Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 119.786 | EURUSD 1.2379 | EURJPY 148.286 | AUDUSD 0.83838 | NZDUSD 0.77846 | USDCAD 1.13834 | EURCHF 1.20242 | USDCHF 0.9713 | GBPUSD 1.56735 | EURGBP 0.78984 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.105 | 119.71

EUR/USD             1.2393 | 1.2373

EUR/JPY               148.615 | 148.32

AUD/USD            0.8398 | 0.8369

NZD/USD             0.7784 | 0.7761

USD/CAD             1.1400 | 1.1383

EUR/CHF              1.2026 | 1.20235

USD/CHF             0.97185 | 0.9704

GBP/USD             1.5681 | 1.5623

EUR/GBP             0.7924 | 0.7897
For today

  • EUR: Another day of blazing financial movement or maybe not. The Euro opened around the 1.2380 areas and the market was unable to move must beyond the 1.2390 areas and the downside was limited to the upper 1.2370’s. Topside sees offers running from the 1.2460 levels into the 1.2500 areas, even through that level the market would need to break through the 1.2530 levels to see any momentum continuing with light offers possibly continuing to the 1.2560’s before the market opens up to the possibility of a test of 1.2600 levels. Downside is again open to the support areas around the 1.2320 areas and ultimately 1.2280 is possibly a stronger level now with stops through the level.
  • GBP: Cable struggled in today’s Asia session moving from the opening 1.5675 levels and opening in Tokyo at the highs above the 1.5680’s before dropping quickly as GBPJPY profit taking kicked in and the Cable took the brunt of the selling to tumble to the 1.5640 areas. The market stabilized for a good portion of the session holding around the 1.5660 areas before further selling moved in as EURGBP steadily moved into the market with the cross moving from the 0.7900 levels towards the 0.7920’s, taking the Cable into the mid 1.5630’s. Downside strong bids are likely around the 1.5600 levels a push through the 1.5590 levels will likely see stops triggered on the move lower and only once the market moves through the 1.5550 sentimental level the market is likely to see support from the 1.5520 levels into the 1.5500. Topside is likely to struggle in a quiet market around the 1.5680 areas before pushing through to above the 1.5700 and a break through the 1.5730 levels is likely to still see light offers, stops are likely to make an appearance above the 1.5760 areas and 1.5800 becomes the next strong resistance level.
  • JPY: Having pushed through the 120.00 areas during the previous session the market moved away from the lows in 119.70’s the market slowly climbed back to the 120.00 areas easily pushing through only to stop around the 120.10 with offers running in the market again. Topside offers from the 120.10 areas which while in Asia have held the market however, the market has been particularly quiet as you’d expect in from of the NFP later in the day. A push through the 120.30 is still likely to see offers continuing as long term longs take profits as the predicted 120.00 levels have been hit, there is chatter of more opening to higher levels however, and this close to the yearend will see funds thinking of winding up for the holiday periods. Downside though still remains fairly well bid down into the 119.40 with the bids likely to be in depth through to 118.80 before stops are likely to become apparent.
  • AUD: The Oz opened around the 0.8385 areas the market and drifted in a tight range barely scraping through the 0.8390 levels in one of the tightest ranges this year, a brief round of AUDJPY selling sent the Oz down to the 0.8370 levels before again settling into a tight range of less than 10 pips. Topside sees the market open to the 0.8420 areas before any reasonable offers start to appear with the market offering into the 0.8460 areas before a possible move higher increases, through the 0.8460 levels the market will likely target the 85 cent level and weak stops above the 0.8540 opens up a fresh test of 86 cent. Downside 0.8350 holds some stubborn bids however, the market over the past 48hrs has continued to trade heavily despite improving numbers yesterday, whether they are relevant or not. A push through 0.8350 will likely see a collection of bids moving through to the 0.8310 areas before the market opens up for a deeper move and the 82 cent handle.

 

Overnight News

JPY:

Japan Bankruptcies Caused by Weak Yen Hit Record in Nov.: Survey

CNY:

China Should Consider Reserve Ratio Cut: Securities Journal

China Unlikely to Set 2015 Growth Target Below 7%: Bus. News

CNY/USD:

China, U.S. Need Cooperation on Anti-Money Laundering: PBOC

AUD:

Australia’s Nov. Construction Index Falls 8 Pts to 45.4

 

Today’s data

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

JPY         Leading Index Oct (P) A 104 | C 104.1 | P 105.6

07:00     EUR        German Factory Orders M/M Oct C 0.50% | P 0.80%

08:00     CHF        Foreign Currency Reserves Nov C 465.5B | P 460.4B

10:00     EUR        Eurozone GDP Q/Q Q3 (P) C 0.20% | P 0.20%

13:30     CAD       Trade Balance (CAD) Oct P 0.71B

13:30     CAD       Net Change in Employment Nov C 5.0K | P 43.1K

13:30     CAD       Unemployment Rate Nov C 6.60% | P 6.50%

13:30     CAD       Labour Productivity Q/Q Q3 P 1.80%

13:30     USD       Change in Non-farm Payrolls Nov C 225K | P 214K

13:30     USD       Unemployment Rate Nov C 5.80% | P 5.80%

13:30     USD       Trade Balance Oct C -$41.2B | P -$43.0B

15:00    USD       Factory Orders Oct C 0.00% | P -0.60%

 

 

 

Harry Hindsight              

  • EUR: The Euro opened a little above the 1.2305 and the market didn’t move too far away from that level moving up to the 1.2320 in early trading but that was the limit. The move into the grey hours saw the market dip to just below the figure however, the move into London didn’t improve anyway and one has to say the reaction to the ECB announcement was as expected Nothing! With Draghi a little more cautious in his commentary and reiterating the ECB’s commitment to act. GDP growth was revised down in 2015 from 1.6% to 1% and 2016 from 1.9% to 1.7%, the market moved initially lower to make new lows in the 1.2280’s before immediately bouncing quickly to 1.2360, triggering some weak stops as the market broke the 1.2380 levels and holding just short of the 1.2420 area. This was followed by a good initial claims in the US and the market quickly to just below the 1.2460’s before dropping back to below 1.2400 levels as the short term buyers cut positions, by the time that London closed the market was back to the initial rally levels around the 1.2360 and the market struggled from that point on rising to 1.2380 and then holding into the close.
  • GBP: A very choppy day for the Cable with the rate decision a foregone conclusion leaving the GBP to be pulled around by the Euro and USD’s over the course of the day. Opening around the 1.5685 levels, the market moved into the Tokyo session moving steadily to above the 1.5700 areas. The rise was quickly over and just a carryover from the previous day’s rally, with the Euro doing nothing the Cable slowly drifted back to the 1.5680 areas for a quiet move into the London session, from this point onwards the market moved more erratically moving quickly to the 1.5700 again and then reversing the move and pushing to close of the 1.5660 level before the release of the numbers in Europe. The release of the ECB decision sent the market higher again, the next event was strong EURGBP buying and the Cable was again pushed lower, after that it was anyone’s guess as the market moved off the 1.5650 lows to hit just short of 1.5720, before returning and then making the high of the day around the 1.5725 levels, if you got the moves you are a legend and the only point I can draw from the movements is that liquidity must have been poor after the first few moves in London and the NYK session was lacking bids and offers between the highs and lows. Then market eventually settled down to finish the day only slightly down against the USD and some 50 pips adrift of where the EURGBP started below 0.7850.
  • JPY: The USDJPY struggled to push through the 120.00 levels, opening around the 119.80 levels dipping early in the session before pushing back up above the 119.90 and remaining in a very tight range for several hours. The first movement was slower as EURJPY selling hit the market and the USDJPY was taken to the 119.70 before bouncing back with impetus enough to push through the 120.00 levels and into the mid-teens above the level before selling pushed it away from the 120.20 areas suggesting something at that levels, the market again moved on the US data and this time pushed quickly through the 120.20 and the resultant selling was strong and immediate, with the option protection gone the resultant selling by those caught in a long position sent the market quickly to below the 119.40 areas before finding sufficient bids to stop the slide, the bounce was to the 119.90 levels and the market held broadly around the 119.80 into the close.
  • AUD: The Oz had a reasonably interesting day if not quite as volatile we’ve often seen. Moving lower as the market prepared for the release of the data the market moved from the opening 0.8405 areas to trade into the 0.8380’s. The release of better retail sales numbers and trade balance sent the market quickly higher to the 0.8430 levels and the highs for the day, the market then spent the rest of the Asian session drifting lower as the market took the numbers as nothing that is likely to reverse the terminal decline of the GDP which is more connected with the cost of raw materials that the Oz relies on in its exports. The market held into the London session around the 0.8370, trading to below 0.8360 but generally not doing much until the release of the US numbers and a quick climb from the lows as the USDJPY broke through the 120.00 and took the AUDJPY carry trade with it, the reversal of USDJPY having traded higher sent the Oz higher as the carry trade attempted to smooth the move out and then the reversal as the USDJPY moved higher and the Oz moved back to the 0.8380 areas.

 

Yesterday’s premiership results

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

AUD       Retail Sales M/M Oct A 0.40% | C 0.10% | P 1.20% | R 1.30%

AUD       Trade Balance (AUD) Oct A -1.32B | C -1.81B | P -2.26B | R -2.24B

EUR        Eurozone Retail PMI Nov A 48.9 | P 47

GBP       BoE Rate Decision A 0.50% | C 0.50% | P 0.50%

GBP       BoE Asset Purchase Target A 375B | C 375B | P 375B

USD       Challenger Job Cuts Y/Y Nov A -20.70% | P 11.90%

EUR        ECB Rate Decision A 0.05% | C 0.05% | P 0.05%

USD       Initial Jobless Claims (NOV 29) A 297K | C 295K | P 313K | R 314K

CAD       Ivey PMI Nov A 56.9 | C 53 | P 51.2

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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