Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 109.203 | EURUSD 1.26127 | EURJPY 137.736 | AUDUSD 0.88343 | NZDUSD 0.78414 | USDCAD 1.11876 | EURCHF 1.20573 | USDCHF 0.95597 | GBPUSD 1.60025 | EURGBP 0.78821 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               111.02 | 109.175
EUR/USD             1.26175 | 1.2564
EUR/JPY               139.55 | 137.68
AUD/USD            0.8854 | 0.8785
NZD/USD             0.7863 | 0.7818
USD/CAD             1.1212 | 1.1183
EUR/CHF              1.20645 | 1.2054
USD/CHF             0.96045 | 0.9557
GBP/USD             1.6008 | 1.5967
EUR/GBP             0.7885 | 0.78635

For today

  • EUR: Early trading was quiet and although the Euro remained under pressure the move lower was gradual and moved off the opening 1.2610 areas to the 1.2600 and held around that area quietly until the release of the BoJ monetary policy statement, the market at this point pushed through the figure strongly dipping quickly on weak stops and a push through into the 1.2580’s over the course of an hour, strong EURJPY selling as the USDJPY moved higher pushed heavily on the Euro side of the cross causing the damage before the EURJPY could move solidly higher to above 139.00. As the market continued to rally in the USDJPY the Euro found itself kept below the 1.2580 dipping into the grey hours towards the previous day’s lows. Support for the moment runs through from the lows to the 1.2525 levels with very little in the way of stops appearing for the moment a push through the 1.2500 level will see option plays and stops likely through the 1.2470-60 levels. Topside offers are quickly behind the 1.2600 levels 1.2615-20 are light before stronger offers appear around the 1.2650-70 areas for any short squeeze.
  • GBP: Cable opened above the 1.6000 levels, drifting into Tokyo slowly slipping below the level in quiet trading. The move through the session saw the Cable slipping slowly lower and once the BoJ statement was released was already close to the 1.5980 levels, unlike the Euro the market in Cable had very little pressure and the EURGBP was already pushing slowly lower so GBP held up fairly well with little action on the pair over the course of the Tokyo session. Downside bids are around the 1.5960 levels at the moment and through 1.5950 before the likelihood of any stops, through there the market is likely to target the 1.5900 levels and support likely to be just below there. Offers from the 1.6030 areas are likely to be a little thin but from that level to 1.6050 before better offers are likely, a push through will likely see offers continuing until a push through the 1.6100 level leading to the strong offers around the 1.6180-1.6200 levels.
  • JPY: USDJPY traded quietly into the new session with very little appearing, continuing the gradual push higher the market pushed through the 109.40 levels, early downside had been briefly tested into the 109.20 levels however, the news that foreign purchases are likely to be continued provided the support with GPIF allowed to increase equity purchase to 25% for home markets and possibly a similar hike for foreign equities from their current 12% allowable holdings. Having spent several hours holding the 109.40 areas the release of the BoJ monetary statement saw an additional Y10trln added to the easing against expectations and the market shot up quickly (I blinked and nearly missed it) moving from the 109.40 levels the market pushed through whatever offers went sailing through 110.00 triggering stops along the way adding to the general buying to push through 110.20 and then 110.40, although the market started to slow the rise continued pushing to above the 110.60 levels before hitting sufficient selling to hold the market, the chances of it moving further was probably only limited by the EURJPY selling which impacted the market along the way, as we move to the grey hours the market continues to hold around the highs however, the topside remained the focus for the market pushing into the 110.90’s and briefly challenging the 111.00 level into the grey hours. Topside offers into the 111.00 levels are still in play and you have to go back to pre-financial crisis to find the market above the current highs with the offers likely to perform in a similar pattern to recent levels and going back through the 111.30 areas. With the sudden move higher the market is likely to be a little thin to the downside with bids likely to be into the 110.10-109.80 levels, weak stops through that area are probably now non-existent with possible profit taking removing the short term longs from the equation or with stops spread over the 110.00 handle. Through the downside market sees light bids on the 109.00 handle down to around 109.20.
  • AUD: The Oz pushed slightly higher from the opening pushing through the 0.8850 levels before starting a steady drift lower as the AUDJPY held steady in a weakening JPY market. The Oz dipped back to the 0.8820 levels and ranged in a tight area until the BoJ release, this combined with the GPIF news saw limited AUDJPY selling into the JPY weakness forcing the Oz lower down through the 0.8790 levels in a limited move as the buying outweighed the selling. The Oz remained in the areas as the USDJPY continued to rise and looks to be resting on support for the moment. Immediate light bids around the 0.8760 levels and while there maybe sporadic stops below this area the market becomes more bid orientated the closer to the 87 cent levels and the key 0.8660-50 areas. Topside offers are around the 0.8830 area and through to 0.8850 nothing special and only likely to get stronger towards the previous highs around the 89 cent level, watch for AUDJPY movement.

 

Today’s data

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

NZD       Building Permits M/M Sep A -12.20% | C 0.00% | P -0.80%

JPY         Unemployment Rate Sep A 3.60% | C 3.60% | P 3.50%

JPY         Household Spending Y/Y Sep A -5.60% | C -4.20% | P -4.70%

JPY         National CPI Core Y/Y Sep A 3.00% | C 3.00% | P 3.10%

JPY         Tokyo CPI Core Y/Y Oct A 2.50% | C 2.50% | P 2.60%

GBP       GfK Consumer Sentiment Oct A -2 | C -1 | P -1

AUD       PPI Q/Q Q3 A 0.20% | C 0.20% | P -0.10%

AUD       PPI Y/Y Q3 A 1.20% | P 2.30%

JPY         Housing Starts Y/Y Sep A -14.30% | C -17.10% | P -12.50%

10:00     EUR        Eurozone Unemployment Rate Sep C 11.50% | P 11.50%

10:00     EUR        Eurozone CPI Estimate Y/Y Oct C 0.40% | P 0.30%

10:00     EUR        Eurozone CPI – Core Y/Y Oct (A) C 0.80% | P 0.80%

12:30     CAD       GDP M/M Aug C 0.00% | P 0.00%

12:30     USD       Employment Cost Index Q3 C 0.50% | P 0.70%

12:30     USD       Personal Income Sep C 0.30% | P 0.30%

12:30     USD       Personal Spending Sep C 0.10% | P 0.50%

12:30     USD       PCE Deflator M/M Sep C 0.00% | P 0.00%

12:30     USD       PCE Deflator Y/Y Sep P 1.50%

12:30     USD       PCE Core M/M Sep C 0.10% | P 0.10%

12:30     USD       PCE Core Y/Y Sep P 1.50%

13:45     USD       Chicago PMI Oct C 61 | P 60.5

13:55     USD       U. of Michigan Confidence Oct (F) C 86.2 | P 86.4

 

Harry Hindsight              

  • EUR: Euro’s traded quietly lower over the Asian session moving from the 1.2630 areas and drifting into the late session around the 1.2620 before making a move down through the 1.2600 area and triggering light stops through the levels. The market moved into the grey hours and London holding around the 1.2600 level until early London pushed it more firmly through triggering further stops on the drop through the 1.2580 levels to halt around the 1.2560. The market struggled to move any further and held on for a couple of further moves lower particularly into the NYK opening hitting 1.2550 on the numbers before bouncing back. Mixed Confidence numbers did little for the market and the US numbers on the face of it should have provided more of a move for the USD with better than expected advance figures counterbalanced by slightly worse initial claims, overall the market balanced on the news and moved steadily back towards the 1.2600 levels triggering weak stops through to above the 1.2620 levels. Talk of options around the 1.2600 in size seem a little off beat with the market not reacting in the style you would expect and having been through this level less than a month ago. While flows were strong during the data periods the overall market was again quiet.
  • GBP: The market opened just above the 1.6010 levels with a quick move lower into the Tokyo opening as a follow through to the FOMC comments, having broken to the 1.5980 levels the market held through the 1.5980’s through the Asian session the late session saw limited selling as the Euro’s broke lower through the 1.5970’s before holding again through the grey hours. The London open saw weak buying to the 1.5980 and the market held for a few hours holding around the levels before steadily rising after the European numbers with EURGBP weakening slightly after a steady drop in the cross from the opening in Tokyo. US numbers initially saw Cable drop quickly through the 1.5960 level as algo’s sold the release before reading the details; the market reversed instantly pushing back through the 1.6000 as the 0.6% above consensus was explained away with defence spending and not a general improvement. Weak stops then sent the market to the 1.6040 levels before slowly drifting into the London close on the 1.6000 levels to finish the day only just short of there.
  • JPY: USDJPY was contained for the most part during the whole day with topside offers slowing any advancement. Moving from the opening just below the 109.00 levels the market gradually pushed higher with strong buying initially on the Tokyo opening pushing through the 109.00 levels and holding above the level and rising to around the 109.15 areas, grey hours saw the market steadily pushing at the offers before breaking the 109.20 level into London. The market slipped back having struggled above the level but only coming to rest on the 109.00 levels and a slow move into the NYK session. US GDP spiked the market to above the 109.30’s before dropping quickly back as the rise was explained away, this caused some weak stops and light selling to push the market back to the 108.80 levels and light support. The next move in USDJPY saw the USDJPY during mid NYK session with talk of GPIF cutting their holdings of JGB’s to the 35% level while having the freedom to boost equity holdings to 25% from their current 12% gave the market further impetus and USDJPY moved through to 109.40’s and the London close. The market then held the 109.20 areas from that point into the close.
  • AUD: The Oz drifted lower from the opening and the release of the import price index dropping from the opening 0.8790 to 0.8760 into the Tokyo opening. The market then continued to hold this level through the Asian session dipping only slightly through the bottom levels into the grey hours. As the USDJPY attempted the topside AUDJPY seemed to be attracting attention and the bulk of the day led to the Oz slowly rising, apart from the US GDP number which sent the market back to 0.8760 the market remained buoyant and pushing steadily through the 88 cent level just through action in the carry trade. Movement in the NYK session saw the market move into the 0.8830 levels before stopping its ascendency and holding into a quiet close.

 

Yesterday’s premiership results

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

NZD       RBNZ Rate Decision A 3.50% | C 3.50% | P 3.50%

AUD       Import Price Index Q/Q Q3 A -0.80% | C 0.30% | P -3.00%

CHF        UBS Consumption Indicator Sep A 1.41 | C 1.35 | P 1.28

CHF        KOF Leading Indicator Oct A 99.8 | C 99.2 | P 99.1 | R 99.3

EUR        German Unemployment Change Oct A -22K | C 5K | P 12K | R 9K

EUR        German Unemployment Rate Oct A 6.70% | C 6.70% | P 6.70%

EUR        Eurozone Economic Confidence Oct A 100.7 | C 99.7 | P 99.9

EUR        Eurozone Industrial Confidence Oct A -5.1 | C -5.5 | P -5.5

EUR        Eurozone Consumer Confidence Oct (F) A -11.1 | C -11.1 | P -11.4

EUR        Eurozone Services Confidence Oct A 4.4 | C 3.1 | P 3.2

EUR        Eurozone Business Climate Indicator Oct A 0.05 | C -0.01 | P 0.07 | R 0.02

USD       Initial Jobless Claims (OCT 25) A 287K | C 277K | P 283K | R 284K

USD       GDP (Annualized) Q3 (A) A 3.50% | C 2.90% | P 4.60%

USD       GDP Price Index Q3 (A) A 1.30% | C 1.40% | P 2.10%

EUR        German CPI M/M Oct (P) A -0.30% | C -0.10% | P 0.00%

EUR        German CPI Y/Y Oct (P) A 0.80% | C 0.90% | P 0.80%

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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