Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 114.617 114.36-60 | EURUSD 1.24547 1.2436-65 | EURJPY 142.755 142.22-85 | AUDUSD 0.86342 0.8625-49 | NZDUSD 0.77519 0.7740-60 | USDCAD 1.13294 1.1325-41 | EURCHF 1.2035 1.2032-40 | USDCHF 0.96624 0.9652-99 | GBPUSD 1.58708 1.5855-99 | EURGBP 0.7847 0.7820-55 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               114.57 | 113.96

EUR/USD             1.2490 | 1.24535

EUR/JPY               142.93 | 142.30

AUD/USD            0.8682 | 0.8640

NZD/USD             0.7794 | 0.7750

USD/CAD             1.1337 | 1.1312

EUR/CHF              1.2040 | 1.2027

USD/CHF             0.9658 | 0.9635

GBP/USD             1.5913 | 1.5871

EUR/GBP             0.7859 | 0.7845

 

For today

• EUR: The divergence of CB policies dominated last week and while I doubt it will go away for the moment there is likely to be some consolidation in the market. Friday and today have seen a the Euro back higher, pushing from the 1.2460 area opening to push at the 1.2680-90 resistance, before stalling and holding in the 1.2480 areas. Over two million voted in the independence ballot for Catalan which Spain has ruled as being illegal, while the vote may be illegal it is believed that Mas Catalan’s president will make a case from the result. While this won’t be an immediate problem it is likely to become more contentious as time goes by. For the moment 1.2500 provides limited resistance with a mix of interest likely to move back to the 1.2550 levels with stops likely through that level, the tougher level is likely to be the 1.2600 level, and through that area market is likely to struggle for traction. Downside sees the market with light bids all the way back with the better bids below the 1.2400 levels and it’s difficult for the moment to see a break through either levels.
• GBP: Moving from an opening 1.5880 level the market moved steadily to above the 1.5900 levels peaking above the 1.5910 levels before holding above the 1.5900 point. We’ve been over the topside over the past two weeks so there is not that much until the market reaches the 1.6000 levels where suspected decent resistance makes an appearance with 1.6040 likely to see stops appearing and an opening to the 1.6100 levels. Downside has light bids on the move lower into the 1.5850 levels were the market stiffens a little until a clear break of the 1.5780 gives way to more stops and a deeper move available.
• JPY: The USD remains on the back foot for the moment however, while there may be a period of consolidation for the USD, the question remains is there any interest out there from the yield players are interested, they seemed interested below 110.00 however, since that point they have been the least noticeable group on the ride to the 115.00 levels. Abe is at the moment considering a snap election while the going is good one assumes and keeping the election away from the sales tax considered to be pencilled in for October 2015. The market today opened below Friday’s close and drifted from the opening 114.50 levels in three waves pushing to just below the 114.00 levels as we move towards the grey hours. For the moment stops are likely through the 113.80-70 levels with the market not really seeing any clear definition to the downside until close to the 110.00 so plenty of open ground. Downside is likely to see patches and as long as the movement isn’t too quick the market is likely to slowly decline with the patches holding and giving time for the longs to cut before too much damage. Topside see’s the 115.00-50 area with offers continually through the levels, 115.80 holds stronger offers again and likely connected to options, it’s a possibility that some of the exporters could have taken back there hedges from much lower down and could provide supply on any move higher. A push through the 116.00 levels just opens up the next handle with similar set ups along the way but nothing concrete.
• AUD: The Oz has continued its rally into the new session opening above Fridays close around the 0.8645 levels and pushing gently through the 0.8650 levels before the release of the CNY numbers generally in line with expectations and leaving the Oz to push quickly to above the 0.8680 level once through the 0.8660 area the market jumped as weak stops were triggered, the market remains above the 0.8670 levels, AUDJPY carry holds around the 99.00 levels as the Oz balances against a strengthening JPY in light trading. The market has the ability to continue to rise now that it is back through the 0.8660 key levels, a push through the 87 cent levels will have limited space with likely offers into the 0.8750 areas but with a clear strong resistance area around that 88 cent level. Downside remains open with bids into the 86 cent levels weakened but present and then bids to the 0.8550 areas before stops appear in the market.

Overnight News

CNY: China Raises Yuan Fixing by 0.37%, Most Since June 2010

China PPI M/m Fall Due to Global Oil Price Drop, Overcapacity

CNY/HKD:

Shanghai-H.K. Stock Connect Program to Start on Nov. 17

PBOC Issues Notice to Regulate Capital Flows for Stock Connect

CNY/KRW:

China, S. Korea Have ‘Virtually’ Reached Free Trade Agreement

CNY/JPY:

China’s Xi, Japan’s Abe Meet in Beijing

JPY:

Japan’s Suga: Would never advise PM Abe to call snap election

Japan Corp. Tax to Be Cut by Less Than 3% by FY2016: Nikkei

Japan PM Abe’s Cabinet Support Rate Falls 7 PP to 42%: Asahi

Japan’s Miyazawa Targets Corp Tax Cut of 2.5 PP or More: Kyodo

JPY/IDR:

Abe Promises Boosting Japanese Investment in Indonesia: Detik

AUD:

Abbott Says Australian Dollar at ‘More Comfortable’ Level

Australian Home Loans to Investors Rise Above 50% of Total

Today’s data

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

AUD       Home Loans Sep A -0.70% | C -0.40% | P -0.90%

CNY        PPI Y/Y Oct A -2.20% | C -2.00% | P -1.80%

CNY        CPI Y/Y Oct A 1.60% | C 1.60% | P 1.60%

09:30     EUR        Eurozone Sentix Investor Confidence Nov C -13.8 | P -13.7

13:15     CAD       Housing Starts Oct C 199.8K | P 197.3K

Weekend News

CNY:

Xi Says Risks Linked to China Economic Slowdown Aren’t Scary
China Exports Bolster Economy as External Demand Strengthens
China’s President Xi Urges Moves on Asia-Pacific Free Trade Pact
China’s Xi Pledges $40 Billion for Silk Road Infrastructure Fund
CNY/CAD:

China Awards $8.2 Billion RQFII Quota, Swap Deal to Canada
JPY/CNY:

Abe Says Japan, China to Work on Improving Relationship: Kyodo
JPY:

Abe Considers Dissolving Parliament on Sales-Tax Delay: Yomiuri
Abe Adviser Says Sales Tax Increase Could Harm Japan’s Recovery
EUR:

ECB Asset-Backed Securities Purchase Not Unproblematic: Dombret
Catalans Open Polls on Independence in Defiance of Spain
Greek Opposition Syriza Party Leads in Metron Analysis Poll
GBP:

Osborne to Explore ‘Sovereign Wealth Fund Based on Shale Gas’
USD/JPY/CNY:

U.S. Welcomes Growing Prospect of Xi-Abe Meeting at APEC
USD:

Kerry Rejects Any Link Between Iran Nuclear Talks and ISIS Fight
USD/MXN:

AT&T Will Buy Mexican Mobile Carrier Iusacell for $2.5 Billion
UAH/RUB:

Ukraine Says Russia Expands Military Presence in Rebel Areas
HKD:

Hong Kong Students Delay Beijing Protest, Seek Ex-Leader’s Help
PHP/AUD:

Philippines to Market $20b Projects to Australian Investors
SEK:

Swedish Govt. Support Drops Amid Budget Vote: Expressen/Demoskop
IDR/CNY: Indonesia Seeks More Concrete Ties with China, Widodo Says

Harry Hindsight

• EUR: The Euro was quiet through the Asian session trading around the 1.2380 areas for the most part from an opening just below that level. Moving into the grey hours the market gradually moved a little higher into the London session but it was slow going and it wasn’t until a couple of hours into the session that the market pushed for the first time through the 1.2400 levels. Although the market made the break through it was short lived and the market moved into the NFP just below the 1.2400 levels. The market chopped around on the release as the numbers were close to expectations but generally decent for this time of year and the unemployment rate showed a dip of 0.1 PP trading to above the 1.2440 before dropping again to below the 1.2360 and then a steady climb pushing easily through the 1.2400 levels easily and continued to the 1.2460 levels for a decent gain on the day but unable to push to the resistance.
• GBP: The market lagged the Euro and was unable in early trading to make any headway at all, slipping back in Asia to test the 1.5820 areas before moving into London on its back foot again as EURGBP slowly rose with the Euro and pressed the GBP to below the 1.5820 but unable to push through 1.5800 holding in the 1.5805 area before moving back to 1.5820-30’s. London remained quiet until the US numbers and while the market moved in a similar fashion moving to above 1.5860 before dropping quickly to below 1.5800 to make new lows, the channel of recovery from the low though was limited and took it time to move to the 1.5880 areas into the close after
• JPY: After a few days or strong demand the USDJPY moved through Asia struggling to make a move through the 115.50 levels, moving from the 115.30 levels the market ranged for the most part around the 115.20 levels with lows just below the 115.10 level and an extended attempt to the 115.50 area touching just below the level and holding for a couple of hours in the area until the market ran out of time and drifted into the grey hours to trade again around the 115.20 levels. London didn’t improve the situation and the market didn’t really awaken until the US numbers. A quick move higher on the release moving to just below 115.60 before the market gave ground quickly to the 114.70 in a harsh move with longs caught. The bounce was to the previous levels before the market started a more leisurely move lower extending the lows through 114.50 and eventually through the 114.30 before finding sufficient support to hold the market and a quiet finish around the 114.60 levels.
• AUD: The Oz traded quietly through moving around the 0.8560 levels and dipping below the 0.8550 level into the grey hours, the move into the London session moving steadily higher taking the market to the 86 cent level into mid-morning before stalling with light profit taking before the US releases, the market held around the 0.8590 and once the data was released the market moved to above the 0.8630 level and then back to 0.8570 moving in a similar pattern to the rest of the pairs before moving steadily higher from above the 86 cent level in slow trading, there was a quick attempt at the 0.8660 level but it was a brief effort before finishing the day around the 0.8640 level.

Friday’s premiership results

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

CHF        Unemployment Rate Oct A 3.20% | C 3.20% | P 3.20%

EUR        German Industrial Production M/M Sep A 1.40% | C 2.10% | P -4.00% | -3.10%

EUR        German Trade Balance (EUR) Sep A 18.5B | C 18.3B | P 17.5B

CHF        Foreign Currency Reserves Oct A 460.4B | P 462.2B

CHF        Retail Sales (Real) Y/Y Sep A 0.30% | C 2.20% | P 1.90% | R 1.40%

GBP       Visible Trade Balance (GBP) Sep A -9.8B | C -9.4B | P -9.1B | R -9.0B

USD       Change in Non-farm Payrolls Oct A 214K | C 228K | P 248K | R 256K

USD       Unemployment Rate Oct A 5.80% | C 5.90% | P 5.90%

CAD       Net Change in Employment Oct A 43.1K | C 0.4K | P 74.1K

CAD       Unemployment Rate Oct A 6.50% | C 6.80% | P 6.80%

Stay lucky

Andy