Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 108.154 | EURUSD 1.27347 | EURJPY 137.729 | AUDUSD 0.88561 | NZDUSD 0.7932 | USDCAD 1.1167 | EURCHF 1.20616 | USDCHF 0.9472 | GBPUSD 1.61327 | EURGBP 0.78937 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               108.24 | 108.08

EUR/USD             1.27405 | 1.27285

EUR/JPY               137.81 | 137.65

AUD/USD            0.8870 | 0.8850

NZD/USD             0.7940 | 0.7910

USD/CAD             1.1173 | 1.1161

EUR/CHF              1.20615 | 1.2058

USD/CHF             0.9473 | 0.9465

GBP/USD             1.6145 | 1.6129

EUR/GBP             0.7896 | 0.7890

 

For today

  • EUR: A very tight range as the market holds quietly waiting for today’s FOMC decision later today. Opening in the 1.2735 area and trading in a tight 10 pip range around the area for the whole session. The topside is a little more open however, the move to the 1.2850 level will see a mixture of interest nothing that could hold any disappointment from the FOMC however, that is very unlikely to be the case. A push through the 1.2850 level will likely see stops appearing quickly only to run into offers into the 1.2900 areas with those offers running to around the 1.2820 areas before weakening. From there the next big figure is likely to be a little more difficult with a congested area into the 1.3000 levels. Downside has only limited bids from the 1.2740-20 area before moving through the 1.2700 areas while there may be some limited bids from then on the 1.2650-30 areas hold stronger bids for the moment with light bids to the 1.2600 levels where bids increase.
  • GBP: Cable was a very little different from the Euro contained within a tight range if only slightly more active. Moving from the opening 1.6130 levels before pushing to above the 1.6140 levels into the Tokyo opening before drifting back to just below the 1.6130’s and holding for several hours, the market then slowly moved above the 1.6140 levels over several hours into the grey hours. Topside offers run deep with the 1.6180 level holding increasing offers into 1.6200 light mixture through the level with a likely bias to stops before stronger offers appear above the 1.6220 thinning but still offered to 1.6250 before the market is likely to see strong stops appearing in the market and an opening to a move towards the 1.6500 areas from the middle of last month. Downside bids into the 1.6100 are light and have been well traversed over the past month with light stops likely through the level but probably not meaningful, a move through the 1.6050 is likely to run into light bids which stiffen the closer the market moves to 1.6000. Patchy from then on to the 1.5950 areas were the bids start to improve and support continues down into the 1.5900 levels.
  • JPY: Expectations of further easing slip away as the popularity of PM Abe after the various scandals and consumption tax pressure the government. This didn’t stop a limited rise in USDJPY from the opening 108.10 areas pushing only into the low 108.20’s as the whole market drifted in and out of a coma. As the market moved through the session it drifted back towards the opening levels with little news to help it along, IP numbers should have driven the market much lower however, and this was in all likelihood countered by end of month USD buying moving onto the scene. GPIF JGB holdings have now dropped below the 50% level for the first time in recent memory. Topside offers are strong from the 108.40 levels and all though a push through the 108.50 will see likely stops the market continues to be offered into the 109.00 levels with a possibility of option plays around the area, a further push if the offers were to buckle the market opens to the 110.00 levels and very strong offers into that area. Downside bids into the 107.50 areas give way to only light bids through the 107.00 level with the market continuing with a mixture into the 106.50 areas and then stronger bids.
  • AUD: A little bit more of a move in the Oz however, 20 pips does not a range make. Moving from the 0.8850 levels the market moved to the highs in the lead up to the Tokyo opening before drifting and then slowly moving over the remainder of the session to close to the 0.8870 levels for the second time. Topside offers 0.8880 level gives way to some light stops before the offers move in again to protect the 89 cent levels. Through that level though the market does open up for a move back to the 93 cent levels with only limited patches along the way 90 cent standing out as likely to be the strongest levels. Downside now sees plenty of congestion down through the 87 cents levels and the key 0.8660-50 level with the potential for large stops through the 0.8640 levels and an opening for deeper moves to 83cents.

 

Overnight News

JPY:

As Japan’s GPIF pivots, JGBs now less than half of assets-source

Japan Sept. Industrial Production Rises 2.7% M/m; Est. +2.2%

CNY:

China to Support Home Buyers in 2015-2016: Securities Journal

China 2015 Growth Target to Signal Policy Priority: World Bank

Internet Finance May Cause Interest Rate Volatility: PBOC’s Lu

CHF:

SNB’s Zurbruegg Says Gold Initiative Would Hurt Credibility: AZ

NZD:

NZ ANZ Oct Business Confidence +26.5%; Sep +13.4%

 

Today’s data

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

JPY         Industrial Production M/M Sep (P) A 2.70% | C 2.50% | P -1.90%

09:30     GBP       Mortgage Approvals Sep C 62.0K | P 64.2K

09:30     GBP       M4 Money Supply M/M Sep C 0.50% | P 0.30%

12:30     CAD       Industrial Product Price M/M Sep C 0.30% | P 0.20%

12:30     CAD       Raw Materials Price Index M/M Sep C 1.50% | P -2.20%

14:30     USD       Crude Oil Inventories P 7.1M

18:00     USD       FOMC Rate Decision C 0.25% | P 0.25%

20:00     NZD       RBNZ Rate Decision C 3.50% | P 3.50%

 

Harry Hindsight              

  • EUR: Euro’s remained reasonably quiet through the Asian session with cross trading dominating the market for the most part in limited play, moving from a quiet opening just below the 1.2700 levels the market edged to above 1.2715 into the middle part of Asia before slowly ebbing away to around the opening levels as it headed into the grey hours. Early Europeans attempted to test the topside in an early push however although the German Import price figure was better than expected the market was unable to get beyond the 1.2720 levels. The failure saw the early buyers dumping there short term positions taking the market to the lows. Frances budget presentation to the ECB was eventually accepted with some compromise along the way and was only slightly supportive. The rest of the early London session was quiet with a gradual push back towards the 1.2710-15 levels before the release of the US data, durable goods data was well below expectations and the USD therefore suffered quickly with the Euro rising through the offers around the 1.2720 triggering some weak stops and pushing to the 1.2740 level before finding some resistance. The market slowed its rise but continued to touch above the 1.2760 eventually before moving to the next number up. The consumer confidence number was well above expectations and this had a limited effect with weak stops triggered to the downside and a quick penetration of the 1.2720 level again before stabilizing and slowly rising and finishing the day trading for the most part around the 1.2740-50 levels before dipping into the close to finish in the mix 1.2730’s. The ECB and the German government seemed to be heading to an increasing impasse, with Merkel’s CDU/CSU coming under pressure from the new Eurosceptic party AfD prompting Angela Merkel to comment that support for the Euro and Europeanism will not entail further costs for the German People, (no just the UK).
  • GBP: A very quiet Asian session saw the Cable move from just below the 1.6120 level to the 1.6130 area with only one brief move lower. While I’d like to say the market was focused elsewhere the volumes across the board seemed to be back to the low volatility movements of early in the month that we’d become accustomed to. With no tier 1 data for the UK the market was dominated firstly by the ongoing saga of £1.7b demanded by the EU as additional slush fund for the various parties that Christmas brings with it and the fact that PM Cameron was stated it won’t be paid on the 1st Dec however, cynicism aside the market was more or less at the mercy of movements in USD and Euro with very little interest in GBP for the moment. EURGBP saw early London buying as the market looked for something to do and the pair managed to move up 15 pips this consequently drove the Cable down to test back through the 1.6100 levels and ultimately 1.6090 before bouncing back to the opening levels over the period of the next couple of hours and the EURGBP back to its opening ranges. US data releases saw the GBP dragged along for the ride more than moving independently as the Euro rose quickly trading through to test the 1.6180 levels before spending the rest of the session slowly drifting lower from the highs. Short term profit taking moved in towards the close of London and the market was again at the 1.6130 albeit the other side before holding quietly from then into the close.
  • JPY: USDJPY rose from the opening after the release of the Retail sales numbers as a consequence of the market believing that the consumption tax added in April was having little effect on the market, the market then ran out of reasons for the JPY to weaken and news that further Government scandals were appearing left the market jaded, the market having been unable to break back above the 108.00 level in early trading settled quickly with weak stops taking it back to the lows and through to hang around the 107.80 levels for the bulk of the session into London. The London market were steady buyers of USDJPY as political implications weakened the Yen with the market reminiscing of the good old days when PM Abe last held office and his quick demise on the back of Government scandals would you believe. This rally was more sustained however, even so it could only make it too the 108.15 areas before the US releases which quickly reversed all the gains and a bit more sending the market back down to the 107.80’s and triggering weak stops through to 107.70 before finding its feet again, one would suspect a happy day for those that turned there positions and played the 107.85/108.20 range play. The market moved quickly back not quite as quickly as the drop but pushed towards the 108.15 and sellers. The impact of the consumer confidence number in the US helped with the move however; once the numbers were out of the way the market drifted and only steadily made it over the course of the session to above the 108.15 levels from the 108.00 areas.
  • AUD: The Oz in Asia was dominated by the retail market and the carry trade with the AUDJPY holding steady above the 95.00 level having broken through early in the session. This tripped into the London session with the Oz less effected by the US numbers but more effected by the JPY movement with the Oz steadily rising through the day to push at the 0.8840 levels before pushing through the level on the release of the US numbers however, having passed that hurdle that’s been in play for a few days the market was unable to capitalize on the break towards the 89 cent levels with strong offers appearing above 0.8880 and holding the market and forcing the Oz back to the 0.8850, the carry trade continued to move steadily higher and the end result was a solid push through over the course of the day to open up that 89 cent level for further probes having held the 0.8850-60 levels into the close.

 

Yesterday’s premiership results

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

JPY         Retail Trade Y/Y Sep A 2.30% | C 1.00% | P 1.20%

EUR        German Import Price Index M/M Sep A 0.30% | C -0.10% | P -0.10%

USD       Durable Goods Orders Sep A -1.30% | C 0.30% | P -18.20% | R -18.40%

USD       Durables Ex Transportation Sep A -0.20% | C 0.50% | P 0.70% | R 0.40%

USD       S&P/CS Composite-20 Y/Y Aug A 5.60% | C 5.70% | P 6.80%

USD       Consumer Confidence Oct A 94.5 | C 87 | P 86

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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