Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 115.762 | EURUSD 1.24756 | EURJPY 144.416 | AUDUSD 0.87196 | NZDUSD 0.7885 | USDCAD 1.13694 | EURCHF 1.20207 | USDCHF 0.96355 | GBPUSD 1.57098 | EURGBP 0.79412 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               116.295 | 115.72

EUR/USD             1.2478 | 1.2426

EUR/JPY               144.84 | 144.315

AUD/USD            0.8724 | 0.8677

NZD/USD             0.7881 | 0.7840

USD/CAD             1.1393 | 1.1366

EUR/CHF              1.2023 | 1.2018

USD/CHF             0.9671 | 0.9635

GBP/USD             1.5711 | 1.5655

EUR/GBP             0.7950 | 0.7936
For today

  • EUR: Advanced GDP numbers for the Eurozone left the market with short term longs removing themselves from the market causing light USD buying across the board. Moving the market from the opening levels of 1.2475 through Sydney and into Tokyo before dropping steadily through the session to 1.2460 and then on a second move through 1.2440. Early buying in EURJPY set the market on edge with the Euro coming under pressure and through the near term support. Topside offers from the 1.2490 onwards which are moderately strong, before fresh offers appear above the 1.2510-20 levels. Of course the market if it wishes will easily blast through the levels if there was a surprise move however, these numbers are advanced so there is only likely to be minor changes. Even through the 1.2520 areas the offers are likely to increase into the 1.2600 levels. Downside sees bids on any moves through the 1.2400 levels before stops are likely through 1.2350. Through the level there is likely to be stronger bids moving into the 1.2330 areas and the downside is likely to start firming with the bottom 1.2000 areas seen action repeatedly from the 2006 period however, nothing is certain but I doubt the US will appreciate a strong USD at this stage of the game.
  • GBP: Cable continued drifting lower throughout the session dipping slowly through the 1.5700 level into the Tokyo session with GBPJPY again featuring along the way. The market barely recovered from the early 1.5680 levels before heading lower as the USD strengthened through the session the move through the 1.5680 took its time as the Euro took more pain than the GBP however it was still a steady grind to the 1.5655 areas. Topside resistance is light through the 1.57 handle but stiffens on the approach to the 1.5800 areas, with stronger levels to far away to matter to much giving the market plenty of room to gather impetus to the upside if the numbers in Europe turned out decent. EURGBP selling is not likely to appear until the market moves to the 80 cent and 0.8050 levels at least and is not likely to cause too much pain if it got there. Downside is more sentimental levels than anything else with the market now moving in the 1.52-1.56 band, as the market moves towards the London opening the near term suspected support is where the current market is around the 1.5660 areas and then the 1.5605 levels, in neither case are there likely to be much in the way of stops, maybe downside breakout types around the 1.5600 levels but it is fairly wide open.
  • JPY: USDJPY opened around the 115.80 levels and the confirmation of a delay to the sales tax placing it back to the 1st or 2nd qtr of 2017 possibly but to be announced next week sometime, as the December election comes to the fore, the market moved quickly higher into the Tokyo opening to the 116.20 areas before dipping back as cross selling impacted the market, USDJPY was not alone as the Nikkei also rallied strongly higher, of course while the additional easing we saw this month was factored around that sales tax coming into play it leaves the market a little more free for moves higher however, how much the MoF, BoJ are willing to let this market go and any further announcements on the sales tax will be after the July-September growth figures are released. The current resistance is more than likely linked to the 2007 congested period around this 116.20-50 area however, once that is out of the way if it gets removed then the 120 levels will become the immediate target for the market. The downside levels have improved somewhat over the week after the quick moves from last month from the 108.00 with support into the 115.00 levels with bids from 115.20 likely to reasonably strong, a push through the area will see some stops however, the concern will be more on the margin requirements on a move lower as the retail market is particularly long in the carry trades as well as the indices’.
  • AUD: The breech of the 101.00 level in the Carry trade was short lived as longer term players took some of their longs back and dipping the market back below the level, this for the moment has been the main driving force in the movement of the Oz with the market moving from the 0.8715 area opening to drop to 0.8690 on the Tokyo opening and drifting from that point onwards as the USDJPY climbed steadily higher to the 116.25-30 level. With no real data in Asia today the Oz has been trapped by the JPY movement and any directional moves are likely to be connected to the JPY for the moment. Light offers around the 0.8720 area will give way to stronger offer through the 0.8750 level and into the 0.8770 and although there may be some stops above the level its still likely to be tough going into the 88 cent level and provides for the moment the strongest area of resistance and likely to be there until 0.8820-30 before opening up fresh tests higher and comments from the RBA. Well trampled 0.8660 levels hold little support now and the move back through that level will see very little to deter the market for the run to 86 cents however, the movement in Oz is likely to be peripheral to other currencies such as the mentioned JPY however, Euro could have an effect if there was a strong number and could have a knock on into the Oz.

 

Overnight News

JPY:

Aso: Sales Tax Decision to Take Economic Conditions into Account

Amari: Abe Likely to Set Sales-Tax Rise Timeframe If Delays Hike

Abe Adviser Honda Says Delay in Sales Tax Rise Inevitable: WSJ

Abe Hasn’t Given Up on Raising Sales-Tax: LDP Tax Panel Chief

Japan’s DPJ Agrees on Policy to Shelve Sales Tax Increase: Kyodo

Japan GPIF Seeking Transition Managers for Stocks, Foreign Bonds

GPIF Updates Management Policy to Reflect Oct. 31 Announcement

Inada: LDP Should Consider Steps to Deal with Weak Yen Effects

CNY:

Li Says China Can Achieve 7.5% Growth Target This Yr. Xinhua

EUR:

ECB’s Noyer: ‘no problem’ buying govt. bonds if needed

NZD:

New Zealand Sees Foreign Bond Ownership Drop to 4-Month Low

GBP:

U.K. October House Prices Rise 0.7% as Sales Hit Seven-Year High

 

 

Today’s data

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

06:30     EUR        French GDP Q/Q Q3 (P) C 0.20% | P 0.00%

07:00     EUR        German GDP Q/Q Q3 (P) C 0.10% | P -0.20%

09:00     EUR        Italian GDP Q/Q Q3 (P) C -0.10% | P -0.20%

10:00     EUR        Eurozone CPI M/M Oct C 0.00% | P 0.40%

10:00     EUR        Eurozone CPI Y/Y Oct (F) C 0.40% | P 0.40%

10:00     EUR        Eurozone CPI – Core Y/Y Oct (F) C 0.70% | P 0.70%

10:00     EUR        Eurozone GDP Q/Q Q3 (A) C 0.10% | P 0.00%

13:30     USD       Advance Retail Sales Oct C 0.30% | P -0.30%

13:30     USD       Retail Sales Less Autos Oct C 0.20% | P -0.20%

13:30     USD       Import Price Index M/M Oct C -1.60% | P -0.50%

13:30     CAD       Manufacturing Shipments M/M Sep C 1.10% | P -3.30%

14:55     USD       U. of Michigan Confidence Nov (P) C 87.5 | P 86.9

15:00     USD       Business Inventories Sep C 0.20% | P 0.20%

 

Harry Hindsight              

  • EUR: A steady grind higher through the Asian session, moving from the 1.2430 areas touching the 1.2420 in early trading before starting the climb into Tokyo session. The market struggled in Tokyo around the 1.2450 levels and light resistance the move into the London session saw the market moving higher, the bulk of the new was against weak numbers with real money and longer term shorts taking back positions. The market broke to the 1.2470 levels and into the NYK session and slightly cooler initial jobless numbers giving the Euro a little more impetus and a rise to the 1.2490’s and a quiet close around the 1.2475 levels.
  • GBP: Limited data for the UK left the market still selling the Cable and particularly EURGBP cross buying steadily pushing the market from the 0.7885 and rising towards the 0.7950 resistance. Cable itself moved in the same fashion drifting lower across the day having stayed in a tight range between 1.5760-80 levels, the move into the London session saw only a small change in the range with the market slowly turning lower, drifting to the 1.5740 areas and moving towards NYK saw the Cable gain pushing down weakly and slightly through the 1.5700 areas before running out just above the areas. Talk of reasonable selling in the GBPJPY behind most of the GBP selling.
  • JPY: USDJPY remained choppy but not as volatile as the previous day. Moving from the opening 115.50 levels trading quietly for the first few hours before the strong indications of a Dec election, taking the market towards the 115.90 levels, the market then kept in touch with the levels for the move into the London session where GBPJPY selling started the move lower the USDJPY dropped to the 115.40 levels and although the market did trade through the level eventually, the market was fairly supportive around the 115.40 levels for the most part. The market did eventually move back to the 115.80 area but was unable to push through and remained around the level into the close.
  • AUD: The Oz seemed the more active of the local pairs trading quietly higher from the opening around the 0.8710 level to just above the 0.8730 levels before dropping quickly as Kent did Q&A for the media the mention of intervention still being on the table did the work sending the market quickly lower and close to the 0.8670 levels before recovering steadily to the opening levels and into London, whether the market actually believes the comment is beside the point as the market reacted as you’d expect in the move down and then moving back higher as the cards begin to be laid out on the table the market believing they have the better hand. By early London the market had moved through the opening and we saw a succession of weak stops thrown out as the market pushed on a second move through the early highs, 0.8740 provided some stronger resistance but even that buckled before pushing to 0.8760 and a halt in the market. The day finished almost unchanged as the rest of the day through into NYK saw the market reverse its moves to move into the 0.8710 areas to close.

 

Yesterday’s premiership results

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

NZD       Business NZ Manufacturing Index Oct A 59.3 | P 58.1 | R 58.5

JPY         Machine Orders M/M Sep A 2.90% | C -1.20% | P 4.70%

AUD       Consumer Inflation Expectation Nov A 4.10% | P 3.40%

GBP       RICS House Price Balance Oct A 20% | C 25% | P 30%

JPY         Industrial Production M/M Sep (F) A 2.90% | C 2.70% | P 2.70%

CNY        Fixed Assets Ex Rural YTD Y/Y Oct A 15.90% | C 16.00% | P 16.10%

CNY        Retail Sales Y/Y Oct A 11.50% | C 11.60% | P 11.60%

CNY        Industrial Production Y/Y Oct A 7.70% | C 8.00% | P 8.00%

EUR        German CPI M/M Oct (F) A -0.30% | C -0.20% | P -0.30%

EUR        German CPI Y/Y Oct (F) A 0.70% | C 0.80% | P 0.80%

CHF        Producer & Import Prices M/M Oct A -0.10% | C -0.30% | P -0.10%

CHF        Producer & Import Prices Y/Y Oct A -1.10% | C -1.30% | P -1.40%

CAD       New Housing Price Index M/M Sep A 0.10% | C 0.10% | P 0.30%

USD       Initial Jobless Claims (NOV 8) A 290K | C 280K | P 278K

USD       Crude Oil Inventories A 1.7M | C 1.0M | P 0.5M

USD       Monthly Budget Statement Oct A -121.7B | C -122.0B | P -90.5B

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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