Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 115.205 | EURUSD 1.23754 | EURJPY 142.562 | AUDUSD 0.8560 | NZDUSD 0.76859 | USDCAD 1.14236 | EURCHF 1.20438 | USDCHF 0.97326 | GBPUSD 1.58336 | EURGBP 0.78151 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               115.47 | 115.06

EUR/USD             1.2386 | 1.2368

EUR/JPY               142.86 | 142.485

AUD/USD            0.8574 | 0.8540

NZD/USD             0.7700 | 0.7660

USD/CAD             1.1443 | 1.1420

EUR/CHF              1.2047 | 1.2040

USD/CHF             0.9736 | 0.9724

GBP/USD             1.5848 | 1.5817

EUR/GBP             0.78225 | 0.78125

For today

• EUR: The market while fairly active has seen limited movement in the Euro trading around the 1.2380 levels for much of the session and returning to the mid 1.2370’s on several occasions. Judging from the action so far the market has limited bids in the immediate area with weak stops likely through the 1.2360 levels, better bids are likely to be around the 1.2330 areas before opening up further movements to the 1.2200 levels. Topside sentimental offers into the 1.2400 areas with weak stops likely through the 1.2420 areas and light mixtures into 1.2450 and then the market has some clear space to the 1.2480-1.2520 areas. Yesterday’s Draghi commentary saw him reasserting to some extent his mastery of the situation whether that continues remains to be seen however, today we focus on the US and NFP.
• GBP: Cable was almost as quiet as the Euro’s until deep into the session moving from the opening 1.5830 levels to trade into the mid 1.5840’s, the market remained in the area until slipping back as we moved into the last couple of hours into the grey hour before London, trading down to the 1.5820’s and fresh lows for the year. The downside will likely see light bids around the sentimental 1.5800 levels, further bids are likely scattered around the 1.5750 areas before opening up the 1.5600 level and ultimately 1.5400. Topside is likely to see only light offers through to the 1.5900 levels possibly stronger into 1.5920 before opening a mixed set from then until that 1.6000 level which the market is beginning to define as a key level.
• JPY: Early gains quickly reversed after the market opened just above the 115.20 areas and down to just below the 115.10 as the market struggled into Tokyo. The market moved off the lows slowly pushing to above the 115.30 area, while the market dipped it continued to slowly rise to just below the highs of yesterday before drifting as the market approached the grey hours. Offers into the 115.50 levels and then likely to be around each sentimental level with no clear definition left for the market until we approach the 120.00 areas however, one can certainly guess that the Japanese government are now becoming nervous about any further weakening of the Yen as both Amari EconMin and Deputy PM Aso both concerned about rapid rises today. Downside sees light bids to the 115.00 levels and through to better likely around the 114.60 levels, a push through the 114.00 area is likely to see stops appearing and an opening to the downside with 110.00 the only level that stands out.
• AUD: While the market has slowly drifted from the opening levels the early session was contained between the 0.8570-50 levels for the most part, the lows were extended further as the USDJPY strengthened however; it remained limited as the Oz played second fiddle to the NFP later today. Offers from the 0.8600 levels into the 0.8620 areas before the market opens up to moves higher and 87cent, likely weak stops through the 0.8630 levels and only limited interference in any rise even if the market can get back above the 87 cent level it will only be a move back into an extended range of 87-89 so limited. Downside sees bids into the 0.8530 levels and through onto 0.8400 however, it’s a step closer to some calls for 83cent to be hit before year ending however, the whole move down is dependent on JPY weakness I believe and for the moment a move to 120.00 may be in doubt if they are verbally intervening.

Overnight News

JPY:

Japan’s Aso Says Sudden FX Moves Up and Down Affect Economy

Japan’s Amari: Excessive Yen Weakness, Strength Both Undesirable

Overseas Investors Buy Most Japanese Stocks in 11 Months

JPY/AUD:

Japan Parliament Approves Trade Agreement With Australia

KRW/JPY:

BOK Governor Lee Says “Not Doing Nothing” on Weak Yen

USD:

Inflation to Move Toward 2% as Oil Prices Stabilize, Mester Says

AUD/JPY:

RBA Sees Subdued Growth, Warns Japan Flows May Keep Aussie High

AUD/CNY:

Robb: Hopes to Nail Final FTA Issues before Xi Visits Australia

CNY:

China End-Sept Trust Assets at 12.95 Trillion Yuan

EUR:

S&P’s Kraemer Says Europe QE Likely to Happen Early 2015

Today’s data

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

06:45     CHF        Unemployment Rate Oct C 3.20% | P 3.20%

07:00     EUR        German Industrial Production M/M Sep C 2.10% | P -4.00%

07:00     EUR        German Trade Balance (EUR) Sep C 18.3B | P 17.5B

08:00     CHF        Foreign Currency Reserves Oct P 462.2B

08:15     CHF        Retail Sales (Real) Y/Y Sep C 2.20% | P 1.90%

09:30     GBP       Visible Trade Balance (GBP) Sep C -9.4B | P -9.1B

13:30     USD       Change in Non-farm Payrolls Oct C 228K | P 248K

13:30     USD       Unemployment Rate Oct C 5.90% | P 5.90%

13:30     CAD       Net Change in Employment Oct C 0.4K | P 74.1K

13:30     CAD       Unemployment Rate Oct C 6.80% | P 6.80%

Harry Hindsight              

• EUR: Euro’s saw limited movement in the Asian session moving from just above the 1.2480 level the market dipped in early trading to below the opening but only just to a steady rise to above until late in the session. USDJPY movements then dominated the market through the balance of the session moving strongly to above the 1.2520 level into the grey hours and into London. A less than stunning German factory orders number set the market drifting lower however, until the ECB announcement the market remained steady and unable to push much below 1.2500. The market ran to the release with concerns about the differences within the ECB spilling over into a larger schism and for the moment Draghi’s commentary was strong and committed to its previous course of easing programmes yet to be implemented, the market took the speech at face value and the market dropped immediately 50-60 pips to the 1.2460 levels, the market continued to decline as real money players moved into the market and quickly pushed through the 1.2400 level before bouncing. The Bounce was limited and only managed to move back above the 1.2440 level over the next couple of hours into the NYK session before renewing the move lower pushing down to make a low just below 1.2370 into the closing period.
• GBP: The move up in the Euro was a steady affair in early trading and the Cable lagged, moving from the opening 1.5970 levels basing off the 1.5960 for most of the session to be pulled along into the grey hours to the 1.6000 levels. Reasonable numbers for the UK could not do anything for the market as the EURGBP buying entering from the London open dominated pushing the GBP lower with the cross moving off the 0.7825 levels to above 0.7860 and into the ECB release. Cable at this point had drifted from the 1.6000 down to 1.5900 levels when the ECB started its speech, while the Euro dropped quickly the Cable dropped only 40 pips as the EURGBP reversed its gains and some again falling through the opening 0.7815 levels and touching just below 0.7800. Cable drifted from the 1.5860 into the 1.5850 before finding enough support to hold the market into the close.
• JPY: USDJPY was reasonably quiet for the early part moving from the opening 114.70 areas to just below 114.60, then the market moved quickly to test the 115.00 levels the market at this point the lines are blurred with some reports of large option protection in the market and/or a large single offer showing up and attracting attention at the point of comments from BoJ officials, the market dipped away from the level and the next event took place with a sudden drop of around 300 pips in the Nikkei, the reputed amount being around $2.5B worth, not to surprisingly the USDJPY then went bid strongly pushing straight through the 115.00 levels pushing to above the 115.50 levels before collapsing back through the levels just as quickly triggering weak stops back through the 115.00 levels as the buying completed the market ran out of reason or liquidity, the market held around the 114.50 levels before continuing its drop into the grey hours pushing closer to the 114.10 levels. From the opening in London the market slowly recovered and whether the option play during Asia was as complicated as I make it the market continued rallying throughout the day, with minor gyrations into the NYK session before pushing slowly back to the 115.20’s into the close.
• AUD: Early trading was choppy as the carry trade dominated the market for the most part, the usual chop occurred on the employment numbers with a 24.1K rise in employment was quickly offset by a rise in the unemployment rate to 6.20% above expectations, touching above the 86 cent levels before collapsing back through and towards the 0.8550 level. Numbers out of the way the AUDJPY dominated from then on with the swing in USDJPY higher dragging the Oz along as AUDJPY rose and then swinging the other way before rising quickly through the highs as the USDJPY dropped quickly away pushing the Oz above the 0.8610 level and a long period of stability. The market moved through the London moving in a tight range around the 0.8610 levels pushing into the mid 0.8620’s and dipping only as low as the 0.8600 area. NYK and a weaker Euro reversed the fortunes of the USD and Oz again started to slip away from the 86 cent levels drifting back to its lows and a close around the 0.8560 levels.

Yesterday’s premiership results

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

AUD       Unemployment Rate Oct A 6.20% | C 6.10% | P 6.10% | R 6.20%

AUD       Employment Change Oct A 24.1K | C 10.3K | P -29.7K | R -23.7K

JPY         Leading Index Sep (P) A 105.6 | C 105.5 | P 104.4

CHF        SECO Consumer Confidence Oct A -11 | C -4 | P -1

EUR        German Factory Orders M/M Sep A 0.80% | C 2.20% | P -5.70% | R -4.20%

EUR        Eurozone Retail PMI Oct A 47 | P 44.8

GBP       Industrial Production M/M Sep A 0.60% | C 0.40% | P 0.00%

GBP       Industrial Production Y/Y Sep A 1.50% | C 1.50% | P 2.50%

GBP       Manufacturing Production M/M Sep A 0.40% | C 0.30% | P 0.10%

GBP       Manufacturing Production Y/Y Sep A 2.90% | C 2.80% | P 3.90%

GBP       BoE Rate Decision A 0.50% | C 0.50% | P 0.50%

GBP       BoE Asset Purchase Target A 375B | C 375B | P 375B

USD       Challenger Job Cuts Y/Y Oct A 11.90% | P -24.40%

EUR        ECB Rate Decision A 0.05% | C 0.05% | P 0.05%

CAD       Building Permits M/M Sep A 12.70% | C 5.20% | P -27.30%

USD       Initial Jobless Claims A 278K | C 285K | P 287K

USD       Non-Farm Productivity Q3 (P) A 2.00% | C 0.80% | P 2.30%

USD       Unit Labour Costs Q3 (P) A 0.30% | C 0.90% | P -0.10%

GBP       NIESR GDP Estimate Oct A 0.70% | P 0.70%

CAD       Ivey PMI Oct A 51.2 | C 59.2 | P 58.6

Good Luck,

Andy