Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 108.263 | EURUSD 1.26464 | EURJPY 136.914 | AUDUSD 0.87624 | NZDUSD 0.78232 | USDCAD 1.12309 | EURCHF 1.20667 | USDCHF 0.95417 | GBPUSD 1.60293 | EURGBP 0.78894 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               108.31 | 107.86

EUR/USD             1.26615 | 1.2644

EUR/JPY               136.95 | 136.55

AUD/USD            0.8764 | 0.8719

NZD/USD             0.7839 | 0.7795

USD/CAD             1.1233 | 1.1215

EUR/CHF              1.20675 | 1.2064

USD/CHF             0.9541 | 0.9529

GBP/USD             1.6041 | 1.6022

EUR/GBP             0.7895 | 0.7887

 

For today

  • EUR: With volumes much reduced the market moved into a quiet Asian session with little in the way of news to help it along, a brief spark of light when confirmation of an Ebola case in NYK sent the Euro from the opening levels we’d held around to above the 1.2660 level in a quick move then steadied to hold in 1.2650-60 area as the market moves towards London. Topside sees offers in the 1.2680 areas with likely weak stops through the level and opening the way for another test above the 1.2700 levels. With only consumer confidence available the market is likely to remain quiet for the day. Downside sees light bids through 1.2640 and strengthening through the 1.2620 into 1.2600 levels becoming more mixed through the level and a push through 1.2580 will see fresh attempts to the lows just above the 1.2500.
  • GBP: A quiet session for the Cable, moving around the 1.6030 levels from the opening and trading only slowly higher to test the 1.6040 levels as the market moved towards the London opening. Today could be interesting if the GDP is weaker than the weak consensus that everyone is calling. Topside sees light offerings from the 1.6060-80 levels with light stops through the levels, mixed interest from that point on with increasing levels of resistance over the next big figure with strong offers above 1.6180 and into 1.6200. The downside sees strong bids into the 1.6000 levels with bids while consistent through to the lows set in however, in the event that we see a weaker GDP number those bids are likely to evaporate leaving the market open to a deeper move and a move beyond 1.5800.
  • JPY: The USDJPY slipped back from the opening highs to trade steadily down below 108.20 levels before fixing supply and the Ebola news hit and the market broke back below 108.00 to sit for a period around the 107.90 levels, trading around the 108.00 level into the London session. Topside offers from the highs onwards are weak for the moment with a lot of the offers already cleared on the move up however, 108.80-109.20 still remains strong and likely to slow any move to the topside. Downside through the 107.80 level opens the market again to a move through the 107 handle with little to stop it until the 107.20 areas. A push through the 106.90 levels will see stops in likely in the market and an opening to the 106.00 areas. Two things balance the market at the moment concerns that the inflationary target in Japan is receding as the commodity prices fall, and US Ebola cases cropping up, this while its serious enough is contained to medical personal recently arriving back from West Africa, the first case with no contact with West Africa will see the markets in turmoil.
  • AUD: NZD trade balance did little for the market in the Oz but seemed contained to just the NZD market, The market edged into the Tokyo session and the Ebola announcement saw the USD movement translated into cross movements that quickly drove the Oz lower, the initial movements came from strong carry trade selling after the NZD numbers and moved to Oz and continued taking the Oz down to 0.8720 before spending the session recovering from a distinct lack of interest in holding the market. The market eventually moved to its opening levels and has spent the rest of the session holding in the areas. With the market remaining in this congested band today would not be the best chance for it to break through in either direction however, for the moment strong offers remain above the 0.8820-40 levels strengthening towards the 0.8880-0.8900 levels. Downside has light bids but likely continual through into the 0.8680 levels and then strengthening into 0.8660-50 and the key support areas, likely strong stops if this level is broken but that is guess work on my part.

 

Overnight News

JPY:

Japan Isn’t Aiming to Weaken Yen, Says Finance Minister Aso

CNY:

China’s Sept; New Home Prices Fall M/m in 69 Cities; 68 in Aug.

China End-Sept. Urban Registered Jobless Rate 4.07%: Ministry

CNY/SGD:

China, Singapore Said to Plan CNY/SGD Direct Trading Next Week

NZD:

NZ annual trade surplus slides in September

NZ Sept Low-Deposit Home Loans Rise to 8.4% of New Lending: RBNZ

USD:

New York Has 8 Designated Ebola Centres, Cuomo Says

GBP/EUR:

Papers lead with call from EU for a further €2b funding from the UK while Germany, France receive rebates sum similar, driving further Eurosceptic calls for severance.

 

Today’s data

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

NZD       Trade Balance (New Zealand dollars) Sep A -1350M | C -620M | P -472M | R -489M

CNY        Conference Board Leading Index Sep A 0.90% | P 0.70%

06:00     EUR        German GfK Consumer Sentiment Nov C 8.1 | P 8.3

08:30     GBP       GDP Q/Q Q3 (A) C 0.70% | P 0.90%

08:30     GBP       Index of Services 3M/3M Aug C 0.90% | P 1.00%

14:00     USD       New Home Sales Sep C 475K | P 504K

 

Harry Hindsight              

  • EUR: Asia was reasonably quiet having broken lower in NYK the market through Asia was unable to push back above the 1.2650 level although there were a few attempts. Moving into the London session the release of the PMI numbers, with mixed PMI numbers, Germany dropped the market with a mixed set only for the market to recover from the 1.2615 area to quickly move through the 1.2650 level on the Eurozone release pushing eventually to above the 1.2660 levels. The market pushed a little higher into the NYK session but was only able to push into the 1.2670’s before the market started to slide back, initial jobless numbers in the US were slightly higher however, this was quickly offset by a couple of better numbers and the USD started to recover the losses with the Euro moving around the 1.2650 areas into the close.
  • GBP: Cable spent the Asian session rising slowly from the opening 1.6050 levels to touch 1.6060 into the London session with lacklustre trading in the pair going through. The move into London saw a choppy reaction to the European numbers before dropping quickly on the retail sales numbers falling back to the 1.6000 and touching through slightly before holding steady and a slow rise back over the session to the 1.6030 areas with only weak attempts above that level. These numbers leave the GDP numbers today likely to be on the weak side.
  • JPY: A mixed day for the USD, with early trading seeing little in the way of movement, rising weakly from the 107.10 levels to just above the 107.30 levels in quiet trading. The move into London saw comments and concerns that given the recent weakness in commodities especially the oil price, this could have the effect of dropping the inflationary number to below 1%, this piece left the JPY much weakened as the USD quickly rose through the 107.40 level triggering weak stops as it drove higher even so the offers quickly appeared above the 107.50 level and the market stalled for several hours before moving into the NYK session and again a steady rise with a tight channel started taking several hours but pushing solidly through the offers. After several hours of rising the market pushing to above the 108.30 levels and limited profit taking moved into the market dropping the market back to below the 108.10 levels before finishing the day just off the highs.
  • AUD: The Oz spent the session falling during Asia with the market dragged by poor Kiwi numbers and moving off the opening 0.8780 levels to touch below 0.8750 before holding steady for half the session. The move into the London session saw the Oz caught up with the buying in USDJPY and the Carry trade was quickly bought as yield flows moved quickly. The Oz moved with the strong buying in USDJPY and triggered weak stops through the 0.8780 opening levels to trade to just below 88 cents. NYK saw a further drive and this time the market broke through the 88 cent level even if only briefly. US releases again put the USD in ascendency in the market and the market fell back quicker than it went up moving down through the 0.8760 level to hold in the previous low range we’d seen in Asia and a quiet finish to the day.

 

Yesterday’s premiership results

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

EUR        Germany Manufacturing PMI Oct (P) A 51.8 | C 49.6 | P 49.9

EUR        Germany Services PMI Oct (P) A 54.8 | C 55 | P 55.7

EUR        Eurozone Manufacturing PMI Oct (P) A 50.7 | C 50 | P 50.3

EUR        Eurozone Services PMI Oct (P) A 52.4 | C 52 | P 52.4

GBP       Retail Sales M/M Sep A -0.30% | C -0.10% | P 0.40%

GBP       BBA Mortgage Approvals Sep A 39.3K | C 41.5K | P 41.6K | R 41.4K

GBP       CBI Trends Total Orders Oct A -6 | C -3 | P -4

USD       Initial Jobless Claims (Oct 18) A 283K | C 269K | P 264K | R 266K

USD       House Price Index M/M Aug A 0.50% | C 0.40% | P 0.10%

USD       Leading Indicators Sep A 0.80% | C 0.70% | P 0.20%

EUR        Eurozone Consumer Confidence Oct (A) A -11 | C -12 | P -11.4

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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