Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 119.703 | EURUSD 1.23739 | EURJPY 148.118 | AUDUSD 0.82918 | NZDUSD 0.77111 | USDCAD 1.14449 | EURCHF 1.20195 | USDCHF 0.97137 | GBPUSD 1.56672 | EURGBP 0.78977 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.92 | 118.68

EUR/USD             1.2398 | 1.2362

EUR/JPY               148.25 | 147.15

AUD/USD            0.8338 | 0.8264

NZD/USD             0.7728 | 0.7662

USD/CAD             1.1458 | 1.1436

EUR/CHF              1.2023 | 1.2017

USD/CHF             0.9722 | 0.9694

GBP/USD             1.5690 | 1.5660

EUR/GBP             0.7902 | 0.7895
For today

  • EUR: After a slightly better USD during the early part of the Asian session into Tokyo the market in the Euro struggled to regain the 1.2400 levels before slipping back towards the 1.2360 levels, a poor reading of Large manufacturing in Japan was the initial USD buying trigger that saw the market broadly USD bullish, CPI numbers in China were mixed and again the market in the USD’s was buffeted by EM talk and Euro’s benefitted from this and pushed back to its highs but stubbornly below the 1.2400 level. The afore said 1.2400 holds only light offerings one suspects and a concerted push would quickly take it through the level however, the 1.2450-60 levels now seems to be the immediate resistance and a push through the level leads into only further congestions and the topside remains closed to the market unless a strong push can send the market through the 1.2520-30 levels around the late November highs, even through there it is debateable whether further movement is possible with 1.2550 itself a fairly strong area to push through and then an exposed 1.2600 level. Downside has light bids all the way down until the market starts to thicken towards the 1.2330 area, a push through 1.2310 will see light stops likely to appear and a further test of the 1.2250 level where the market stopped abruptly.
  • GBP: A similar pattern for the Cable moving to the mid 1.5680’s from the opening levels below 1.5670 in early trading the market was unable to push through from the Japanese numbers and the market saw some cross JPY selling entering the market to make the lows in Cable around the 1.5660 levels, from that point onwards the market began to rise steadily as the USD came under pressure across the board, which in light of yesterday seems to have discounted those numbers in favour of the delays to rate rises in the US. The market eventually pushed into the grey hours attempting to break back to the 1.5700 levels but for the moment struggles just above the 1.5690 levels. Offerings are likely into the 1.5750 levels possibly starting around the 1.5720 areas before weak stops are likely to appear, a push through there will allow the market to gain some momentum possibly in a push to the 1.5800 levels, Downside has light bids through the 1.5650 levels and becomes more effective as the market pushes into the 1.5630 levels with a lot of congestion from then into the 1.5600 levels, a push below the 1.5580-90 levels is likely to again expose a test through to below the 1.5550 areas.
  • JPY: USDJPY opened around the 119.70 areas and drifted sideways until just before the JPY numbers were released moved to the 119.20 levels before bouncing on poor numbers and heading steadily back to above the 119.90 before USD selling moved back in as the longs in the market started to cut back positions. Whether this is the consequence of the rejection towards the 122.00 levels or the possibility of problems arising from the EM countries who issued debt in USD remains to be seen but the market slowly pushed lower and through the 119.00 levels with little problem, the market eventually found a base around the 118.80 areas with mostly Japanese retail doing the damage in good volumes. Light offers into the 119.20 area before the possibility of weak stops through that level, a move higher though is likely to find light offerings all the way to the 119.80 level which is now the stronger offering area. Pushing through the 120.00 areas will again open up the topside and orders are likely to be thin on the ground through that level. Downside saw the market cleared yesterday to 118.00 however, some of those buyers are likely to be back around the 118.00-20 areas and stronger bids suspected on a push through the level and only a break here will the downside be peeled back with only limited bids around the 117.00 areas and then a test of the 116.00 area.
  • AUD: Early buying in USDJPY saw the market pushed lower in the Oz as the AUDJPY carry remained static around the 99.00 levels, and it would seem that this pattern continued through the session with the Oz moving back from the lows of 0.8270 back through the opening 0.8290 and into the 0.8330 areas towards the end of the session as the USDJPY dipped. With the market dominated by the cross trades in the market the topside offerings above the 0.8380-0.8400 are likely to be dependent on USDJPY breaking lower again, even through this level the market to 85 cents is likely to be a struggle as the market moves through some congestion. Downside now sees the day traders looking at the 0.8250 cent levels however, while the level proved reasonably strong enough to hold the market on the first probe lower the real support areas are closer to the 82 cent level and a break here opens up deeper moves to place the market in the 0.79-82 area but again this is likely to be a by-product of interactions with the JPY.

 

Overnight News

JPY:

Japan business mood sours as economy struggles with recession

Japan consumer mood worsens for 4th straight month in November

Seko Says Want to Put Measures for Weak Yen in Economic Stimulus

Japan wholesale prices show first fall in nearly two years

AUD:

Australian Consumer Confidence Drops to Lowest Since Aug. 2011

Australia Oct. Home-Loan Approvals Rise 0.3% M/M; Est. 0.1% Gain

CNY:

China Nov consumer inflation eases to 1.4 pct, less than expected

China Sets Yuan Reference Rate at Strongest Since March 3

China May Seek to Limit Brokerages Leverage: Securities News

Shanghai FTZ Says to Focus on Yuan Convertibility, Rates Next

NZD:

Fonterra’s Spierings Aiming for Higher Dividend Than Forecast

New Zealand Forecasts Larger Fall in Primary Exports

English Says ‘Challenging’ for N.Z. to Achieve Fiscal Targets

New Zealand House Price Inflation Accelerates to 6%

 

Today’s data

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

AUD       Westpac Consumer Confidence M/M Dec A -5.70% | P 1.90%

JPY         Domestic CGPI Y/Y Nov A 2.70% | C 2.70% | P 2.90%

JPY         BSI Large Manufacturing Q/Q Q4 A 8.1 | C 13.1 | P 12.7

AUD       Home Loans M/M Oct A 0.30% | C 0.20% | P -0.70% | R -0.40%

CNY        CPI Y/Y Nov A 1.40% | C 1.60% | P 1.60%

CNY        PPI Y/Y Nov A -2.70% | C -2.40% | P -2.20%

JPY         Consumer Confidence Nov A 37.7 | P 38.9

09:30     GBP       Visible Trade Balance (GBP) Oct C -9.5B | P -9.8B

15:30     USD       Crude Oil Inventories P -3.7M

19:00     USD       Monthly Budget Statement Nov C -79.6B | P -121.7B

 

Harry Hindsight              

  • EUR: The Euro remained steady during Asia with no ill effects from the selling in USDJPY, moving from the opening 1.2310 areas the market dipped slowly to below the 1.2300 level before recovering steadily into the grey hours and a quick move to the 1.2340 levels as the USD lost its gloss as the USDJPY continued through supportive levels, London were quick buyers and the market was quickly to the 1.2360 level and trading around there into the NYK session, early NYK also started a steady stream of buying with the market taking in the lower rated bonds that China has now decided are not suitable for collateral setting both equity markets and bond markets taking the brunt. Euro’s saw good German trade balance numbers and the NYK market took the Euro through the 1.2400 levels to trigger some light stops for a quick move to above the 1.2440 levels. Once the highs were made the market drifted back below the 1.2400 levels and then held around the 1.2380 levels in less frantic trading with good volumes across the majors driving the market.
  • GBP: Cable was a little more choppy than most with the initial selling in USD’s subdued during Asia against the GBP, moving from the opening 1.5660 levels the Cable drifted in early trading to push slightly below the 1.5630 areas as some strong GBPJPY selling was seen however, this didn’t last long and as the USD continued to weaken Cable started to catch the move up triggering weak stops through the 1.5650 levels into the grey hours. London opening took the market towards the 1.5700 levels from the opening and only into the UK numbers did the market start to see a dip with weak longs cutting positions to the 1.5680/70 levels and then the release, a very poor set of number with production numbers greatly below consensus and the Cable quickly dropped back to the lows. The move into the NYK session was a move off those lows as the USD weakness continued and the Cable moved steadily to above the 1.5710 levels before finding sufficient offers to stop the market from breaking out to the topside 1.5800 levels. As the London market closed the market had already drifted back into the 1.5660-50 areas and struggled into the close around those areas.
  • JPY: USDJPY opened around the 120.60 area and looked initially to be fairly well bid, however, the above mentioned China item on collateral and the rejection of the previous 121.85 had the market running a little scared and the quick move to the 120.40 left the supportive 120.20-00 area exposed, the market then spent a reasonable period of time pushing through the support until the market had broken to the 119.80 level, always a favourite number and this held only into the London opening before being tested and pushed through, the market traded to a low of the 119.60 level before reversing to the 120.00 areas again and the market had to wait until NYK moved in before the bigger moves materialized steadily moving through the previous low and then triggering light stops and margins on a break below 119.20 trading quickly to below 118.00 in a very strong move, the market bounced just as quickly after the US inventory news was absorbed, quickly moving back to above the 119.00 level and then more sedately pushing back to a close above the 119.60 level in light weak trading.
  • AUD: As you would expect the Oz spent much of the day being buffeted by JPY movements with early trading the only exception as a weaker NAB business number sent the Oz from just above the opening levels at 83 cent to below 0.8260 in a quick move, the market then saw strong AUDJPY carry trade selling move into the market and the market gradually eased to below 0.8230 before the momentum ran out, the move into the London session saw strong day traders picking up the market and running it to 0.8280 as the USDJPY dropped back and pressure was released in the AUDJPY. The USD then took over as the dominating factor and with mooted reports that further setbacks of a rise in interest rates are likely the Oz broke through the 0.8320 area and put in a quick move to above 0.8370 before the market had sated its USD selling and then the move back to the opening levels to see the Oz pretty much unchanged on the day.

 

Yesterday’s premiership results

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%

CHF        Unemployment Rate Nov A 3.10% | C 3.20% | P 3.10%

EUR        German Trade Balance (EUR) Oct A 20.6B | C 18.9B | P 18.5B

GBP       Industrial Production M/M Oct A -0.10% | C 0.20% | P 0.60%

GBP       Industrial Production Y/Y Oct A 1.10% | C 1.80% | P 1.50% | R 0.80%

GBP       Manufacturing Production M/M Oct A -0.70% | C 0.20% | P 0.40%

GBP       Manufacturing Production Y/Y Oct A 1.70% | C 3.20% | P 2.90%

GBP       NIESR GDP Estimate Nov A 0.70% | P 0.70%

USD       Wholesale Inventories Oct A 0.40% | C 0.20% | P 0.30% | R 0.40%

 

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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