Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 118.651 | EURUSD 1.23432 | EURJPY 146.446 | AUDUSD 0.81226 | NZDUSD 0.77457 | USDCAD 1.16337 | EURCHF 1.20093 | USDCHF 0.9729 | GBPUSD 1.55764 | EURGBP 0.79246 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.015 | 118.35

EUR/USD             1.2353 | 1.23205

EUR/JPY               146.715 | 146.15

AUD/USD            0.8163 | 0.8117

NZD/USD             0.7733 | 0.7682

USD/CAD             1.1648 | 1.1626

EUR/CHF              1.2010 | 1.2009

USD/CHF             0.9747 | 0.97225

GBP/USD             1.5593 | 1.5564

EUR/GBP             0.7924 | 0.7917
For today

• EUR: A very quiet start to the day with the market opening around the 1.2340 areas and apart from a dip into the Tokyo open remaining in that area, the low just above the 1.2320 level and the highs towards the 1.2350, with little in the way of strong data to appear on the day Initial claims is about the most exciting we can expect without some nefarious comments from the ECB. Light offers into the 1.2400-20 area are likely to give way to an open run to stronger offers into the 1.2480 however; these are likely to be only marginally stronger before giving way for another test above the 1.2500 levels and stronger offers towards the top end of the handle. The Downside is resting on likely strong bids from the 1.2320 levels and into the 1.2280 area and lighter bids until the market reaches the recent lows around 1.2250 where again the bids will dominate, a weak set of stops through the level before resting bids kick in around the 1.2200-20 levels.
• GBP: Cable has moved slightly higher over the course of the session trading from the 1.5580 areas and into the low 1.5590’s but with little conviction, topside light offers through the 1.5600 levels will likely open up a push to 1.5640 and a little area of mixture before 1.5700 opens up. Downside is even sketchier with the lows yesterday likely to sure bids from the 1.5540 area and into 1.5500 still remaining to be chopped through.
• JPY: The USDJPY opened with a move from the 118.67-70 levels to test briefly above the 119.00 in weak buying before beginning a steady decline of the session before coming to rest in the 118.36-50 range for the day. Topside offers into the 119.00 will likely see early mixture before giving way to more dominant offers on a move to the 119.50 levels from there the market is again dominated with offers into the 120.00 handle and with a lack of data may struggle to move cleanly through the level without some good impetus. Downside saw a big shake up yesterday and the downside is likely to be a little weak with sentimental buyers being slightly favoured above the sellers over the downside 150 pips a strong Initial jobless claims would put the pressure on the USDJPY however, for the moment 117.50 will see the most likely first set of bids appear to stymie the market to the downside with congestion then until the 116.50 areas where the market will have the ability to test the downside lows from yesterday.
• AUD: The Oz spent the early trading holding the opening levels and trading in a tight 0.8120-30 areas before the USDJPY began to drift a little lower and allowing the market to move up a little to test above the 0.8160 levels, the market was quiet and the market eventually ran out of ideas at that point and drifted back to the 0.8130 in slow trading. Downside is now an open opportunity with a break below the 81 cent level and into the 0.8080 likely to clear the market of any near term bids and a potential to move just below the 80 cent level before reaching any respectable bids. Topside is likely to see offers into the 0.8170 levels and only a push through the 0.8200-20 will set up a small short squeeze and that is likely to be limited at best.

Overnight News

JPY:

Japanese Sold Net 610.3 Billion Yen Overseas Debt Last Week

Japan’s Household Assets rise 2.7% YoY to 1,654t Yen in 3Q: BOJ

CNY:

China Said to Be Open to a More Flexible Yuan, WSJ Reports

China Home Prices Post Year’s Biggest Drop in First-Tier Cities

CNY/RUB:

China Encourages Cos. to Hedge Risks from RUB Depreciation

RUB:

Russia in ‘Perfect Storm’ of 3 Crises, EconMin Tells Vedomosti

NOK:

Norges Bank’s Olsen Says there’s No Crisis on Krone, DN Reports

NZD:

Revised New Zealand Annual GDP Growth Best in Seven Years

English Says N.Z. Growth Potential May Be Higher Than Thought

AUD:

RBA Paper Sees China Investment Slowdown Weighing on Australia

Today’s data

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

NZD       Gross Domestic Product Q/Q Q3 A 1.00% | C 0.70% | P 0.70%

07:00     CHF        Trade Balance (CHF) Nov C 2.41B | P 3.26B

09:00     EUR        German IFO – Business Climate Dec C 105.3 | P 104.7

09:00     EUR        German IFO – Current Assessment Dec C 110.3 | P 110

09:00     EUR        German IFO – Expectations Dec C 100.9 | P 99.7

09:30     GBP       Retail Sales M/M Nov C 0.30% | P 0.80%

13:30     USD       Initial Jobless Claims (DEC 13) C 297K | P 294K

15:00     USD       Philly Fed Survey Dec C 30 | P 40.8

15:00    USD       Leading Indicators Nov C 0.50% | P 0.90%

Harry Hindsight              

• EUR: The Euro opened quietly and moved sideways into the Tokyo session holding above the 1.2510 levels before starting a steady slide lower the grey hours around the 1.2480 levels. The push into London saw some light selling through to the 1.2460 levels before stalling and holding the level into the NYK session and the long wait for the FOMC was nearly over, WSJ ran a story of Coeure signalling that large asset purchases would start next year and the Euro’s dropped quickly to 1.2420 before trading in a slower fashion to push through the 1.2400 level for the first time. Then the market held above the 1.2400 level into the FOMC, the FOMC initially saw the USD falling back as the dovish tone and the use of patient in its approach confused the listeners with the market touching the 1.2380 level and bouncing towards the 1.2480’s before the USD rallied strongly and the Euro pushed to the 1.2320 levels, what bounce there was, was weak and the market held around the 1.2340 areas into the close on a reasonably decent day considering the time of the year.
• GBP: A slow drift through the day moving from the 1.5750 areas, drifting steadily to the 1.5725 areas into the grey hours, a more solid dip on the back of the MPC numbers before holding around the 1.5720’s. The WSJ story above that led the Euro lower saw the GBP following and trading steadily through the 1.5660 levels to the 1.5640’s with the GBP remaining slightly better than the Euro and EURGBP slipping back below 0.7915 in limited action. The move to the FOMC announcement was a quiet affair and the market quickly dropped to the 1.5600 before snapping higher in a mirror image of the Euro moves and then lower dropping through the 1.5600 level and following through to trade to the 1.5540’s and the support on the lows, before a quiet close around the 1.5580 areas.
• JPY: The USDJPY opened around the 116.50 areas and rose steadily to above the 117.00 level in early trading and apart from minor dips steadily continued the rise recapturing a big figure of loss from the previous day into the London opening, while the volumes at this stage had not set the world on fire the move towards the FOMC saw the market move quickly through the 118.00 levels triggering light stops and a move to the 118.50 level before finding sufficient offers to slow the ascent as the commentary from Yellen, with the market possibly reading more into it than was really available, Yellen was dismissive of inflationary concerns calling energy prices as transitory and those prices being net positive for the economy. The market eventually settled around the 118.60 areas into the close as the market slowed.
• AUD: The Oz moved slowly in early trading with a slight spike higher as the carry trade pushed back through the 96.00 level and light stops taking the Oz from the open 0.8220 and its narrow range around that area to the mid 0.8230’s before slipping back again and this time pushing through the 82 cent level and triggering stops through the level. The market  briefly held in the 0.8180 level and then the 0.8170 levels as light bids stalled a more substantial move lower before heading into the London session holding around the 0.8150 areas. London were steady buyers of the Oz and the market lifted slowly back to the 82 cent level before running out of ideas and drifting back into the FOMC around the 0.8170 levels. The market saw the brief weakening in the USD before the USD rallied strongly towards the end of Yellens commentaries seeing the Oz immediately drop to the 0.8110 levels and an unresponsive bounce to hold the 0.8120-30 levels into the close.

Yesterday’s premiership results

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

NZD       Current Account Balance (NZD) Q3 A -5.01B | C -5.32B | P -1.07B | R -1.08B

AUD       Westpac Leading Index M/M Nov A -0.10% | P 0.03% | R 0.10%

JPY         Trade Balance (JPY) Nov A -0.93T | C -0.99T | P -0.98T | R -0.99T

GBP       MPC Official Bank Rate Votes A 2–0—7 | C 2–0—7 | P 2–0–7

GBP       MPC Asset Purchase Facility Votes A 0–0—9 | C 0–0—9 | P 0–0–9

GBP       Jobless Claims Change Nov A -26.9K | C -22.0K | P -20.4K | R -25.1K

GBP       Claimant Count Rate Nov A 2.70% | P 2.80%

GBP       ILO Unemployment Rate (3M) Oct A 6.00% | C 6.00% | P 6.00%

EUR        Eurozone CPI Y/Y Nov (F) A 0.30% | C 0.30% | P 0.30%

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

CHF        ZEW (Expectations) Dec A -4.9 | P -7.6

CAD       Wholesale Sales M/M Oct A 0.10% | C 0.90% | P 1.80%

USD       CPI M/M Nov A -0.30% | C -0.10% | P 0.00%

USD       CPI Y/Y Nov A 1.30% | C 1.50% | P 1.70%

USD       CPI Core M/M Nov A 0.10% | C 0.20% | P 0.20%

USD       CPI Core Y/Y Nov A 1.70% | C 1.80% | P 1.80%

USD       Current Account Balance Q3 A -100.3B | C -$94.4B | P -$98.5B | R -98.4B

USD       Crude Oil Inventories A -0.85M | C -2.25M | P 1.5M

USD       FOMC Rate Decision A 0.25% | C    0.25% | P 0.25%

Good Luck,

Andy