Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 120.693 | EURUSD 1.23173 | EURJPY 148.657 | AUDUSD 0.82942 | NZDUSD 0.76592 | USDCAD 1.14781 | EURCHF 1.20219 | USDCHF 0.97605 | GBPUSD 1.56535 | EURGBP 0.78688 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               121.005 | 119.995

EUR/USD             1.2323 | 1.2292

EUR/JPY               148.845 | 147.795

AUD/USD            0.8303 | 0.8223

NZD/USD             0.7661 | 0.7609

USD/CAD             1.1501 | 1.1477

EUR/CHF              1.20235 | 1.2019

USD/CHF             0.9777 | 0.9754

GBP/USD             1.5661 | 1.5626

EUR/GBP             0.7877 | 0.78645
For today

  • EUR: With only minor numbers apart from the German trade balance the market has been dominated by the continuing profit taking, with the market back to being on hold for the moment as the USD continues to consolidate with the commentary firmly fixing the first rises to sometime in the summertime of 2015, with the movement we have seen over the course of the past few months in the USD the chances could shift to an early rise if economic data fits as the higher the USD goes the more pressure to resist a rise which could risk the economic numbers beginning to drift off. For the moment though yesterday’s German IP numbers did little to stimulate the market and the Euro traded higher as it weakened against a far stronger Cable. Today again the Euro finds itself on the wrong end of cross movements with EURJPY being led along by continuing Yen strength having rejected the 121.85-80 levels yesterday. Holding its opening levels into Tokyo the market sold the EURJPY cross quickly on the opening and the market then held around the 1.2310 areas for the most part with one brief attempt to break lower and through the 1.2300 levels. The market continues to hold the 1.2310 levels with light volumes now the market has settled a little.  Offers from the 1.2330 level continue now to the 1.2350 areas close to where the market broke lower from on Friday, a solid push through the 1.2380 areas will open up the 1.2450 areas however, the market is likely to be congested in the area with no clear direction unless there is plenty of impetus driving the market and then an attempt into the 1.2500 levels is an outside chance. Downside will likely see the 1.2280 again providing light support before the 1.2250-30 levels take over, even a push through this level still leaves little movement and the 1.2200 area is likely to be dominated by bids.
  • GBP: Cable has struggled through the session having opened around the 1.5650 areas the market slipped from 1.5660 early highs and has broadly continued slowly lower, the market dipped to as low as the 1.5620’s before finding limited support with the GBPJPY cross doing most of the damage on the session, the market did recover a little towards the later part of the session and the market looks to be heading into the grey hours in the 1.5640 areas. Topside offers around the 1.5680 level match the breakdown from Friday and for the moment have looked sufficient to keep a lid on any accesses the market may have, strong EURGBP selling yesterday defined the Cable for much of the session and as with the Euro the crosses are having a lot of sway in the direction of the market. Once through the 1.5680 areas though the topside remains offered for a good distance and only a break through the 1.5750 area will open up some light and that is likely to be limited for the moment. Downside the 1.5620-00 area again comes into play and while the market has been through it the dip lower was probably deemed as manageable and bids will be around the 1.5580 levels with weak stops below 1.5540, a push through the 1.5500 level does open further downside potential and a clear break opens up a test of the 1.5400 and then the 1.50-54 range.
  • JPY: USDJPY saw some limited buying from the 120.80 levels having dipped on the opening to below 120.60, however the early buying from retail types was soon overhauled a poor NAB business confidence number tipped the AUDJPY carry through the 100.00 level and weak stops triggered a deeper move dragging both AUDUSD and USDJPY lower through the course of the session AUDJPY eventually reached the 99.00 areas before halting its slide as the USDJPY bids around the 120.00-20 started to kick in and hold the market. Downside bids to the 120.00 levels dominate for the moment however, a clear breakthrough of the 119.80 levels opens up a deeper move through to light support around the 119.50 levels and then stronger levels into the 119.00 level, even then the downside potential increases with the 118.00-117.50 levels likely to be the stronger areas and if the market picks up pace would see plenty of margin types being squeezed out of the market. The topside now is dominated by the rejection of the 122.00 areas and while they appeared yesterday to be a weak point the movement higher would probably struggle through the 121.00 levels with plenty of longs willing to lighten their positions above that level and especially beyond the 121.50 areas.
  • AUD: The Oz having spent the past 24hrs roughly trading around the 83 cent levels found itself decidedly offside when the business confidence number was released, trading from the 83 cent level the market quickly dropped to the 0.8260 level and then traded successively lower in small waves to touch through the 0.8230 levels. The current levels hold some limited support for the pair into the 0.8200 areas however a move through the 0.8180 areas opens up a possible deeper move through the 80 cent level with only light congestion in between, Topside is possibly limited by continual selling in the AUDJPY and without a deeper USDJPY fall back the pressure will remain on the Oz which is probably pleasing for the RBA however, a strong push through the 0.8340 areas will possibly trigger weak stops and open up a test of the 84 cent level in a small short squeeze even then the offers are likely to be light but continuous through that levels and the fall over the past week or so from the 88 cent level has been continuous and will be difficult to cut through.

 

Overnight News

JPY:

Aso: Reaching Japan Fiscal Goal Harder After Tax Rise Delay

Japan FinMin says watching FX market; won’t comment on levels

Japan Is Said to Weigh as Much as 3 Trillion Yen Extra Budget

Japan Hiring Outlook Gauge at Highest Level in More Than 5 Years

AUD:

Australian Business Confidence at 16-Month Low as Rate Cuts Seen

Australia ANZ Weekly Consumer Sentiment Falls 3.1% to 110.4

APRA Urges Banks to Limit Investor Home-Loan Growth to 10%

CNY:

China Sets Yuan Reference Rate at Strongest Since March 7

NZD:

N.Z. Consumers Spend More on Hospitality Than Fuel

GBP:

U.K. LFL Nov. Retail Sales Up 0.9 Y/y, BRC Says

 

Today’s data

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

JPY         Japan Money Stock M2+CD Y/Y Nov A 3.60% | C 3.20% | P 3.20%

GBP       BRC Sales Like-For-Like Y/Y Nov A 0.90% | C 0.60% | P 0.00%

AUD       NAB Business Confidence Nov A 1 | P 4 | R 5

JPY         Machine Tool Orders Y/Y Nov (P) A 36.60% | P 30.80%

6:45        CHF        Unemployment Rate Nov C 3.20% | P 3.10%

7:00        EUR        German Trade Balance (EUR) Oct C 18.9B | P 21.9B

9:30        GBP       Industrial Production M/M Oct C 0.20% | P 0.60%

9:30        GBP       Industrial Production Y/Y Oct C 1.80% | P 1.50%

9:30        GBP       Manufacturing Production M/M Oct C 0.20% | P 0.40%

9:30        GBP       Manufacturing Production Y/Y Oct C 3.20% | P 2.90%

15:00     GBP       NIESR GDP Estimate Nov P 0.70%

15:00    USD       Wholesale Inventories Oct C 0.20% | P 0.30%

 

Harry Hindsight              

  • EUR: A quiet session through Asia saw the market moving from the opening 1.2285 areas to trade just above the 1.2300 level on a couple of occasions however, the market generally stayed around the 1.2290 levels for the most part until the London session, dipping in the grey hours before London to 1.2280 and then dropping quickly after the release of a falling German IP number which came in below expectations with a revision of the previous month’s. The market based on the 1.2250 after the numbers and was unable to push off the supportive levels until NYK entered the market and with no data and only the USDJPY selling over the course of the day to go by the market saw strong USD selling entering the other majors to join the USDJPY and the market moved off the lows to push steadily into the highs during the end of London and the early part of NYK trading to a high just above the 1.2340 areas before drifting back as light profit taking moved into the market towards the close.
  • GBP: Cable was one of the better movers of the day opening around the 1.5580 levels early selling from the opening eventually pushed the Cable back to below the 1.5550 a light support area where the market didn’t quiet hit the 1.5540 areas into the grey hours and break out players pushing lower for glory, the move failed and it was all one way until the London close from then on. Moving in a tight channel the market moved to the 1.5630 levels and into NYK as fairly strong EURGBP selling moved in to push the cross from the 0.7900 areas to the 0.7845 areas before finding some respite and a resurgent Euro. The move into the NYK session was fairly quiet as the Euro played catch up however, the NYK option cut again saw the Cable rising and having pushed through the 1.5630 levels triggered light stops and moved to just below the 1.5680 areas before light selling appeared from day traders, taking the market back to the 1.5650 levels, and the EURGBP to hold around the 0.7870.
  • JPY: USDJPY opened around the 121.60 levels and apart from an early attempt to break higher in the Sydney session pre GDP reading the market found it hard going above the 121.80 levels and had started a move lower as the market saw profit taking moving into the market in size, the release of worse than expected GDP numbers did nothing to deflect the move and the USDJPY continued lower over the course of the day as the selling continued, trading down into London around the 121.00 level the move through was fairly gentle and the market only dropped quickly late into the NYK session on the penetration of the 120.80 levels quickly moving to the 120.20 and bouncing back to 120.80 into the close. Lots of types were seen in the market with real money and retail particularly active.
  • AUD: Apart from the Asian session the Oz was particularly quiet over the session, opening a little lower than Fridays close the market moved into the Tokyo session filling the gap on the charts from the 0.8310 level to push above 0.8320 that was before the drop in USDJPY and consequently the AUDJPY carry started to drag on the Oz as the retail sector started to move into the market to protect the profits accrued and the Oz quickly dropped back to below 83 cents. The market did regain the opening levels however, AUDJPY selling continued to weigh on the Oz and the market eased lower into the grey hours having touched through the 0.8280 areas briefly before early London started a slightly deeper move to the 0.8260 levels and limited support turned the market back to a steady rise back to the opening levels again, from that point onwards though the market was barely able to move in either direction with 0.8310 topping the market and the 0.8290 supporting in light trading through the whole of the remaining session.

 

Yesterday’s premiership results

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

NZD       Manufacturing Activity Q3 A -1.20% | C -1.90% | P -2.30%

JPY         Current Account (JPY) Oct A 0.95T | C 0.46T | P 0.41T

JPY         GDP Q/Q Q3 (F) A -0.50% | C -0.10% | P -0.40%

JPY         GDP Deflator Y/Y Q3 (F) A 2.00% | C 2.10% | P 2.10%

CNY        Trade Balance Nov A $54.5B | C $45.41B | P $45.41B

EUR        German Industrial Production M/M Oct A 0.20% | C 0.40% | P 1.40% | R 1.10%

CHF        CPI M/M Nov A 0.00% | C -0.10% | P 0.00%

CHF        CPI Y/Y Nov A -0.10% | C -0.10% | P 0.00%

CHF        Retail Sales (Real) Y/Y Oct A 0.30% | C 0.90% | P 0.30% | R 0.50%

EUR        Eurozone Sentix Investor Confidence Dec A -2.5 | C -9 | P -11.9

CAD       Housing Starts Nov A 196K | C 195.0K | P 183.6K

CAD       Building Permits M/M Oct A 0.70% | C 3.90% | P 12.70%

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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