Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 120.008 | EURUSD 1.1237 | AUDUSD 0.72069 | NZDUSD 0.66226 | USDCAD 1.30573 | USDCHF 0.97363 | GBPUSD 1.5318 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.12 | 119.83

EUR/USD             1.1262 | 1.12345

EUR/JPY               135.01 | 134.74

AUD/USD            0.7216 | 0.7165

NZD/USD             0.6630 | 0.6586

USD/CAD             1.3071 | 1.3053

EUR/CHF              1.0947 | 1.0939

USD/CHF             0.9739 | 0.9721

GBP/USD             1.5321 | 1.5300

EUR/GBP             0.7358 | 0.7337

For Today

• EUR: Another quiet session with the market steadily rising from the 1.1235 levels and testing to the 1.1260 levels before holding steady through the session, reasonable EURGBP buying which led the Euro higher however, volumes were limited at best. Topside offers light through to the 1.1280 level and likely to become a little stronger to the 1.1300 levels and likely to increase in strength until the market pushes through the 1.1330 areas, offers from that point are likely to be mixed with weak stops and the potential for limited buying through the 1.1360 areas and then the market opens with limited offers to the 1.1400 areas. Downside bids light into the 1.1200 areas and likely to increase on the 1.11 handle, with possibly lighter bids into the 1.1150 areas and increasing significantly into the 1.1100 areas.
• GBP: Light EURGBP buying eventually tipped the Cable lower with the market opening just below the 1.5320 level and slipping back to test towards the 1.5300 levels before holding for the run to the grey hours, no real independent movement of the Cable and with a BoE decision unlikely to change anything the market remains a little static. Topside offers into the 1.5350 levels are likely to be limited at best but for now remain the key level protecting a larger move higher, a push through the level will see limited offers continuing however, until the 1.5500 areas the market is fairly open. Downside bids light all the way down however, the market has struggle all the way down and back to the current levels over the past few weeks so the bids are likely to be less defined until the market again tests below the 1.5200 areas where better bids are likely through the levels with 1.5150 a stronger level continuing to the 1.5100 areas.
• JPY: USDJPY remained reasonably quiet with China back from a week long holiday doing little to rally a stuttering market, trading from the 120.00 areas the market dipped into the Tokyo session with Tokyo fix finding sufficient supply to take the market as low as the 119.80’s before recovering once the fix expired and the market moved back above the 120.00 level and setting the high around the 120.10 levels however, once the rally was over the market again gravitated to the 119.80 areas and traded quietly around the 119.90 levels to the grey hours. No real change on direction for the USDJPY for the moment with offers into the 120.20 likely to be light and a push through the 120.40 levels likely to see weak stops opening the market for a short time with better offers likely to reappear as the market approaches the 121.00 levels and stronger offers likely to protect the upside. Downside bids limited but constant on the move lower with the 119.20-00 areas likely to be fairly strong with limited profit taking and real money buying adding to possible yield hunters looking for somewhere safe. A break through the 118.70 levels could possibly open the market for a larger fall with bids likely to continue around the 118.00 areas before opening the 116.00 levels.
• AUD: A quiet market overall and while the early market saw the Oz holding around the 0.7200 levels the move through that level eventually saw the market drift to the 0.7170 areas and moving into the levels from earlier in the week. Topside offers through the 0.7240 areas likely to limit the move higher for the moment and possibly continuing to the 0.7260 and only opening a little before better offers appear around the 73 cent levels and then a very congested area for about a big figure with strong offers likely every 50 pips. Downside bids remain weak with limited bids to the 71 cent level and then opening for another test to 0.7000 opening with strong bids through that level and increasing in size as the market pushes through the 0.6950.

Overnight News

JPY:

Japanese Sold Net 1.3 Trillion Yen Overseas Debt Last Week

Japan Aug. Core Machine Orders Fall 5.7% M/m; est. +2.3%

Japan Aug. Current-Acct Surplus 1.65t Yen; Est. +1.23t Yen

Japan Sept. Economy Watchers Current Index Falls to 47.5

BOJ: Japan CPI Ex Fresh Food and Energy Rose 1.1% Y/Y in August

CNY/JPY:

Chinese Investor Buys Tokyo’s Most Expensive House Since 2004

CNY:

PBOC Deputy Governor Says ‘Don’t Worry’ About China Economy: AFP

Moody’s: Rising Credit Risk Symptom of China Rebalancing

USD/KRW:

U.S. Says Ready for North Korea Nuclear Threat Defence: Reuters

USD/CNY:

U.S. Said to Plan Warships in China-Claimed S. China Sea: FT

AUD:

RBA’s Simon: Low Rates Aren’t Inherently Risky, Destabilizing

HKD:

HKMA Chief Says High Asking Prices Cause Low Property Sales:HKET

USD:

TPP Agreement Is Credit Positive for the U.S., Moody’s Says

EUR:

Portugal Absolute Majority Loss Complicates, Moody’s Says

GBP:

U.K. Sept. RICS House Price Index at 44 vs Est. 55

TRY/RUB:

Erdogan Asks Russia to Think About Turkey Trade Ties: Hurriyet

Today’s data

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

GBP       RICS House Price Balance Sep A 44% | C 56% | P 53%

JPY         Machine Orders M/M Aug A -5.70% | C 3.10% | P -3.60%

JPY         Current Account (JPY) Aug A 1.59T | C 1.28T | P 1.32T

JPY         Eco Watchers Survey: Current Sep A 47.5 | C 48.6 | P 49.3

05:45     CHF        Unemployment Rate Sep C 3.40% | P 3.30%

06:00     EUR        German Trade Balance (EUR) Aug C 20.2B | P 22.8B

11:00     GBP       Bank of England Rate Decision C 0.50% | P 0.50%

11:00     GBP       BoE Asset Purchase Target C 375B | P 375B

11:00     GBP       MPC Official Bank Rate Votes C 1–0—8 | P 1–0–8

11:00     GBP       MPC Asset Purchase Facility Votes C 0–0—9 | P 0–0–9

11:30     EUR        ECB Monetary Policy Meeting Accounts

12:15     CAD       Housing Starts Sep P 216.9k

12:30     CAD       New Housing Price Index M/M Aug C 0.20% | P 0.10%

12:30    USD       Initial Jobless Claims (OCT 3) C 274K | P 277K

Harry Hindsight              

• EUR: Euro’s again tested the upside in early trading but struggled through the 1.1280 levels as resistance remained firm, drifting back lower and the move into the grey hours saw strong selling on a weak German IP number and the market quickly testing to the 1.1220 levels into the official London opening, the market then held the level and drifted for a period before slowly starting to rise as USD sellers moved into the session and into the NYK period, having moved back to the 1.1270 the level again attracted sellers, with the NYK session now in full swing the Euro again tested the lows and this time pushed closer to the 1.1200 level before profit taking from early sellers reversed the trend and the market snapped back and then traded in a narrow range to the close.
• GBP: Cable traded steadily higher through the Asian session with light EURGBP cross selling helping the Cable from the opening 1.5230 areas to close to the 1.5260 area in a quiet period, the move into the London session saw the poor German numbers again setting the cross selling in motion and Cable steadily rose from the London opening to test through the 1.5300 levels, and while the better than expected IP numbers did little when balanced again the MP numbers however, the move higher was over and although the market again peaked into the London close to the 1.5340 levels the market had run its course for the day and finished above the 1.5300 levels. Over the course of the early part of London the EURGBP selling which had accounted for the cross dipping from the 0.7400 levels quickly dropped from the 0.7380 levels and into the 0.7340 into London and then while the market held the level for a period continued to press the downside to trade along the 0.7335 levels for a long period to the close.
• JPY: USDJPY slowly traded higher from the opening 120.20 levels to test through the 120.35 before the BoJ report was released, with no change and no further easing the market quickly tested lower falling quickly to just through the 119.80 levels before levelling off in anticipation of Kuroda’s speech, and while the market managed to push again above the 120.00 level as the speech started the market was not overly enthralled by the Greenspan type speech of double talk and drifted from that point to the NYK session holding a broadly 120.00-15 range before dipping lower into the NYK session and again trading in a quiet range sub 120.00 to the close.
• AUD: With the current move in the USD the commodity currencies have benefited more than most and although it’s not been a massive rise for the Oz the market has put on a few pips since the NFP and the market didn’t disappoint over the session rising from the 0.7170 areas to steadily push higher as the USD gave ground and the JPY strengthened sufficiently for the Oz to rise strongly above the 0.7200 level and peak at the 0.7230 levels before drifting to the close in quiet trading.

Yesterday’s premiership results

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

GBP       BRC Shop Price Index Y/Y Sep A -1.90% | P -1.40%

JPY         Leading Index Aug (P) A 103.5 | C 103.4 | P 105

EUR        German Industrial Production M/M Aug A -1.20% | C 0.30% | P 0.70%

CHF        Foreign Currency Reserves Sep A 542B | P 540.4B

GBP       Industrial Production M/M Aug A 0.50% | C 0.20% | P -0.40% | R -0.70%

GBP       Industrial Production Y/Y Aug A 1.90% | C 1.20% | P 0.80% | R 0.70%

GBP       Manufacturing Production M/M Aug A 1.00% | C 0.30% | P -0.80% | R -0.30%

GBP       Manufacturing Production Y/Y Aug A -0.80% | C -0.10% | P -0.50% | R -1.20%

CAD       Building Permits M/M Aug A -3.70% | P -0.60%

GBP       NIESR GDP Estimate Sep A 0.50% | P 0.50%

USD       Crude Oil Inventories A 3.1M | C 2.2M | P 4.0M

Good Luck,

Andy

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