Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 119.901 119.88-120.125 | EURUSD 1.12114 1.1205-35 | AUDUSD 0.70507 0.7030-58 | NZDUSD 0.64444 0.6423-35 | USDCAD 1.31543 1.3151-87 | USDCHF 0.97163 0.9685-0.9730 | GBPUSD 1.51789 1.5164-1.5200 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.12 | 119.87

EUR/USD             1.1247 | 1.12075

EUR/JPY               134.89 | 134.33

AUD/USD            0.7080 | 0.7043

NZD/USD             0.6473 | 0.6430

USD/CAD             1.3175 | 1.3127

EUR/CHF              1.0907 | 1.0897

USD/CHF             0.9720 | 0.9696

GBP/USD             1.5218 | 1.5172

EUR/GBP             0.7391 | 0.7380

For today

• EUR: A slightly better opening saw the Euro rising through the session to push 1.1240 before drifting back again as the early part of Tokyo ran out of interest, the market continues to speculate on the Fed lift off and given the poor NFP which was the reasoning behind an earlier lift off point long past now gives the market an impression of further delays and still the 1Q 2016 remains. Topside offers into the 1.1300 levels continuing through the 1.1320 levels and likely stops appearing through the 1.1330 levels even so offers are likely then to continue as the market moves through the 1.1350 levels and the possibility of weakness only on a break through the 1.1360 levels opening up a test to 1.1400 and further offers. Downside bids into the 1.1200 are likely to be reasonably stiff and likely to continue through the level with only light stops and strengthening again into the 1.1150 areas with the 1.1200-1.1100 being stubborn over the past month. If the range were to break then there is a possibility to push lower and into the 1.1000 areas.
• GBP: Cable opened around the 1.5190 areas and quickly closed the slight gap from Friday and dipped to the 1.5170 before the market rose steadily through the Tokyo session to push to the 1.5120 levels before stalling and then holding into the grey hours around the 1.5110 levels and into the grey hours. Light bids into the 1.5150 areas with the bids increasing on any move towards the 1.5100 levels a push through the level is likely to see weak stops and the market opening to a test to the 1.5000 and possibly stronger bids and option plays. Topside offers light into the 1.5250 areas however; a break here could see a short squeeze with little in the way of offers until a move to the 1.5350 areas.
• JPY: USDJPY remained steady through the session trading in a narrow range around the 120.00 with the market balanced between uncertainty and the possibility of further easing later this month, whether the BoJ has the ability to continue with expanding the program remains to be seen. Light offers through the 120.50 areas before the 121.00 level becomes exposed however, through the level the offers start to thicken as the market moves to the top end of the range we’ve seen over the past month or so, and the 122.00 levels likely to be the target of any move. Downside bids down into the 119.00 levels and likely through the 118.80 areas as with Friday’s attempt, even through the levels the market is likely to see bids continuing as the market looks for further forward guidance from the BoJ.
• AUD: With much of Australia out for the day the market moved quietly into the Asian session initially drifting to below the 0.7050 levels before rallying strongly to test to the 0.7080 levels before holding steady around the 0.7070 areas for the balance of the session. Downside bids continue down through the 0.7000 levels with better bids from below the 0.6950 areas and likely to be fairly strong all the way to the 69 cent level and possible option plays. Topside offers from the 0.7080 levels onwards and into the 71 cent area with very little weakness showing to the topside for the moment however, a push through the level will see further offers soaking up any weak stops and the offers continuing through to the 0.7160 levels before the market opens a little.

Overnight News

Asia:

Developing East Asia’s Scope to Ease Policy Limited: World Bank

USD:

Fed’s Rosengren Says 2% Growth Needed for Rate Lift off This Year

EUR:

Portugal’s Ruling Coalition Defeats Socialists in Election

JPY: Most Japanese Not Feeling Benefit of Abe Economic Policies: Poll

Japanese Official Says TPP Deal Near With Dairy Unresolved

TPP:

TPP Ministers to Announce Declaration on Currency Manipulation

TPP Talks in Atlanta to Continue Into the Night

CNY:

China Crackdown on Yuan Speculation Hurts Importers, HKEJ Says

NZD:

New Zealand Economy May Grow Less Than 2% in 2015, Treasury Says

AUD:

Australia Sept. Services Index Falls 3.4 Pts M/m to 52.3

Australia’s Sept. TD Monthly Inflation Gauge Rises 0.3% M/m

Australia Sept. ANZ Job Ads Rise 3.9% vs 1.3% in Aug.

Today’s data

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

AUD       TD Securities Inflation M/M Sep A 0.30% | P 0.10%

JPY         Real Cash Earnings Y/Y Aug A 0.50% | C 0.70% | P 0.30% | R 0.90%

07:45     EUR        Italy Services PMI Sep C 54.8 | P 54.6

08:00     EUR        Eurozone Services PMI Sep (F) C 54 | P 54

08:30     EUR        Eurozone Sentix Investor Confidence Oct C 12.2 | P 13.6

08:30     GBP       Services PMI Sep C 56.4 | P 55.6

09:00     EUR        Eurozone Retail Sales M/M Aug C -0.10% | P 0.40%

14:00     USD       ISM Non-Manufacturing Composite Sep C 58 | P 59

14:00     USD       Labour Market Conditions Index Change Sep P 2.1

Weekend News

JPY:

BOJ May Lower Inflation View on Slow Global Growth: Nikkei
Mizuho, DBJ to Start 30b Yen Fund to Support Local Cos.: Nikkei
JPY/USD:

TPP May Have U.S.-Japan Mechanism on Auto Disputes: Reuters
USD:

Kocherlakota Says Low Inflation Warrants Further Fed Stimulus
Dudley Says Work Needed on Tools to Avert Financial Crises
Biden May Make Decision on Whether to Run in 7-10 Days: CBS News
TPP:

TPP Ministers Extend Talks in Atlanta Until Oct. 4
CNY/HKD:

Shanghai-Hong Kong September Stock Link Trading at 7-Month Low
EUR:

Tsipras: Greek Debt Relief Negotiation to Take Place By End-2015
Portuguese President Says Election Takes Place at ‘Crucial’ Time
NOK:

Norway’s PM Warns Currency Instability Is a Threat to Economy
RUB:

Russian Economy Ministry Sees 2015 GDP Falling 3.9%
Russia’s Oreshkin Says 2016 Capital Outflow Seen at $60b-$70b
GBP/HKD/SGD:

U.K.’s Prudential May Move Headquarters to Asia: Sunday Times

Harry Hindsight

• EUR: A quiet session until the release of the NFP numbers, with the market slowly drifting from the opening 1.1190 levels testing above the 1.1200 during the Asian session the market slowly moved into the London session testing to the 1.1150’s before the release, a poorer number than expected saw the Euro quickly move from the lows to test the 1.1300 areas not quiet making the 1.1320 but only just short before the offers contained the rally. The failure to the topside saw the market tip back to the 1.1260 levels holding for a period before accelerating quickly to test back to the 1.1200 areas and a quiet close.
• GBP: Cable slowly rose from to the opening around the 1.5130 moving to the London session pushing through the 1.5150 areas and holding, a quick move to the 1.5170 levels on the release of the Construction PMI was short lived and the market again settled back to the 1.5150 level before the release of the NFP saw the market gap higher and a quick movement to the 1.5230 levels before holding for a period above the 1.5200 areas into the London close, once London had left the market the Cable started to drift to the close around the 1.5180 areas.
• JPY: A steady climb through the Asian session saw the market move from the opening around 119.90 and push the 120.00 areas for several hours before testing through the level as the London market entered, even so with the NFP to come the market struggled to move with any conviction and rose only steadily to test the 120.40 levels just before the release and then the market disappeared dropping instantly to the 119.00 levels and then struggling with bids, grinding through the bids to the 118.80 areas the market eventually ran out of sellers and the market again started to rise, catching the shorts by surprise the market rallied quickly to the 119.80 levels before slowing and quietly testing through the 120.00 in quiet trading to the close.
• AUD: The Oz had a more interesting day with the market pushing to above the 0.7050 areas in early trading before retail sales came in as expected and dropped quickly to the 0.7010 levels, rising steadily back to the 0.7050 levels into the London session the market then drifted to the NFP release before sparking quickly higher to the 0.7070 areas and then dropping just as quickly to the 0.7000 areas before steadying with the topside offers obviously being missed and causing panic selling the market then managed to push back to its opening levels around the 0.7030 areas and a steady climb into the closing few hours to above the 0.7050 levels.

Friday’s premiership results

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

JPY         Unemployment Rate Aug A 3.40% | C 3.30% | P 3.30%

JPY         Household Spending Y/Y Aug A 2.90% | C 0.40% | P -0.20%

JPY         Monetary Base Y/Y Sep A 35.10% | C 34.20% | P 33.30%

AUD       Retail Sales M/M Aug A 0.40% | C 0.40% | P -0.10%

GBP       Construction PMI Sep A 59.9 | C 57.5 | P 57.3

EUR        Eurozone PPI M/M Aug A -0.80% | C -0.50% | P -0.10% | R -0.20%

EUR        Eurozone PPI Y/Y Aug A -2.60% | C -2.40% | P -2.10%

USD       Change in Non-farm Payrolls Sep A 142k | C 200k | P 173k | R 136k

USD       Unemployment Rate Sep A 5.10% | C 5.10% | P 5.10%

USD       Average Hourly Earnings M/M Sep A 0% | C 0.20% | P 0.30%

USD       Factory Orders Aug A -1.70% | C -0.60% | P 0.40% | R 0.20%

Stay lucky

Andy

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