Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 117.969 | EURUSD 1.25541 | EURJPY 148.092 | AUDUSD 0.86193 | NZDUSD 0.78644 | USDCAD 1.13402 | EURCHF 1.2014 | USDCHF 0.9570 | GBPUSD 1.56822 | EURGBP 0.80051 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               118.72 | 117.885

EUR/USD             1.25555 | 1.2530

EUR/JPY               148.94 | 148.00

AUD/USD            0.8622 | 0.8584

NZD/USD             0.7854 | 0.7825

USD/CAD             1.1358 | 1.1338

EUR/CHF              1.2016 | 1.2012

USD/CHF             0.9587 | 0.95705

GBP/USD             1.5688 | 1.5665

EUR/GBP             0.8006 | 0.7997
For today

• EUR: The Euro was pressured lower from the opening 1.2555 areas pushing in early trading down through the 1.2540 levels and too 1.2530 into the early part of the Tokyo session, EURJPY offers around the 148.40 areas saw the cross dip towards the 148.00 levels. Eventually the USDJPY pushed on and the EURJPY couldn’t resist the movement and started to move steadily higher and in line with the general move, this took the Euro back towards its opening levels in quiet trading for the Euro. Topside offers are likely to have moved back into the 1.2580-1.2600 levels with light stops likely through the 1.2620, through that level 1.2650 remains the next offerings and those offers are likely to thicken as we move to the 1.2700 areas. Downside bids into the 1.2500 level are probably light at best with the better bids likely to be into the 1.2450 levels however, these levels are well traversed and while there may be bids the strongest level is likely to be through the 1.2400 area and we would need a major shake up to free the market in either direction with the market becoming a little tired in this 1.2400-1.2600 range.
• GBP: Cable through the Asian session has been particularly dull and traded in a narrow band from the 1.5670-80 levels for the most part and not really following the movements of the Euro. Downside bids through the 1.5600 levels as with yesterday a push through the 1.5590 levels opens up more movement to the downside with the levels being more sentimental than physical for the moment but as the picture builds these sentimental levels are likely to increase, especially with a more clouded picture from the BoE minutes kicking in, 1.5405 would provide the next levels of support and similar at each big figure however, a move through the 1.5590 levels will technically open up a greater move lower exposing the 1.5300 levels. Topside see’s immediate offers moving in above the 1.5700 levels and into the 1.5720 levels yesterday’s highs with the chance of weak stops through that level, further offers are likely to then move into the market with the 1.5780 levels possibly a stronger offering.
• JPY: The USDJPY continued its move, opening around the 118.00 levels the market moved to above the 118.20 levels in an early move in Sydney before trading back to the 118.00 and continuing into the session trading in that range, early Trade balance numbers showed through better but had little impact, the push through the 118.20 area saw the market open up and the rise steepened and steady buying pushed the market towards the 118.70 levels with strong two way flows from the 118.00/20 areas opening to lesser supplies until the highs. Topside level is from the 118.80 levels and through the 119.00 with strong offers again in play however, there was strong offers in play on the move up through 118.00. Short dated options dominate the topside now rather than longer term plays so less likely to see the same type of protection, through that level and the world is your oyster with 120.00 probably only more interesting because it’s a rounder number. Downside will probably have very little to protect any strong or surprising move and is open for a damaging move. 117.00 is likely to have a few bids available but its still weak and 116.60 areas would provide some light support to 116.40 before better bids into the 116.00 levels.
• AUD: Falling Iron ore prices continue to  pressure the Oz however, while it is likely to have a strong impact on trade figures the market is taking the movements as the only economic data to watch for, with interest rates not likely to rise for the foreseeable future of more importance. A weaker manufacturing PMI in China added to pressure however, the market made several efforts below the 0.8590 level but continuing to hold into the grey hours. Topside offers likely into the 0.8620 areas being light however, weak stops are likely to be just beyond that level and possibly offers from the 0.8640 and 0.8660, this again is around the favourite but over used levels now and less likely to be dominant, the 0.8700/0.8730 areas provide better resistance however, only a major upset could see that trading. Downside is light but probably bid below the 0.8540 level if the current levels break and those bids likely to be through to the 85 cent area.

Overnight News

JPY:

Suga: Even With Tax Delay, Meeting FY2020 Fiscal Goal No Problem

Japan Oct exports rise 9.6 pct year/year – MOF

Japanese Bought Net 212.5 Billion Yen Overseas Debt Last Week

Japan Nov flash manufacturing PMI eases slightly, output up

Aso: Japan Lower House Election to Be Held on Dec. 14

GPIF Names Private Equity Executive Mizuno as Investing Head

CNY:

HSBC China Nov. Flash Manufacturing PMI 50; Est. 50.2

China Yuan Won’t Face Large Depreciation Risk: Sec. Journal

China Should Cut ‘Excessive’ Expansion of Investment: Sec. News

NZD/CNY:

New Zealand in ‘Comprehensive Strategic Partnership’ With China

NZD:

NZ Q3 producer prices fall on lower dairy prices

N.Z.’s English Says Surplus Challenging as Dairy Prices Slump

New Zealand ANZ Oct. Job Listings Fall 0.3% to 36,854

Today’s data

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

NZD       PPI Inputs Q/Q Q3 A -1.50% | C 0.30% | P -1.00%

NZD       PPI Outputs Q/Q Q3 A -1.10% | C 0.20% | P -0.50%

JPY         Trade Balance (JPY) Oct A -0.98T | C -1.02T | P -1.07T

CNY        HSBC Manufacturing PMI Nov (P) A 50 | C 50.2 | P 50.4

07:00     CHF        Trade Balance (CHF) Oct C 2.57B | P 2.45B

07:00     EUR        German PPI M/M Oct C -0.20% | P 0.00%

07:00     EUR        German PPI Y/Y Oct C -0.90% | P -1.00%

08:00     EUR        France Manufacturing PMI Nov (P) C 48.9 | P 48.5

08:00     EUR        France Services PMI Nov (P) C 48.6 | P 48.3

08:30     EUR        Germany Manufacturing PMI Nov (P) C 51.5 | P 51.4

08:30     EUR        Germany Services PMI Nov (P) C 54.5 | P 54.4

09:00     EUR        Eurozone Manufacturing PMI Nov (P) C 50.9 | P 50.6

09:00     EUR        Eurozone Services PMI Nov (P) C 52.3 | P 52.3

09:30     GBP       Retail Sales M/M Oct C 0.40% | P -0.30%

11:00     GBP       CBI Trends Total Orders Nov C -3 | P -6

13:30     CAD       Wholesale Sales M/M Sep C 0.70% | P 0.20%

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

13:30     USD       CPI Y/Y Oct C 1.60% | P 1.70%

13:30     USD       CPI Core M/M Oct C 0.20% | P 0.10%

13:30     USD       CPI Core Y/Y Oct C 1.80% | P 1.70%

13:30     USD       Initial Jobless Claims (NOV 15) C 286K | P 290K

15:00     USD       Philly Fed Survey Nov C 18.5 | P 20.7

15:00     USD       Existing Home Sales Oct  C 5.15M | P 5.17M

15:00     USD       Leading Indicators Oct C 0.50% | P 0.80%

15:00     EUR        Eurozone Consumer Confidence Nov (A) C -11.1 | P -11.1

Harry Hindsight              

• EUR: Euro’s was pushed slightly lower as the USD rose with the help of a weaker Yen trading down from the opening 1.2535 areas pushing gently through the 1.2520 levels and trading around the level into the London session. London saw a limited reaction to a better current account number and revision moving to the 1.2540 levels pre-release and holding around that level through to the NYK session. NYK saw a choppy session with the market heading higher as the US numbers came out mixed but balanced overall and the Euro pushing through the 1.2570 triggering weak stops before just as quickly moving lower, and back into the holding areas around the 1.2540 as the Fed released the minutes but the whole affair was mooted at best however, the Euro did spark higher again triggering weak stops from early sellers and pushing a touch through the 1.2600 level before collapsing back to the 1.2540 levels and a slow period of trading around the 1.2550 levels into the close. As can be seen with only limited data the market was moved more on sentiment and peripheral movements of other currencies.
• GBP: Cable spent the Asian session sinking slowly towards the 1.5600 levels testing early into the Tokyo session before holding in the 1.5610-20, the move into London saw the market move lower as the London market sold into an expected no change however, the minutes revealed more clear indications of the no voters slowly drifting towards a yes vote and although the result was the same those indications clearly show a leaning now for a rate change coming closer. Cable leapt higher pushing quickly through the opening levels and triggering weak stops and pushing through 1.5650 and hitting 1.5670. The market steadily continued to rise touching briefly through the 1.5700 levels before finding sufficient offers to hold the market. From this point the market was a little mixed. EURGBP had held in a tight range during Asia trading around the 0.8020 levels before moving higher into the London opening as the Euro reacted to the current account number, the release of the BoE minutes saw the market drop back quickly falling from the highs above the 0.8035 levels quickly negating the range and falling further as stops were triggered falling over the next hour to below 0.7990 before bouncing. Back above the 80 cent level. Cables reaction was to stop on its high and slip back to the 1.5670 levels and eventually slipping back to the 1.5650 level as the second attempt to the 1.5700 failed. NYK became a steady stream of buying from that point and the Fed release again triggered strong buying in Cable to the 1.5720 pushing through the figure before again finding the topside to stubborn and slipping into the 1.5680’s.
• JPY: USDJPY spent the day rising steadily in a tight channel only the Fed commentary set the market slightly lower however, the market opening around the 116.90 levels and jumped on the Tokyo opening to above the 117.00 level before slipping just below again ater making 117.20. The market then continued rising steadily to the 117.40 levels and traded the area into the later part of Tokyo before early London started buying, again the market plateaued this time at the 117.60 and it remained for the NYK session to take it on its next journey pushing this time to just below the 117.80 levels and limited offers. Fed commentary took the market on its final leg pushing to the 118.00 levels trading for the last couple of hours into a close.  While the picture looks dull and boring there was plenty of flow through the session in USDJPY and the gradual rise over the day was tempered by cross selling into the rise.
• AUD: Talk of falling Iron prices, and dovish comments from RBA’s Stevens added to a decent 15yr auction which one suspects was the source of the Oz strength over the past couple of days. Given that however, the weakening JPY or USD strength if you wish saw the Oz slip steadily lower in a similar tight channel to the USDJPY’s rise. The Asian session saw the market slip back to the 0.8660 level from the openings around the 0.8720 area, the market held for the later part of the Asian session and only renewed its downward trend into the London session, weak stops through the 0.8650 levels and a dip to the mid 0.8620’s before steadying and running into the NYK session in the 0.8640 levels, With much of the base metals lower into the close of the first ring on the LME the Oz came under particular pressure and the market tested the 0.8620 levels and a slow push to the 86 cent level, the market ran out of impetus and held the level to close at the 0.8620 areas. Strong fund selling through the 0.8650 on a second breakout attempt did most of the damage though through the day.

Yesterday’s premiership results

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

AUD       Westpac Leading Index M/M Oct A 0.00% | C 0.00% | P -0.10%

JPY         All Industry Activity Index M/M Sep A 1.00% | C 1.20% | P -0.10%

EUR        Eurozone Current Account (EUR) Sep A 30.0B | C 21.3B | P 18.9B | R 22.8B

GBP       MPC Official Bank Rate Votes A 2—0—7 | C 2–0—7 | P 2–0–7

GBP       MPC Asset Purchase Facility Votes A 0—0—9 | C 0–0—9 | P 0–0–9

CHF        ZEW (Expectations) Nov A -7.6 | P -30.7

USD       Housing Starts Oct A 1.01M | C 1.03M | P 1.02M | R 1.04M

USD       Building Permits Oct A 1.08M | C 1.04M | P 1.02M | R 1.03M

USD       Crude Oil Inventories A 2.6M | C -1.5M | P -1.7M

Good Luck,

Andy