Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 107.149 | EURUSD 1.26465 | EURJPY 135.503 | AUDUSD 0.87777 | NZDUSD 0.79469 | USDCAD 1.12334| EURCHF 1.20618 | USDCHF 0.95366 | GBPUSD 1.60498 | EURGBP 0.78795 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               107.36 | 107.105

EUR/USD             1.2650 | 1.2633

EUR/JPY               135.665 | 135.42

AUD/USD            0.8780 | 0.8749

NZD/USD             0.7930 | 0.7831

USD/CAD             1.1263 | 1.1232

EUR/CHF              1.2065 | 1.20605

USD/CHF             0.95495 | 0.9537

GBP/USD             1.6055 | 1.6040

EUR/GBP             0.7883 | 0.7873

For today

• EUR: While the market was contained in a narrow range the market was unable to move above the 1.2650 level in early trading before giving ground as the USD continued to strengthen with end of week USD buying flowing through most of the pairs, the market pushed into the mid 1.2630’s with good volume two way volumes running in the market. Topside Euro’s now sees light offers from the 1.2650 area in play with weak stops likely through the 1.2660 level with only slightly better offers through to 1.2700; through there good offers are still in play around the 1.2730-40 levels that have held in the past 24hrs. Through there opens up fresh attempts above the 1.2800 areas. Downside finds itself sitting on supportive areas a push through the 1.2600 level will open up fresh attempts on the yearly lows and a potential move into the 1.2100-1.2500 range from 2012.
• GBP: Cable maintains its levels moving slightly higher over the course of the Asian session to above the 1.6050 levels; while volumes have been ok the market has struggled for any impetus in any direction. Light bids to the 1.6020 levels with better likely below the area and into the 1.6000 levels, a push through there will see weak stops from yesterday’s longs in play and a potential move to the 1.5900 level and stronger support around the years lows. Topside offers around the 1.6100 level are likely now to be a little sticky however; a strong push will open up fresh attempts at the 1.6200 levels that have been causing problems from early this month onwards.
• JPY: Having dipped back from the highs in NYK the market opened around the 107.15 level and moved into the Tokyo session with little difference, the release of the Manufacturing PMI better than expected did very little to the market and the end of week buyers took the market steadily higher and into the 107.35 levels. The topside offers running from the highs and into the 107.40 still dominate and with no real impetus have not been tested and continue to hold the market, a push through the 107.50 will likely see stops being triggered and a quick move to the 107.80 levels and further offers running to beyond the 108.00 levels. Downside bids are light into the 107.00-106.80 range before giving ground and opening up another test of the 106.20 bids.
• AUD: The Oz has slowly declined with a slip in the NZD CPI dragging on the Oz and the NZD dropped back some 40 pips after the release, an as expected NAB number didn’t help and although it hasn’t run away it’s been a quiet move from the opening 0.8780 levels to the 0.8750 level before holding just off the lows. 0.8780 now provides light resistance after a range bound session with plenty of cross buying going through, beyond that the market is likely to see further offers every 10 pips or so moving to the stronger resistance at the 0.8830, downside is on this week’s supportive levels and a push through the 0.8740 levels is likely to open up a quick stab at the 87 cent area however, beyond that still remains strongly bid and only a fresh attempt through the 0.8660-50 level will break the status quo we’ve seen this month.

Overnight News

NZD:

NZ Annual Inflation At Bottom of Central Bank Target Range

CNY:

China Manufacturing PMI Rises as Inventory, Jobs Improve: HSBC

China Forex Reserves Fall Due to Stronger Dollar: SAFE’s Guan

SAFE’s Guan Says U.S. QE Tapering Affects China Capital Flows

China to Focus on Breaking up Local Monopolies: Info Daily

China May Issue Guidelines for Internet Finance Soon: Bus. News

JPY:

Japanese Sold Net 1169.1 Billion Yen Overseas Debt Last Week

Japan Sells T-Bills at Negative Yield for First Time on Record

Amari: U.S., Japan Made Some Real Progress in Many Areas in TPP

Markit/JMMA Japan Oct. Flash Mfg. PMI 52.8 vs 51.7 in Sept.

JPY/VND:

Japan Cos. May Depart Vietnam Due to Lack of Support: JETRO

Today’s data

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

NZD       CPI Q/Q Q3 A 0.30% | C 0.50% | P 0.30%

NZD       CPI Y/Y Q3 A 1.00% | C 1.30% | P 1.60%

AUD       NAB Business Confidence Q3 A 6 | P 6

JPY         Manufacturing PMI Oct (P) A 52.8 | C 52.1 | P 51.7

CNY        HSBC China Manufacturing PMI Oct (P) A 50.4 | C 49.9 | P 50.2

07:30     EUR        Germany Manufacturing PMI Oct (P) C 49.6 | P 49.9

07:30     EUR        Germany Services PMI Oct (P) C               55 | P 55.7

08:00     EUR        Eurozone Manufacturing PMI Oct (P) C 50 | P 50.3

08:00     EUR        Eurozone Services PMI Oct (P) C 52 | P 52.4

08:30     GBP       Retail Sales M/M Sep C -0.10% | P 0.40%

08:30     GBP       BBA Mortgage Approvals Sep C 41.5K | P 41.6K

10:00     GBP       CBI Trends Total Orders Oct C -3 | P -4

12:30     USD       Initial Jobless Claims (Oct 18) C 269K | P 264K

13:00     USD       House Price Index M/M Aug C 0.40% | P 0.10%

14:00     USD       Leading Indicators Sep C 0.70% | P 0.20%

14:00     EUR        Eurozone Consumer Confidence Oct (A) C -12 | P -11.4

Harry Hindsight              

• EUR: A slow steady rise through the Asian session and into the London start moving below the 1.2720 levels and just missing 1.2740. The move into the London session saw further denials of ECB plans for corporate bond buying by ECB’s Coene the wording no concrete proposals suggests that discussions are still on going. This pushed the Euro down through the low 1.2700’s steadily pushing through to hold the 1.2690 levels for several hours and the move into NYK. After a brief respite the market again dropped quickly with the CPI numbers out of the US indicating a headline increase above expectations and the Euro’s was again under pressure this time falling quickly to the 1.2660 level before a steady push through the level and down to below 1.2650 as profit taking moved in to slow the decent. Selling was from almost every class, with limited bids and profit taking moving into the market to hold it in a tight range 1.2640-50 into the close.
• GBP: A quiet Asian session eventually ran out into the London session and the market falling into the opening trading from the highs around 1.6130 to push through the 1.6100 levels on the opening, triggering some weak stops and touching the 1.6070 before holding briefly. The release by the BoE was nothing more than expected, early chatter of the split being 8-1 was soon squashed however, the commentary was fairly dovish far more dovish than one would expect given the no change in the split but any doubt on the next rate rise being put further back were put to sleep. The market then pushed down to below the 1.6020 levels before finding support strong enough to hold the market up. The EURGP cross moved back to above the 0.7925 levels before the Euro started to weaken reversing the move and pushing through the lows and triggering weak stops through the 0.7890 level thus helping the Cable to move higher as the cross hit 0.7875 and held in the regions, Cable crawled briefly to the 1.6080 levels on cross selling before settling back to trade around the 1.6050 levels into the end of day.
• JPY: A tight range through Asia and into London with market a little choppy with no clear movement one way or the other, moving from the opening 107.00 level the market made a brief move to above the 107.10 levels before spending the rest session drifting lower to below 106.85, the move to London saw late buying move in and it was more or less the same into the NYK session with the market being buffeted by Eurozone news and the UK releases bouncing from the 106.80 to 107.00 range throughout. Better headline CPI numbers sent the market quickly and firmly through the 107.00 levels pushing through the 107.30 before stalling for the first time, while the move lower was limited the market after a few hours made a second attempt with a slightly higher number before the same result and the market drifted back towards 107.10 and holding into the close. A poor trade balance did very little for the market and one suspects the market was prepared for the continued drop.
• AUD: A mixed set of numbers on the CPI was the only movement really in the Asian session with the market initially drifting lower from the opening around the 0.8780 levels tipping only into the mid 0.8760’s before beginning to rise, the CPI weighted number and trimmed numbers having the market move one way then the other, one has to feel sorry for those using EA’s in these circumstances, moving down through the 0.8750 before rising again quickly through the starting area and continuing into the high 0.8780’s and then a steady rally to the 88 cent levels. The move into London saw the market drifting around the 0.8790 levels with a brief stab again at 88 cents the market turned south as London range players reversed their positions for a move lower, if they made anything it was slim as the market was contained from then till the move into the NYK session. Again a failure through the 88 cent level sent the market back to 0.8770 and one suspects the range players cut their positions and the market this time pushed through the 88 cent level pushing into the 0.8815 area before again drifting lower from that point on until the close with very little change for the day.

Yesterday’s premiership results

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%

GBP       MPC Official Bank Rate Votes A 2—0—7 | C 2–0—7 | P 2–0–7

GBP       MPC Asset Purchase Facility Votes A 0—0—9 | C 0–0—9 | P 0–0–9

USD       CPI M/M Sep A 0.10% | C 0.00% | P -0.20%

USD       CPI Y/Y Sep A 1.70% | C 1.60% | P 1.70%

USD       CPI Core M/M Sep A 0.10% | C 0.20% | P 0.00%

USD       CPI Core Y/Y Sep A -1.70% | C 1.80% | P 1.70%

CAD       Retail Sales M/M Aug A -0.30% | C 0.20% | P -0.10%

CAD       Retail Sales Less Autos M/M Aug A -0.30% | C 0.30% | P -0.60%

CAD       BoC Rate Decision A 1.00% | C 1.00% | P 1.00%

USD       Crude Oil Inventories A 7.1M | C 2.8M | P 8.9M

Good Luck,

Andy