Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 118.402 | EURUSD 1.24695 | EURJPY 147.641 | AUDUSD 0.84896 | NZDUSD 0.79047 | USDCAD 1.13271 | EURCHF 1.20292 | USDCHF 0.96466 | GBPUSD 1.57294 | EURGBP 0.79276 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               118.515 | 118.23

EUR/USD             1.2476 | 1.24615

EUR/JPY               147.72 | 147.475

AUD/USD            0.8527 | 0.8470

NZD/USD             0.7890 | 0.7857

USD/CAD             1.1333 | 1.1319

EUR/CHF              1.20345 | 1.20295

USD/CHF             0.96565 | 0.9642

GBP/USD             1.5743 | 1.5722

EUR/GBP             0.79285 | 0.7921
For today

  • EUR: Euro’s has traded quietly over the session dipping from the 1.2470’s to the 1.2460’s trading for several hours into Tokyo before trading at the lower level for the rest of the session and struggling to gain the 1.2470’s again. Light bids into the 1.2450 levels with the strong bids below the 1.2430 and into the figure level. A push through the 1.2380 level will open up a fresh attempt for new lows and a break of 1.2350 is likely to trigger further pressure to the downside, with 1.2300-10 the next line in the sand. Topside now has a lot of congestion likely centring on the current levels with a push above the 1.2500 meeting resistance from 1.2510 levels onwards and into the 1.2550 area, through there the market is likely to see weak stops before a push for the 1.2600 level and further medium offers.
  • GBP: Cable gently lost ground against the USD slipping slowly from the opening 1.5735 areas to the 1.3722 area over the course of a very slow session. Topside sees light offers into the 1.5750 area before the market opens up for a test on the stronger 1.5800 levels; even through this level 1.5850 is still likely to stand in the way of any further moves in a quiet market as we’ve seen throughout Asia. Downside is well traversed through the 1.5700 areas however; a push through the 1.5700 level will likely test 1.5650 quickly before the strong support areas of 1.5600 take over.
  • JPY: USDJPY moved gradually higher from the opening levels dipping in early trading to the mid 118.20’s before slowly climbing to test the 118.50 levels in very slow trading with the RBA commentary unchanged and little more in the market to stir things up. Topside is obviously dominated towards the 119.00 levels with selling likely to start from the 118.80-90 levels and getting stronger however, yesterday’s price action and the quick push to 119.10 may have removed some of that liquidity so another push through the level may see the 119.20 areas buckle and an opening to the 120.00 area and another sticking point. Downside has had time to refresh itself and the 118.20-00 area is likely with stops probably below the 117.90-80 levels then the market opens up to light and continuous bids down to the 117.00 areas where support thickens a little.
  • AUD: The market opened around the 0.8490 levels trading slightly lower as some of the longs cut positions before the RBA announcement, dipping into the mid 0.8470’s as the market moved into the Tokyo session. Even into the session the market held around the 0.8480’s for several hours before dipping on the no change announcement to the 0.8470 and then moving quickly to 0.8510. The market stalled for a short period before rising quickly to above 0.8520 as the RBA comments hit the market with very little difference. The market has since held above the 85 cent levels and moves towards London holding above 0.8510. Topside 0.8530 into the 0.8550 levels offers the first line of resistance but is likely to be light giving way to stops through the 0.8560 levels and opening up a test of the 86 cent levels, a push above the 0.8620 areas will open up further movement to the topside. Downside a push through the 0.8480 level again opens up the downside potential with the market likely to see bids down around the 0.8420 areas, a push through the 0.8380 levels is likely to trigger some stops however, 6 months ago 83 cents was the level the market was looking for on the downside so unless there are interest cuts in the near future its reached its potential and shorts will be taking some profit one would suspect.

 

Overnight News

AUD:

RBA Keeps Record-Low Rate to Boost Economy as Commodities Tumble

Australia Oct. Building Approvals Rise 11.4% M/M; Est 5.0% Gain

Foreign Ownership of Australian Govt. Debt Falls in 3Q

Australia ANZ Weekly Consumer Sentiment Falls 0.3% to 113.9

AUD: Australia government spending rise in Q3

JPY:

Abe Begins Election Bid as Recession Clouds Economic Policy

Amari: Abe Has Displayed Strong Stance on Fiscal Reform: Nikkei

Japan govt. spokesman: PM Abe to present fiscal consolidation plan by next summer

Japanese Workers See Wages Drop for 16th Month on Inflation

NZD:

N.Z. Commodity Price Index Falls for a Ninth Month, ANZ Says

CNY:

China Raises Yuan Reference Rate by 0.07%, Most since Nov. 10

IMF:

Fed Will Raise Rates Very Delicately, Sensibly: IMF’s Lagarde

 

Today’s data

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

JPY         Monetary Base Y/Y Nov A 36.70% | C 37.20% | P 36.90%

AUD       Building Approvals M/M Oct A 11.40% | C 5.00% | P -11.00% | R -11.20%

AUD       Current Account (AUD) Q3 A -12.5B | C -13.7B | P -13.7B | R -13.9B

AUD       RBA Rate Decision A 2.50% | C 2.50% | P 2.50%

09:30     GBP       Construction PMI Nov C 61 | P 61.4

10:00     EUR        Eurozone PPI M/M Oct C -0.30% | P 0.20%

10:00     EUR        Eurozone PPI Y/Y Oct C -1.30% | P -1.40%

15:00     USD       Construction Spending M/M Oct C 0.60% | P -0.40%

 

Harry Hindsight              

  • EUR: The Euro started the day slipping back from the opening levels of 1.2450 as the Gold dropped quickly from the opening with the USD rising quickly across the board. The move into Tokyo saw the Euro pushing below the 1.2430 levels and near term support before gradually rising through the session back above the opening 1.2450 levels. The move into the London session saw strong selling as the market moved to the PMI numbers pushing through to the 1.2420 levels. The release of said did little for the market however, the market rejected the lows and short squeeze followed as with all the commodities and the Euro quickly rallied to above the Asian highs and a push to the 1.2470 levels, the market then held around the levels in slow trading ignoring the weaker data. The move into the NYK session saw a continuation of the move and the USD slipped further over the session moving steadily to above the 1.2500 levels but struggled with a lack of impetus generated the market slipped back and although it tested the levels again drifted into a quiet close around the 1.2470’s. With the likelihood of a firm declaration from the ECB the market is beginning to look for directional movement from other sources.
  • GBP: The market opened in Cable around the 1.5640’s before the USD buying hit the market as commodity prices moved quickly lower after the Swiss vote on Gold reserves registered a no and the market moved quickly lower and trading through the supportive 1.5600 levels, touching just through the 1.5590 levels before starting a steady climb higher. The move into the grey hours saw some quick buying to put the market in Cable back to the opening levels and although the selloff in the Euro initially dragged on the GBP the downside move was limited and it wasn’t long before EURGBP selling moved into the market, the market had peaked in the cross above the 0.7975 levels before dropping steadily through into the London session and holding some 50 pips lower on the day. Cable headed steadily higher in three steps halting initially at the 1.5680 levels and then the 1.5720 area before finally pushing strongly to the 1.5760 levels as GBP benefitted the most on the move to finish the day just below the 1.5740’s, a strong PMI figure for manufacturing again helped the market  higher during the day.
  • JPY: USDJPY was limited in reaction with very strong offers into and above the 119.00 levels, opening around the 118.70 levels the market moved steadily through offers to the 119.00 level but although the market did push through the level it was limited and the market slipped back into the 118.90 areas and that is where it remained for several hours. The move into the London session saw the release of a downgrade from Moody’s dropping the Japan’s sovereign debt from Aaa3 to A1 triggering a quick move to above the 119.00 level touching briefly through 119.10 levels before the market dropped hard and fast to the 118.10 levels as one suspects the sellers were caught with parts of their positions unfilled, the drop then became exaggerated as the quick move triggered successive weak stops and only bounced back to the 118.50 once the market was exhausted of supply. The move into the NYK saw renewed selling as the new comers sold into the USD weakness and mixed numbers. The market fell back to the 117.90 levels as stops were again triggered through the 118.00 levels before the market stabilized and slowly started to rally once the London session left the market and commodity prices had run there course and returned to early Friday’s levels.
  • AUD: After an opening below Friday’s close around the 0.8480 level the market continued the fall back as the Gold market opened, with the Oz quickly pushing to the 0.8430 levels areas. The market moved into the Tokyo session and the day was still not over for the Oz and a weaker Manufacturing PMI in China, this sent the Oz to the 0.8420 levels. The market held in the 0.8420-50 levels then for several hours before the London market took over and the USD rally was over with and started to slip as commodity prices began to regain there previous levels. The move through 0.8450 coincided with the Moody’s announcement and the market quickly moved 40 pips to the 0.8490 with weak stops being triggered along the way. The NYK market continued the buying pushing the market to the 0.8520 in early trading and choppily towards the London close and then drifting back to close just under the 85 cent level.

 

Yesterday’s premiership results

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

CHF        SVME PMI Nov A 54.7 | C 53.1 | P 55.3

EUR        Italy Manufacturing PMI Nov A 49 | C 49.4 | P 49

EUR        Eurozone Manufacturing PMI Nov (F) A 50.1 | C 50.4 | P 50.4

GBP       PMI Manufacturing Nov A 53.5 | C 53 | P 53.2 | R 53.3

GBP       Mortgage Approvals Oct A 59.4K | C 59.0K | P 61.3K

GBP       M4 Money Supply M/M Oct A -0.10% | C 0.20% | P -0.70%

USD       ISM Manufacturing Nov A 58.7 | C 58 | P 59

USD       ISM Prices Paid Nov A 44.5 | C 52.5 | P 53.5

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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