Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 116.639 | EURUSD 1.24501 | EURJPY 145.201 | AUDUSD 0.87093 | NZDUSD 0.79209 | USDCAD 1.13076 | EURCHF 1.2013 | USDCHF 0.96492 | GBPUSD 1.56413 | EURGBP 0.79603 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               116.79 | 116.425

EUR/USD             1.24765 | 1.2442

EUR/JPY               145.50 | 145.20

AUD/USD            0.8733 | 0.8699

NZD/USD             0.7950 | 0.7910

USD/CAD             1.1307 | 1.1277

EUR/CHF              1.20155 | 1.2012

USD/CHF             0.9654 | 0.96295

GBP/USD             1.5657 | 1.5635

EUR/GBP             0.7970 | 0.79585
For today

  • EUR: The Euro moved quietly higher as the USD dipped against the Yen in early trading moving from the opening 1.2450 area to gradually move to the 1.2470 levels before drawing into a quiet period before the Abe makes his announcements to the market. Bids on the downside towards the 1.2440 area for the moment hold the market with light stops through to the 1.2420 levels, the market becomes a little mixed building to reasonable bids into the 1.2380 levels. For the downside the market needs to break below the 1.2350 levels opens up only to the 1.2320-00 area where the market is likely to be reasonably strong. Topside sees light offers dominating the 1.2500-40 before breaking and opening up another test of the 1.2580 levels and possibly opening up a short term reversal of the trend lower.
  • GBP: Cable has been particularly quiet moving from the 1.5640 areas to trade into the mid 1.5650’s and holding there for several hours as the market awaits the Abe announcements. Downside market sees some strong bids into the 1.5600 level with a clear break opening up the next level around the 1.5500 area and not seen since last year with the downside open to the 1.5500 levels. Topside sees light offers just above the 1.5660 levels a push to the next light offering areas and through that 1.5700 level will then leave only further sentimental levels around 1.5750 and 1.5800 left before running into stronger bids from that point on and into the 1.5850 areas.
  • JPY: USDJPY has remained in a fairly tight range with the market expectations for Abe’s commentary mooted for the moment, some are thinking that not only are we likely to see a delay on the Sales Tax until the first quarter of 2017, the Election date set for December but a possible stimulus package to move the economy forward and out of the dangers of recession. The market opened around the current 116.60 levels before pressing towards the 116.80 level in pre-Tokyo trading then drifting off as weaker longs cut out of positions and ran the market to below 116.50 before recovering to the opening areas for several hours. Topside offers into the 117.20 levels while potentially strong are likely to be punched through quickly if a stimulus package is released and the next stop would be possible option plays into the 118.00 level. The downside is limited and while disappointment at nothing other than the Sales Tax and Election will in all likelihood take the market back below 116.00 however, the downside is limited to say the least and everything is already built in, the only downside risk will be that the two key points are not mentioned or in particular the Sales Tax, at which point all bets are off as this is added easing if the delay goes through and was not part of the original economic policy set out a couple of weeks ago.
  • AUD: The Oz moved from the opening 0.8710 level to test the downside briefly before rising slowly after the RBA with a broadly speaking unchanged release. The market moved to the 0.8730 level before holding in a quiet range. Light bids into the 87 cent level with a light mixture through the downside until stronger bids appear around the 0.8650 levels and then the bids start to increase as the market moves down through the 86 cent level, only a clear break through the 0.8550 levels. Topside is open to the 88 cent level however, so far they have been strong enough to hold in the past 24hrs and local news has curtailed a good portion of potential movement. Through the level has sentimental offers for the most part clustered around the 0.8850 levels before meeting the next line in the sand as the market approaches the 0.8900 levels.

 

Overnight News

CNY:

Oct. new home prices fall MoM in 69 cities same as Sep

Oct. new home prices fall YoY in 67 cities above 58 in Sep

All China Oct new home prices -2.6% YoY vs. sept -1.3%

AUD:

RBA minutes were released in line with previous releases and no surprises

EUR:

EU budget talks drag on past deadline

USD:

FED still sees low inflation as being the likely foe

 

 

 

 

Today’s data

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

AUD       Conference Board Leading Index Sep A -0.30% | P -0.20%

09:30     GBP       CPI M/M Oct C 0.10% | P 0.00%

09:30     GBP       CPI Y/Y Oct C 1.30% | P 1.20%

09:30     GBP       Core CPI Y/Y Oct C 1.60% | P 1.50%

09:30     GBP       RPI M/M Oct C 0.10% | P 0.20%

09:30     GBP       RPI Y/Y Oct C 2.30% | P 2.30%

09:30     GBP       PPI Input M/M Oct C -1.60% | P -0.60%

09:30     GBP       PPI Input Y/Y Oct C -8.30% | P -7.40%

09:30     GBP       PPI Output M/M Oct C -0.20% | P -0.10%

09:30     GBP       PPI Output Y/Y Oct C -0.20% | P -0.40%

09:30     GBP       PPI Output Core M/M Oct C 0.00% | P -0.10%

09:30     GBP       PPI Output Core Y/Y Oct  C 0.80% | P 0.80%

09:30     GBP       DCLG UK House Prices Y/Y Sep C 12.10% | P 11.70%

10:00     EUR        German ZEW (Economic Sentiment) Nov C 0.5 | P -3.6

10:00     EUR        German ZEW (Current Situation) Nov C 1.8 | P 3.2

10:00     EUR        Eurozone ZEW (Economic Sentiment) Nov C 4.3 | P 4.1

13:30     USD       PPI M/M Oct C -0.10% | P -0.10%

13:30     USD       PPI Y/Y Oct C 1.20% | P 1.60%

13:30     USD       PPI Core M/M Oct C 0.10% | P 0.00%

13:30     USD       PPI Core Y/Y Oct C 1.50% | P 1.60%

15:00     USD       NAHB Housing Market Index Nov C 55 | P 54

21:00     USD       Net Long-term TIC Flows Sep C $41.3B | P $52.1B

 

Harry Hindsight              

  • EUR: The Euro moved quietly from the opening 1.2525 areas before jumping quickly as the JPY cross took over and JPY weakened, the market moved quickly to above the 1.2540 areas before holding and then steadily rising as the JPY reversed and the Euro was allowed to freely move to close to the 1.2580 levels. Once the JPY finished its movements the Euro started to slowly move in a tight channel into the London session trading down to the opening areas, Eurozone trade figures did nothing to help the market and the market saw weak stops triggered in early London dipping through the 1.2500 levels and holding in the 1.2490-1.2500 levels into the NYK session in quiet trading. Mixed US numbers but more importantly a drop in industrial production these numbers were ignored as Draghi and Praet dragged out the same useful rhetoric of doing whatever etc. Forcing the bids around the 1.2480 levels to break and again triggering light stops and putting the market around the 1.2450 level where the market held for several hours into the close.
  • GBP: The market opened around the 1.5670 levels and until the Tokyo opening with a quick stab higher to the 1.5690 levels before continuing in the same fashion as the Euro and pushing to the mid 1.5730’s in a strong reaction to the movements of the Yen. The move into the grey hours saw the market start to take heed of the commentary over the weekend from BoE’s Carney and BoE’s Chief Economist Haldane with further dovish comments driving the market lower as rate rises disappear over the hill and probably the one after that. The market slipped back in an increasing fall and triggered weak stops through the 1.5680 level before holding briefly around the 1.5660 levels before breaking for a second time to the 1.5630 levels and a quiet move into NYK and a steady drift around the 1.5640 levels to where it closed.
  • JPY: A day at the races with the USDJY affecting the whole market as the market opened a little higher from Friday’s close around the 116.40 levels jumping to the 116.60 in early trading and retail buying. The release of the GDP number saw Japan move into recession officially. The market sparked higher initially as you would expect pushing through the 117.00 levels to make a 7 yr. high at 117.06 before suddenly turn as real money, fund, CTA and exporters sold into the retail market, the Nikkei also dropped quickly and the USDJPY was quickly through the 116.50 levels and triggering stops and squeezing out the recent longs pushing to 116.00 and again to the 115.50 levels before bouncing, the bounce was shallow and unable at that point to push back through 116.00 before turning back south to test below the 115.50 levels. Early Europeans read the numbers in a more level headed manner and started steadily to sell the JPY against all the crosses as the market listened to the noise from the BoJ and MoF, it was quickly established early in the session that Abe would be making a statement within 24hrs in reference to the Sales Tax and Election. The market recovered much of it losses over the course of the day in steady but choppy trading to move around the 116.50 levels during the bulk of the NYK session and then popping a little higher into the close.
  • AUD: As with the other currencies the Oz was little different, drifting from a higher opening around the 0.8770 levels to the Tokyo opening holding 0.8750 before trading steadily higher as the AUDJPY carry trade pushed firmly through the 102.00 levels touching to the 102.40 area before dropping quickly back to the 102.00 area again, as USDJPY dipped ever lower the Oz continued to rise as the pressure on the Oz was released and the pair slowly moved to above the 0.8790 levels and into strong offers. The market held for several hours into the grey hours before slowly starting to slip back as the USDJPY started to recover into the London session. The market moved into the NYK session trading on the 0.8730 levels and as with the others slipped a little lower into the NYK falling to the 0.8700 levels before holding. The NYK session was a quiet affair moving around the 0.8710 levels into the close.

 

Yesterday’s premiership results

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

NZD       Retail Sales Q/Q Q3 A 1.50% | C 0.80% | P 1.20% | R 1.10%

JPY         GDP Q/Q Q3 (P) A -0.40% | C 0.50% | P -1.80%

JPY         GDP Deflator Y/Y Q3 (P) A 2.10% | C 1.90% | P 2.00%

GBP       Rightmove House Prices M/M Nov A -1.70% | P 2.60%

EUR        Eurozone Trade Balance (EUR) Sep A 17.7B | C 16.2B | P 15.8B | R 15.4B

CAD       International Securities Transactions (CAD) Sep A 4.37B | C 11.32B | P 10.28B | R 10.29B

USD       Empire State Manufacturing Nov A 10.2 | C 10 | P 6.17

USD       Industrial Production Oct A -0.10% | C 0.20% | P 1.00%

USD     Capacity Utilization Oct A 78.90% | C 79.30% | P 79.30%

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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