Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 118.631 118.73-77 | EURUSD 1.24507 1.2450-55 | EURJPY 147.693 147.82-92 | AUDUSD 0.85076 0.8495-96 | NZDUSD 0.78384 0.7831-42 | USDCAD 1.14175 1.1420-30 | EURCHF 1.20233 1.2030-35 | USDCHF 0.9657 0.9646-70 | GBPUSD 1.56492 1.5629-55 | EURGBP 0.79565 0.7946-65 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.03 | 118.6

EUR/USD             1.2474 | 1.2428

EUR/JPY               148.10 | 147.78

AUD/USD            0.8499 | 0.8417

NZD/USD             0.7831 | 0.7777

USD/CAD             1.1459 | 1.1421

EUR/CHF              1.2042 | 1.2030

USD/CHF             0.9683 | 0.96525

GBP/USD             1.5659 | 1.5585

EUR/GBP             0.7977 | 0.7956

 

For today

• EUR: The big news for the weekend was the vote on increasing Gold reserves in Switzerland which the Swiss voters voted down by 78% to 22% according to projections. This meant the XAU/USD dropped quickly on the lows and the respondent moves in the USD ran through the market with early Euro’s dropping from the opening 1.2450 levels into Tokyo to touch below the 1.2430 levels. Once the news was absorbed in the market the Euro’s began to move off the lows and steadily rose back to just above the opening levels. Bids around the 1.2430 levels have held the market for the time being however, the bids are likely to run to the 1.2410 areas before weak stops make an appearance but through those levels the market without impetus it is likely to struggle to the downside with profit taking, range buyers in the way to previous lows tested during November. A move through the 1.2350 is likely to see strong stops on the move through and likely to run into bids into the 1.2310 areas, a push through this level is likely to have expended a lot of volume and it will struggle for the first move. Topside has offers to the 1.2500 levels, once through the level the offers still continue to the 1.2550 levels with only light stops along the way, even through the 1.2550 levels the market has offers building around the 1.2600 areas.
• GBP: Cable was no different to the Euro however, given the lack of liquidity between the opening level and 1.5600 it quickly moved to the lows before slowly moving towards the 1.5620 areas as the EURGBP made slight headway again. Downside 1.5600 levels seems to be the key level for the moment holding throughout November a break through the 1.5550 areas will likely open up a deeper test and a move into the 1.5400-1.5200 areas. Topside offers into the 1.5700 levels however, these are likely to be light and not until a good push through the 1.5750 levels does the market open a little, 1.5800 has broadly held for a couple of weeks now and until that breaks the market is not likely to test to the 1.5900 and then the 1.6000.
• JPY: USDJPY has been reasonably slow going however, that disguises the fact that again the market has carved through substantial offers to the 119.00 having opened just below the 118.80 levels. The move higher was a steady push after an initial burst to 118.90 and having peaked through the 119.00 level as with the last time the market was unable to push to far before dropping back to trade around the 118.90 level for the bulk of the day so far. Topside obviously 119.00-20 is likely to hold offers with a light mixture of weak stops however, above the 118.20 areas the stops could possibly take over the market to above the 119.30 opening the market and potential for a move to 120.00 and a similar story. Downside bids into the 118.20 however, in between the market is likely to be a little thin which could possibly put the market in a quick move and straight through to the only slightly better bids of 117.50. Through 117.50 the retail market on a quick move may be struggling with margins and cross selling could send the market even further.
• AUD: With weekend reports concentrating on the OPEC decision the market in Commodity currencies has been hit with both barrels and the Oz was pushed lower, opening around the 0.8480 levels and dropping quickly to the 0.8430 areas into Tokyo before finding some support, the market continued to fall a little after the PMI manufacturing numbers in China slipped dipping through the 0.8420 level before bouncing into the 0.8450 areas as the market drifted to sleep. Topside offers from the 0.8510 areas and through to the 0.8530 levels before light stops start to appear in the market. Through there 0.8550 holds fresh offers and the topside seems to becoming a struggle with any move higher struggling to hit the previous high tide levels.

Overnight News

CHF:

Swiss Voters Reject Measure Forcing SNB to Acquire More Gold

SNB Pledges Steps to Supplement Cap ‘Immediately’ If Warranted

JPY:

Abe Adviser Hamada ‘Jubilant’ Over Weak Yen, Falling Oil Prices

Hamada: Monetary Policy Course at Risk If Abe Barely Wins Govt

Majority in Japan Say Abenomics Didn’t Improve Economy: Mainichi

Japan’s Suga: Capex on rising trend as corporate profits improve

Japanese Manufacturers Boost Investment Amid Weak Consumption

Japanese Corp. Capital Spending to Grow 8% This FY: Nikkei

Most LDP Election Candidates Favor Nuclear Restart: Kyodo

Markit/JMMA Japan Nov. Manufacturing PMI 52 vs 52.4 in Oct.

Bank of Japan Risks Runway Inflation, Says Ex-Board Member Suda

CNY:

China Manufacturing Gauge Drops Amid APEC Factory Shutdowns

HSBC China Nov. Manufacturing PMI 50, Matching Estimate

Xi Says China Will Keep Pushing to Alter Asia Security Landscape

AUD:

Australia inflation gauge subdued in November TDMI

Australia Nov. Manufacturing Index Rises 0.7 Pt to 50.1

NZD:

New Zealand Treasury Says Tax Revenue May Not Meet Forecast

N.Z. Terms of Trade Fall for First Time in Seven Quarters

GBP:

U.K. Manufacturing Growth to Slow to 2% in 2015, EEF Forecasts

Today’s data

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

NZD       Terms of Trade Index Q/Q Q3 A -4.40% | C -4.50% | P 0.30%

AUD       TD Securities Inflation M/M Nov A 0.10% | P 0.20%

JPY         Capital Spending Q3 A 5.50% | C 2.00% | P 3.00%

CNY        Manufacturing PMI Nov A 50.3 | C 50.5 | P 50.8

CNY        HSBC China Manufacturing PMI Nov (F) A 50 | C 50 | P 50

08:30     CHF        SVME PMI Nov C 53.1 | P 55.3

08:45     EUR        Italy Manufacturing PMI Nov C 49.4 | P 49

09:00     EUR        Eurozone Manufacturing PMI Nov (F) C 50.4 | P 50.4

09:30     GBP       PMI Manufacturing Nov C 53 | P 53.2

09:30     GBP       Mortgage Approvals Oct C 59.0K | P 61.3K

09:30     GBP       M4 Money Supply M/M Oct P -0.70%

15:00     USD       ISM Manufacturing Nov C 58 | P 59

15:00     USD       ISM Prices Paid Nov C 52.5 | P 53.5

23:50     JPY         Monetary Base Y/Y Nov P 36.90%

Weekend News

CHF: Swiss Go to Polls on SNB’s Gold, Immigration in Economic U-Turn
JPY: Support for Abe’s LDP Rises 2.7 Points to 28% in Kyodo Poll
JPY: Abe Says Market for Long-Term Japanese Government Bonds Stable
JPY: Japan Says No Urban Land Values Fell for First Time in 7 Years
JPY: Japanese, Intl Cos. to Jointly Develop Defence Projects: Nikkei
JPY: Japan Car Unions Demand More Than 6,000 Yen/Month Raise: Nikkei
USD: Black Friday Online Sales Jump 22% as Jobs, Gas Spur Shopping
EUR: ECB’s Lautenschlaeger Rebuffs QE as German Opposition Grows
EUR: EU Adds Sanctions on Separatists in Ukraine as Clashes Flare
EUR: Dijsselbloem Cites Risk of Asset Bubbles as Threat to Growth
EUR: Greece Needs Further Debt Relief, ECB’s Yannis Stournaras Says
EUR: Greece Said to Weigh IMF Role in Credit Line in Samaras Reversal
CNY: China Budget Deficit May Be 1.9t Yuan Next Year, Caijing Reports
CNY: China to Increase Fuel Tax to Curb Pollution, Carbon Emissions
CNY: China Official Says Fed May Raise Rates Early 2015: Sec. Journal
AUD: Abbott’s Coalition Loses Government in Victoria State Election

Harry Hindsight

• EUR:  The market opened around the 1.2465 areas and Asia was a limited seller through the session moving the market down to the 1.2450 areas before moving between that level and the opening until moving quickly lower into the grey hours this was against the German retail sales numbers, comments by ECB officials suggested that the ECB would prefer more time to weight up the options as if the previous weeks had no bearing. After the move lower into the London session bouncing off the 1.2430 level and heading back to the 1.2460 levels again the market then reacted to a no change set of numbers to the 1.2490 level holding for several hours before dropping back to the lows as the liquidity started to disappear into end of the London session and the NYK session only on skeleton staff. The market recovered a little to the 1.2450 as some light profit taking moved in.
• GBP: Cable was a steadier pair with a gradual drop from the opening around the 1.5740 levels slipping slowly in Asia to move into London on the 1.5680 area and holding for several hours before dipping as the London market ran out of the office for the weekend and the market pushing steadily to the 1.5620 levels. The market finished the day off the lows as light profit taking moved in.
• JPY: The catalyst for the USD bids, with the market moving from the 117.80 area to move quickly to just below the 118.00 areas, the Tokyo open saw the market move quickly through the level that had held for over an hour, the market then held in a narrow 118.10-30 levels for the remainder of the session and the move into London, Mid-afternoon saw the buyers of USD’s appear in earnest and they continued buying deep through the day until the London session left for the day, pushing from the holding areas to move up above the 118.70 and into the resistance levels to finish the day not far from the highs.
• AUD: With the US out for the day Commodity currencies had a little respite and the market opened around the 0.8550 before dropping back in early trading to the 0.8520, the market then remained in a tight 0.8490-0.8540 levels for the day with little surprise with only a brief move quickly on the close of London as the shorts covered quickly before the end of the day. The market eventually closed around the 0.8510 levels.

Friday’s premiership results

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

NZD       Building Permits M/M Oct A 8.80% | P -12.20% | R -11.90%

JPY         Unemployment Rate Oct A 3.50% | C 3.60% | P 3.60%

JPY         Household Spending Y/Y Oct A -4.00% | C -5.00% | P -5.60%

JPY         National CPI Core Y/Y Oct A 2.90% | C 2.90% | P 3.00%

JPY         Tokyo CPI Core Y/Y Nov A 2.40% | C 2.40% | P 2.50%

JPY         Retail Trade Y/Y Oct A 1.40% | C 1.50% | P 2.30%

JPY         Industrial Production M/M Oct (P) A 0.20% | C -0.50% | P 2.90%

NZD       NBNZ Business Confidence Nov A 31.5 | P 26.5

GBP       GfK Consumer Sentiment Nov A -2 | C -1 | P -2

JPY         Housing Starts Y/Y Oct A -12.30% | C -15.00% | P -14.30%

JPY         Annualized Housing Starts Oct A 0.904M | C 0.876M | P 0.880M

JPY         Construction Orders Y/Y Oct A 15.70% | P -40.30%

EUR        German Retail Sales M/M Oct A 1.90% | C 1.50% | P -3.20% | R -2.80%

GBP       Nationwide House Prices M/M Nov A 0.30% | C 0.30% | P 0.50%

CHF        KOF Leading Indicator Nov A 98.7 | C 100 | P 99.8

EUR        Eurozone Unemployment Rate Oct A 11.50% | C 11.50% | P 11.50%

EUR        Eurozone CPI Estimate Y/Y Nov A 0.30% | C 0.30% | P 0.40%

EUR        Eurozone CPI – Core Y/Y Nov (A) A 0.70% | C 0.70% | P 0.70%

CAD       GDP M/M Sep A 0.40% | C 0.40% | P -0.10%

CAD       Industrial Product Price M/M Oct A -0.50% | C -0.40% | P -0.40%

CAD       Raw Materials Price Index M/M Oct A -4.30% | C 0.30% | P -1.80% | R 13:30

Stay lucky

Andy