Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 114.043 | EURUSD 1.24812 | EURJPY 142.343 | AUDUSD 0.8682 | NZDUSD 0.7719 | USDCAD 1.13592 | EURCHF 1.20565 | USDCHF 0.96596 | GBPUSD 1.59714 | EURGBP 0.78153 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               114.04 | 113.28

EUR/USD             1.2532 | 1.2482

EUR/JPY               142.35 | 141.83

AUD/USD            0.8736 | 0.8644

NZD/USD             0.7760 | 0.7710

USD/CAD             1.1375 | 1.1343

EUR/CHF              1.20615 | 1.20545

USD/CHF             0.9656 | 0.9625

GBP/USD             1.6003 | 1.5965

EUR/GBP             0.78305 | 0.78155

For today

• EUR: The market started quietly with a steady rise from the opening 1.2480’s and a push slowly through into Tokyo and the 1.2500 levels, the market held in the areas for a short period before a small short squeeze through the 1.2510 areas led the market to touch 1.2530 before holding the 1.2520-30 areas into the grey hours. With no real news the movement was started to some extent by movements in the Oz with the EURAUD cross rising quickly after the Oz numbers and while the Oz stabilized the Euro’s move continued to hold onto some of its gains over the past 24hrs helping the Euro through the 1.2500 level and hold. Topside light offers in the 1.2530 areas with a further round of light offers around the 1.2560 and into the 1.2600 where offers are likely to be a little bit stronger. While the outlook in the Eurozone has not changed the differences between the different camps is increasing, as the QE if and when fully implemented may not be enough without the austerity measures suggested and we’ve seen how that one is going. Downside bids 1.2480 however, its likely to be a little weak and the downside is open to the 1.2440 levels where the new support level appears and deeper moves become viable and helping the Eurozone’s economy.
• GBP: Apart from a brief blip in early trading as the Cable was dragged a little by movements in the Oz the market moved from the 1.5975 levels and generally moved higher with the movement of the Euro losing a little ground in the cross as that moved into the 0.7830 levels. Cable eventually moved to the 1.6000 area to trade quietly around the area and into London. Topside light offers into the 1.6020 areas extending into 1.6040 before the market becomes open to the 1.6120 from the breakdown last week. Through that level the market is likely to struggle without some major news to push the market towards the 1.6200 and likely strong resistance. Downside bids from 1.5960 and into fairly strong bids 1.5940-30 levels and the market will likely still struggle to move lower until a breakthrough of the 1.5850 areas and a deeper move can develop.
• JPY: Having taken out the 114.00 levels during the previous session the market walked into the new session drifting from the figure area with Trans Pacific Partnership agreement running aground and the Japanese EconMin Amari unable to see a way forward at the moment, and for once the real news sent the market back a little with the USDJPY slowly drifting through what would have been a very decent range only 6 months ago and now is a quiet session. The market now holds into the London session around the 113.40 levels, with reasonable volumes throughout the session.  Topside options and offers are likely into the 115.00 levels now and given the strength of the recent moves will probably not present too much of a problem. The downside is still adjusting to the present levels with the market still playing catch up to the new ranges, and like the move up through the 104-107 levels the downside seems to be dominated by sentimental levels until the 110.00-20 areas were bids are likely to be a little thicker and more mixed in front.
• AUD: The Oz what can be said, so the trade balance didn’t improve and a revision of historical employment rates by roughly a tenth higher still maintains an increasing unemployment rate, the market dropped quickly pushing down through the 0.8660 level triggering weak stops and again dropping into the 0.8640’s before bouncing as the buying kicked in from the range players kicked in and the retail numbers were absorbed as the shining light for the day and the market was back to the 87 cent level, probably not quite as quickly as it dropped but quick enough to burn the fingers of the breakout players. The market then remained steady until the RBA announcement before bouncing to above the 0.8730 levels in what was a surprising one direction only up, the market has remained above the level since in quiet trading with the market supported particularly in the crosses since the announcement. Commentary was almost exactly the same as last month’s giving no indications of a change in the foreseeable future. Bids from the 0.8660 and into 0.8640 remain strong and given the bounce are likely to have been replenished already for the next attempt if there is one however, that is the third time the level has been tested and while the RBA is more pleased with the current levels they’d be happy with it a lot lower, for once the market has spoken less today on the subject of the 83 cent levels and the movement in JPY still dominates the market elsewhere and not the Oz. Topside offers are a little congested from the 0.8750 levels and though the 0.8810 area however, 89 cent remains the level of resistance and only a strong break there will open up further moves higher with 90 cent quickly becoming a target.

Overnight News

JPY:

Aso Says Weak Yen Has Good Effect on Japanese Exporters

Abe Adviser Hamada Calls for 18-Mo. Sales Tax Hike Delay: Nikkei

Raising Japan’s Sales Tax as Planned Is Best: Komeito’s Ishii

Moody’s: BOJ’s Easing Is Credit Positive for Japan’s Rating

CNY:

China to Maintain Medium, High Speed Growth: Premier Li

China Aims to Enhance Research Into Free Trade Area: Ministry

AUD:

RBA’s Stevens Holds Benchmark Interest Rate at 2.5% (Full Text)

Australia Sept. Employment Change Revised to 23,700 Loss

Australia has Apple to thank for timely economic boost

Australia ANZ Weekly Consumer Sentiment Unchanged at 114.6

NZD:

N.Z. Commodity Price Index Falls for an Eighth Month, ANZ Says

Today’s data

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

AUD       Trade Balance (AUD) Sep A -2.26B | C -1.78B | P -0.79B | 1.01B

AUD       Retail Sales M/M Sep A 1.20% | C 0.30% | P 0.10%

JPY         Manufacturing PMI Oct (F) A 52.4 | C 52.8 | P 52.8

AUD       RBA Rate Decision A 2.50% | C 2.50% | P 2.50%

10:00     EUR        Eurozone PPI M/M Sep C 0.00% | P -0.10%

10:00     EUR        Eurozone PPI Y/Y Sep C -1.50% | P -1.40%

13:30     CAD       Trade Balance (CAD) Sep C -0.7B | P -0.61B

13:30     USD       Trade Balance Sep C -$40.0B | P -$40.1B

15:00     USD       Factory Orders Sep C -0.20% | P -10.10%

Harry Hindsight              

• EUR: The market opened lower from Fridays close and quietly moved into the Asian session. The USDJPY opened higher and the force of offers in the EURJPY pushed the Euro’s lower and down through the support levels just above the 1.2500 levels, the move down through the level triggered a lot of stops through the level dropping quickly to the 1.2440 areas before the selling eased off for a short period. The bounce was limited moving back to the 1.2480 areas before the selling quickly reappeared as the balance of the orders below 1.2500 came back in and took the market this time to 1.2450. The downside now over with the market moved back to the 1.2480 levels and slowly pushed higher through the session and into the London session. From then on it was a non-event with the market pushing only as high as 1.2510 levels before slipping back through to 1.2470 in NYK with volumes dropping off from the early sessions. Volumes had been brisk through the early part of Asia and into early London. Weak individual PMI numbers and Eurozone numbers left the market vulnerable however, this balanced out with mixed US numbers.
• GBP: The Cable as with the Euro opened lower opening around the 1.5980 levels, dragged lower from the opening in Tokyo as the Euro broke down to recent support levels the market traded down to just through the 1.5930 levels before bouncing and moving back higher squeezing the EURGBP lower as the Euro lost ground against the GBP. The market moved back to the 1.5970 levels and traded quietly from that point onwards back to the opening levels. The move into London saw the market spark alive as the PMI numbers kicked in with a better result than expected for manufacturing, Cable quickly moved back to the 1.6000 level and pushed slowly through the level and spiking to above the 1.6020 level before settling back again to the figure areas. The move into the NYK session saw the market drop back below the figure to hold in a quiet range around the 1.5970-1.5990 levels into the close.
• JPY: Fed cuts and Japan eases so on the opening the market started in pre-market in line with the Friday close however, by the time the market opened officially the market started the day just below the 113.00 level, and while a lot of volume went through the market it was unable to push through that level and drifted back into the 112.80 levels dipping only once below the 112.60 levels before moving back to hold the 112.80 into the London session. The move into the London session saw the market again pushing higher in what would have been described in some quarters as a push to get at stops and or option plays with the move through occurring very quickly and instantly moving to 113.20 with stops triggered and the market continuing higher with hardly a step back pushing into the NYK session on a steady mission to peak above 114.20 briefly before slipping back to 113.80 and then holding the 113.80-114.00 range into the close.
• AUD: In what some perceive as a USD move the Oz slipped back from the low opening around the 0.8760 levels, the market then dropped off as the drag of the Euro kicked in and selling in crosses sent the Oz back down through the 0.8720 area and into the waiting bids. The early move over with the Oz remained in a quiet rising market to above the 0.8750 into the London session holding the level through the opening and a little further before starting to decline as the JPY started to weaken further. The market continued to slowly slip lower pushing through the 87 cent level quietly to hold in the 0.8680 areas into the close and of course close to the key support areas.

Yesterday’s premiership results

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

AUD       TD Securities Inflation M/M Oct A 0.20% | P 0.10%

AUD       Building Approvals M/M Sep A -11.00% | C -0.90% | P 3.00% | R 3.40%

CNY        Non-manufacturing PMI Oct A 53.8 | P 54

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

CHF        SVME PMI Oct A 55.3 | C 51.3 | P 50.4

EUR        Italy Manufacturing PMI Oct A 49 | C 50.6 | P 50.7

EUR        Eurozone Manufacturing PMI Oct (F) A 50.6 | C 50.7 | P 50.7

GBP       PMI Manufacturing Oct A 53.2 | C 51.5 | P 51.6 | R 51.5

USD       ISM Manufacturing Oct A 59 | C 56.5 | P 56.6

USD       ISM Prices Paid Oct A 53.2 | C 58.3 | P 59.5

USD       Construction Spending M/M Sep A -0.40% | C 0.60% | P -0.80%

Good Luck,

Andy