GBP: The market waits for the BoE minutes and/or any change in the voting however, while the inflationary figures have likely put back any rise in interest rates this is more than likely a product of falling energy prices over the past couple of months and will not likely to cause any panic for the moment. The market spent much of the early part of the session holding the lows around 1.6110 level, and while the market was dragged lower yesterday by the Euro more than anything else the range today has been only slightly better than the Euro moving from those lows to test the 1.6130 levels as the session moved on, with volumes much lower than the previous couple of weeks. Light offers through the 1.6130 level and similar into 1.6150 before opening for a fresh attempt higher and strong offers towards the 1.6180-1.6215 areas. Above there the market opens up with a push through the 1.6250 level leaving the 1.6400 level open from the move down in late September.
• JPY: A slow start to the day had the market dipping through the 107.00 levels as the Oz rose moved back higher after the release of the Oz inflationary data, the market pushed down into the 106.80’s before finding enough demand to offset the selling in AUDJPY which moved through the session in a choppy but narrow range considering. The move back was a steady grind higher pushing back above the 107.00 levels as the market moved into the grey hours with the market very subdued. Topside offers run from the 107.30-50 areas before any likelihood of stops making an appearance with further offers strengthening as the market approaches the 108.00 areas, even through the area the market is still likely to see plenty of supply holding the USDJPY in place with only a strong push through the 108.50 levels likely to see anymore topside space. To the downside reasonably well traversed over the past week or so sees bids around the 106.50 levels before stronger levels from 106.20 and through to 105.80, even from there 105.50 remains a key level of support for the moment.
• AUD: The Oz drifted in early trading moving from the opening 0.8780 areas to trade into the mid 0.8760’s before moving into the Tokyo session rising quietly before the numbers. The release of the numbers which as per the norm are not straightforward saw the little black boxes sending signals into the market to sell on the back of the headline trimmed QoQ number at 0.40% weaker than expected, needless to say the market hit below the 0.8750 levels before surging back through and trading to the 0.8780’s before settling down and heading steadily to the 88 cent levels, most of the volume on the day was produced at this point with the Oz crosses gyrating as much as the AUDUSD. Offers continue to hold the market above the 0.8830 level with range players again likely to be in front of those levels. A push through is likely to see weak stops and through 0.8850 and open to test the 89 cent level for the second time this month. Good offers in the lead up to that 89 cent level will be dependent on peripheral markets with US CPI numbers likely to be watched closely. Downside sees 0.8750 with light support with the better supportive areas around the 0.8700 level and the other end of the range play with buyers lined up below there. As pointed out 0.8660-50 remains the key level.

Overnight News

AUD:

Inflation remains balanced with RBA unconcerned with the QoQ number

JPY:

Japans trade balance still a concern as the number comes in weaker than expected.

EUR:

Euro crawls higher on no Corporate bond buying headline.

Today’s data

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

AUD       Conference Board Leading Index Aug A -0.20% | P 0.50% | R 0.60%

AUD       Westpac Leading Index M/M Sep A -0.10% | P -0.10%

JPY         Trade Balance (JPY) Sep A -1.0T | C -0.91T | P -0.92T | -0.91T

AUD       CPI Q/Q Q3 A 0.50% | C 0.40% | P 0.50%

AUD       CPI Y/Y Q3 A 2.30% | C 2.30% | P 3.00%

AUD       CPI RBA Trimmed Mean Q/Q Q3 A 0.40% | C 0.50% | P 0.80%

AUD       CPI RBA Trimmed Mean Y/Y Q3 A 2.50% | C 2.70% | P 2.90%

AUD       CPI RBA Weighted Median Q/Q Q3 A 0.60% | C 0.50%| P 0.60%

AUD       CPI RBA Weighted Median Y/Y Q3 A 2.60% | C 2.60% | P 2.70% | R 2.60%

08:30     GBP       BoE Minutes

08:30     GBP       MPC Official Bank Rate Votes C 2–0—7 | P 2–0–7

08:30     GBP       MPC Asset Purchase Facility Votes C 0–0—9 | P 0–0–9

12:30     USD       CPI M/M Sep C 0.00% | P -0.20%

12:30     USD       CPI Y/Y Sep C 1.60% | P 1.70%

12:30     USD       CPI Core M/M Sep C 0.20% | P 0.00%

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

12:30     CAD       Retail Sales M/M Aug C 0.20% | P -0.10%

12:30     CAD       Retail Sales Less Autos M/M Aug C 0.30% | P -0.60%

14:00     CAD       BoC Rate Decision C 1.00% | P 1.00%

14:30     USD       Crude Oil Inventories P 8.9M

Harry Hindsight              

• EUR: Early trading was dominated by cross plays as the USD lost some of its previous day’s gains with the Euro moving off the lows around 1.2790 to move steadily to a London opening around the 1.2820 levels up from the opening 1.2800. Early reports above that the ECB were in the process of authorising the purchase of Corporate bonds in its endeavours to instil the economy were quickly put into doubts as contrary reports appeared in several newspapers, this had the effect of turning the market having already failed the 1.2840 levels, to drop was a quick 40 pip drop from the 1.2810 levels to hit 1.2770 before finding limited bids. The selling then continued into the NYK session with the market unable to break back above the 1.2780 levels with any conviction and succumbing to the pressure to drift down to the 1.2720 levels before finding sufficient support to hold the market.  Real money sellers dominated the corp buyers throughout the day.
• GBP: Cable started the day no different to that of the Euro, moving steadily lower from the opening before reversing the losses caused by cross movements. The move higher was a tight channelled move from the 1.6155 level to push to the 1.6185 areas before running into sufficient resistance to hold the market for the move into the London session. The market held steady into the early part of London unable to move higher against the USD however, and initially losing ground against the Euro as the cross moved to above the 0.7940 levels. The reversal of fortunes for the Euro dragged a little on Cable however, the EURGBP cross dropped back over the course of the London session trading through 0.7900 and pushing to the 0.7880 levels, with the slide in the Euro and a lack of data the GBP was dragged lower over the course of the session holding into the NYK session around the 1.6150 level before giving ground to the 1.6130 levels and ultimately the 1.6110 areas before moving into a close just off the levels.
• JPY: With Japanese health Minister Shiozaki telling the newswires that he had no knowledge of misplaced official documents on GPIF the USD and equity rally seen from the opening of the week were quickly reversed over the course of the session dropping from the early highs in Tokyo just above the 107.00 levels to 106.70 before the market held for a period around the 106.80 levels, The session continued to bear the brunt of the confusion over the document taking the market through 106.70 and triggering weak stops as worries over a likely increase in margins against assets linked to the document. The move into the London session saw the market on the lows around the 106.30 levels. The 106.30 level held and the rally was steady pushing in one move over the course of a couple of hours to the opening levels around the 106.90 level before stalling and holding in a 106.60-80 range until the end of the London session. The move from that point was a steady rise to the 106.90 levels into the close as the USD finished the day in positive territory.
• AUD: The Oz limped along through the early period with the release of the China data the market moved off the lows of 0.8760 levels to above 0.8810 levels as USDJPY headed lower AUDJPY carry remained in a reasonably tight but choppy range. The move towards London saw the Oz pushing to the topside with the 0.8830 under threat in the opening period of London only to find range players selling on a failure to break through, although the market dipped to the 88 cent areas it was unable to move to far and the opening into NYK saw fresh buying pushing to the topside again with only a minor breach of the 0.8830 levels. As with the first attempt the market failure stirred the market and a rising USD soon took the Oz back through the opening levels of 88 cent and through to the 0.8780 levels before holding steady.

Yesterday’s premiership results

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%

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

CHF        Trade Balance (CHF) Sep A 2.45B | C 2.43B | P 1.39B | R 1.33B

GBP       Public Sector Net Borrowing (GBP) Sep A 11.1B | C 9.3B | P 10.9B | R 11.0B

USD       Existing Home Sales Sep A 5.17M | C 5.10M | P 5.05M

Good Luck,

Andy