Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 118.275 | EURUSD 1.24416 | EURJPY 147.151 | AUDUSD 0.86178 | NZDUSD 0.78581 | USDCAD 1.12822 | EURCHF 1.20246 | USDCHF 0.96647 | GBPUSD 1.57072 | EURGBP 0.79207 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               118.59 | 117.78

EUR/USD             1.2443 | 1.2418

EUR/JPY               147.385 | 146.38

AUD/USD            0.8619 | 0.8569

NZD/USD             0.7867 | 0.7808

USD/CAD             1.1299 | 1.1278

EUR/CHF              1.2029 | 1.2025

USD/CHF             0.9685 | 0.9665

GBP/USD             1.5707 | 1.5673

EUR/GBP             0.7924 | 0.79185
For today

  • EUR: The market drifted from the opening gradually easing back from the 1.2440 to 1.2430 into the Tokyo open some light trading sent the market down to the 1.2420 levels, EURJPY selling was the initial mover however, once the damage was done on the Tokyo opening the market never looked like recovering in quiet trading. Noyer made comments while in Tokyo about Europe’s weak inflation despite accommodative policies which I’ve not noticed. For the moment bids into the 1.2415-00 area before giving way to weak stops however, the downside then sees further support into the two time lows around the 1.2360-50 areas even through this level the market is likely to see long dated support from the 1.2330 levels. Topside offers are limited to the 1.2440 area and only a move through the 1.2500 opens up further tests to the 1.2560 levels.
  • GBP: The market in GBP weakened to some degree across the board if only slightly in some cases, Cable moved steadily off the opening 1.5705 levels and slipping steadily through into the mid 1.5670’s before stabilizing and pushing back into the 1.5680’s. The session has been particularly quiet with very little news apart from commentary from the PBoC on the subject of the weekends rate cuts in China. Light bids appearing below the 1.5620 levels and growing in size as you move towards the 1.5600 levels, discussions between British Telecom/O2 and or EE are probably in very early stages and not likely to give any impetus to the market, through that level the market opens up a little with nothing but sentimental areas to go with. Topside offers through to the 1.5710 levels contain the topside for the moment and no direct data will see the market determined either by the GDP numbers in Germany and US numbers later. However, a push through the near offers still leaves the 1.5750 levels to push through before entertaining the 1.5800 levels.
  • JPY: BoJ minutes did little for the markets with Kuroda showing only minor concerns with current FX rates, this with a background of officials and larger companies advocating further weakness for the Yen, this being a change of position from when he was PM. The commentary left the market a little nervous and early buyers bought the rumour rather than the fact with USDJPY moving from the opening 118.30 to rise to close to the 118.60 levels before collapsing as the weaker Yen comments hit the mark, dropping in the first hour of Tokyo to the 117.80 levels before bouncing and then continuing the move lower and holding in the 117.90 areas for the balance of the session, The moves in USDJPY dominated the markets for the most part an in a dull session was the only game in town. For the moment 117.80 holds the balance of power and a move through the level will likely see the market moving strongly lower too the 117.40 areas before finding some limited support areas, through the level though the market is exposed to further tests down through the 117.00 levels. Topside offers from the 118.60 levels all the way back through to the 119.00 levels with strong offers in that area and likely through the 119.20 levels.
  • AUD: The Oz opened around the 0.8620 areas and held early into the session with only minor selling of the carry trade after the Kuroda comments, further selling of the USDJPY eventually affected the market and although the USDJPY had stopped declining the market tipped over into the AUDJPY and the market in the Oz was forced to the 0.8570 levels before recovering to 86 cents. The 0.8550 level to the downside holds the key to any further moves lower however; a push through there opens up further downside risk to the 83 cent areas, but as with the last key level once through the market stalled but remained below the level. Topside offer are weak into the 0.8650 levels but meet congestion on a push through the 87 cent levels, the stronger offers are concentrated around the 88 cent levels and this remains the topside dominance for the moment.

 

Overnight News

JPY:

BoJ Kuroda, Cannot deny weak Yen squeezing profits of small firms, non-manufacturers

BoJ Kuroda, Cannot deny weak Yen weights on Households

Kuroda will continue to carefully watch impact of FX on Economy

GPIF to adopt board system, Kyodo says

BoJ to keep easing until 2% inflation stable

BoJ will check risks, make adjustments as needed

BoJ policymakers divided over extra stimulus: minutes

CNY:

China rate cut not start of economy-wide stimulus Sec Journal

AUD:

Fitch says higher capital for big 4 Oz banks is credit positive

EUR:

Noyer says weak Europe inflation is despite accommodative policy

French and British Banks press EU to revise bank reform plans

 

Today’s data

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

JPY         Corporate Service Price Y/Y Oct A 3.60% | C 3.60% | P 3.50%

CNY        Conference Board Leading Index Oct A 0.90% | P 0.90% | R 1.00%

NZD       RBNZ 2-Year Inflation Expectation Q4 A 2.10% | P 2.23% | R 2.20%

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

09:30     GBP       BBA Mortgage Approvals Oct C 38.5K | P 39.3K

13:30     CAD       Retail Sales M/M Sep C 0.50% | P 0.30%

13:30     CAD       Retail Sales Less Autos M/M Sep C 0.30% | P -0.30%

13:30     USD       GDP (Annualized) Q3 (S) C 3.30% | P 3.50%

13:30     USD       GDP Price Index Q3 (S) C 1.30% | P 1.30%

14:00     USD       House Price Index M/M Sep C 0.40% | P 0.50%

14:00     USD       S&P/Case-Shiller Composite-20 Y/Y Sep C 4.60% | P 5.60%

15:00     USD       Consumer Confidence Nov C 96 | P 94.5

 

Harry Hindsight              

  • EUR: After a low start with the market pushing to the mid 1.2360’s the market spent the day recovering with a steady climb through the Asian session to just below the 1.2400 and unable to push through the level. The market moved into the London session with only the IFO numbers on the board and the market benefited from a higher set of numbers, the market had seen some longs cutting into the numbers so the bounce back was fairly quick from the 1.2375 levels and this time the market moved easily through the 1.2400 levels to continue its steady climb continued into the NYK session with the market recovering some of last week’s losses and a move to above the 1.2440 where the market eventually closed. Short covering in commodity crosses was the main cause of the moves higher with continual buying coming to market against Oz and CAD.
  • GBP: Cable was a little stronger with no data and little to talk about, tagging along in early trading with the Euro the market edged from the opening 1.5645 areas to rise in the Asian session to above the 1.5670 levels. The market reversed all the steady gains falling to the 1.5630 level before again steadily rising higher with talk of M&A’s in the market driving it initially lower before regaining its strength and moving back to the 1.5670 levels and triggering weak stops on the move through the level and to 1.5690. The market did move through the 1.5700 levels eventually in mid NYK however, although it held above the levels into the close it was by finger tips only.
  • JPY: The market opened in line with Friday’s market moving from the 117.80 levels before dipping into the Tokyo session to touch briefly below the 117.60 levels before spending the rest of the session recovering those meagre losses however, it has to be pointed out that it was a bank holiday in Japan. London was initially quiet with the market holding around the 117.90 levels and unable to move through the 118 level, weak Euro’s sent the USDJPY higher and the market quickly pushed to the 118.20 level before again holding quietly above the levels. NYK was little different with only a minor move towards the 118.50 areas before drifting back to the London highs and holding.
  • AUD: As the USDJPY rose the Oz drifted lower, after early buying as China cut rates for the first time since 2012, the Asian session market moved off the 0.8670 levels to touch just above the 87 cent levels, the market then went into decline moving steadily lower with a brief spirt on the opening in London to fall to the 0.8640 levels, the rest of the day was taken up with a move lower to below the 0.8610 before holding quietly around that level into the close. Cross buying of EURAUD gave the market its initial impetus in the London session.

 

Yesterday’s premiership results

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

EUR        German IFO – Business Climate Nov A 104.7 | C 103 | P 103.2

EUR        German IFO – Current Assessment Nov A 110 | C 108 | P 108.4

EUR       German IFO – Expectations Nov A 99.7 | C 95.5 | P 98.3

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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