Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 118.833 | EURUSD 1.14733 | AUDUSD 0.73005 | NZDUSD 0.67665 | USDCAD 1.29347 | USDCHF 0.94938 | GBPUSD 1.5477 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.17 | 118.70

EUR/USD             1.1491 | 1.14615

EUR/JPY               136.73 | 136.29

AUD/USD            0.7352 | 0.7297

NZD/USD             0.6846 | 0.6788

USD/CAD             1.2940 | 1.2904

EUR/CHF              1.0903 | 1.0888

USD/CHF             0.95025 | 0.9482

GBP/USD             1.5485 | 1.5462

EUR/GBP             0.7424 | 0.74115

For Today

• EUR: Early trading saw the Euro slipping back as profit taking took place and limited shorts entered the market in front of the 1.1500 levels however, once that initial selling was over with and the market moved towards the 1.1460 level the market again turned to head towards the 1.1490 levels and held into the grey hours just short of 1.1490. Limited movement from the Oz numbers for the Euro. Topside offers into the 1.1500 levels are likely to give way to weak stops through the 1.1510 levels and the market opening to a steady test through to the 1.1600 with light offers likely to appear around the 1.1540-60 areas and again towards the 1.1600 level with only US data today the focus will be on those inflationary figures, Downside bids light through to the 1.1400 areas with weak stops likely to follow closely through the level and a little congestion on any move down through 1.1380 but opening the 1.1320 levels for a test lower and rejection of the topside.
• GBP: Cable traded in a tight range between the 1.5460-80 levels with a lack of impetus to take the market through the 1.5500 level and the possibility of a higher range. With inflationary news countering the employment news the market remains balanced between the potential skill shortages and the inflationary details not as short lived as the MPC expected however, the squeeze on weekly earnings is likely to trump the inflation numbers and similar to the US the potential for inflation to rise quickly becomes an issue. A break through the 1.5500 level will see limited stops appearing in the market and offers likely to continue to the 1.5550 areas from this level though the possibility of stronger stops and the market opening for a renewed test of the 1.5650 highs from last month become a possibility. Downside bids light through to the 1.5350 areas and having already dipped this week to the 1.5200 area the downside remains reasonably weak as the market refreshes into the end of the week however, weak stops could be a distinct possibility if the market continues pushing against the 1.5500 levels and they are likely to appear through sentimental levels such as 1.5450 or 1.5400 depending on how deep the pockets of the longs maybe.
• JPY: USDJPY started to recover as the market moved into the Tokyo market with the buyers returning slowly, moving from the opening 118.80 areas the market dipped into the Tokyo fix as supply pushed the market to the 118.70 levels before buyers quickly jumped on the dip and the market moved quickly to above the 118.900 levels before slowly edging up beyond 119.00, the market topped just below the 119.20 levels and then spent a good portion of the session trading around the 119.00 levels to the grey hours. Topside offers through the 119.20 level will likely see weakness beyond the 119.30 and the market again opening to the 120.00 levels with the possibility of 119.80 offers increasing in size through to the 120.20-40 areas. Downside bids through the 119.00 and into the 118.60 levels and likely to be fairly strong a break through the level is possibly going to see weak stops appearing and the market quickly testing to the 118.00 levels and limited bids for the moment.
• AUD: The market opened quietly in anticipation of the employment data, moving into the Tokyo session holding around the opening 73 cent level, the release saw the market lift with consumer inflation expectations to push to the 0.7340 levels before dropping back quickly on the headline -5.1K employment numbers however, once the full numbers were in the market the Oz again started a steady rally to push through the 0.7350 levels before comments from RBA watcher Mitchell with comments of a further cut in interest rates next month, the Oz dropped back towards the 73 cent level before settling around the 0.7320 levels into the grey hours. Offers to the topside increase on any move through the 0.7350 areas and into the 74 cent level with plenty of congestion in this area, a push through the 0.7420 levels will see the offers continue but possibly lighter in nature and a test of the 75 cent levels could see a break to the 76 cent level quickly appearing, downside bids are likely light and nervous for an extended length and strong bids are not likely to be seen until the market moves towards the 72 cent level however, limited bids are likely to be around the 73 cent level dipping into the 0.7280 areas before the market again opens to the downside, of course through the 72 cent level the weakness of the bids again reappears and the 70 cent level becomes exposed.

Overnight News

AUD:

Australian Sept Employment Fell 5,100 M/M; Est. 9,600 Rise

Why a rate cut is suddenly on the cards RBA watcher Mitchell

AUD/INR/EUR:

Australia Looks to India, EU for Next Batch of FTAs, Robb Says

NZD:

New Zealand Manufacturing Grows at Fastest Pace since February

N.Z. Consumer Confidence Rose a Second Month in October: ANZ

English Says N.Z. Won’t Change Direction after Budget Surplus

Fitch Says N.Z. Budget Surplus Underscores Positive Outlook

CNY:

China Should Use ‘Moderately Loose’ Monetary Tools: Sec. Daily

CNY/CHF:

China Said to Consider Yuan-Swiss Franc Direct Trading Link

USD:

Treasury Says U.S. Has No Plans to Bail out Puerto Rico

EUR:

Constancio Sees ‘Potential Spill overs’ of Zero Lower Bound Exit

Today’s data

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

NZD       Business NZ Manufacturing Index Sep A 55.4 | P 55 | R 55.1

AUD       Consumer Inflation Expectation Oct A 3.50% | P 3.20%

AUD       Employment Change Sep A -5.1K | C 5.0k | P 17.4k | R 18.1K

AUD       Unemployment Rate Sep A 6.20% | C 6.30% | P 6.20%

JPY         Industrial Production M/M Aug (F) A -1.20% | C -0.50% | P -0.50%

JPY         Tertiary Industry Index M/M Aug A 0.10% | C 0.00% | P 0.20%

12:30     USD       Initial Jobless Claims (OCT 10) C 269K | P 263K

12:30     USD       CPI M/M Sep C -0.20% | P -0.10%

12:30     USD       CPI Y/Y Sep C -0.20% | P 0.20%

12:30     USD       CPI Core M/M Sep C 0.10% | P 0.10%

12:30     USD       CPI Core Y/Y Sep C 1.80% | P 1.80%

12:30     USD       Empire State Manufacturing Index Oct C -7 | P -14.67

14:00     USD       Philly Fed Survey Oct C 0 | P -6

14:30    USD       Crude Oil Inventories P 3.1M

Harry Hindsight              

• EUR: A steady rise to the 1.1400 levels but quiet session through Asia and moving into the grey hours around the 1.1390 levels. London were early buyers taking the market through the 1.1400 levels and testing into the 1.1420’s before holding the 1.1400 level through to the NYK session, a dip in retail sales in the US saw the market quickly move towards the 1.1450 levels before holding around the level for an hours or so before retracing to the 1.1410 levels. The market then saw solid USD selling as the markets adjust to the idea that there is not likely to be lift off in 2015 and is more likely deeper into 2016, and the market again pushed the 1.1450 levels, beige book commentary showed only modest growth and the USD had the rug pulled from under and the Euro climbed to the 1.1490 levels into the closing period.
• GBP: Cable opened quietly around the 1.5240 levels and steadily climbed through the Asian session through to the 1.5280 areas before holding steady into the grey hours, early London bought the market however, early movement was more to do with the pull of the Euro, the release of the employment numbers in the UK again saw the unemployment rate drop again this time to 5.40% and although stronger jobless claims initially sent the market lower having broken through 1.5300 the market quickly bounced off the 1.5280’s and rallied sharply to the 1.5360 areas and negating the previous day’s losses with weak stops exaggerating the move, from there the market moved into the NYK session making steady headway and finally pushing through the 1.5400 levels to trigger further stops and opening the topside to continuing buying, the beige book had little impact as the Cable pushed to just short of the 1.5500 levels and then held steady around the 1.5480 levels to the close. Asia saw limited EURGBP selling through to the grey hours with the market moving off the highs of 0.7470 levels and drifting through the 0.7460 open to test the 0.7450 level and into the grey hours, the move into London saw a slightly stronger Euro leading the way and the EURGBP cross again tested through the 0.7470 levels before the release of the UK numbers, employment numbers saw a stronger Cable and the EURGBP cross was in full retreat, with the cross heading steadily through to deep into the NYK session testing the 0.7400 levels.
• JPY: USDJPY moved through the Asian session ranging between the opening 119.80-119.50 levels and moving quietly before holding the 119.50 level through the London session, with no real effect from the other majors and infact only started to move once the US retail sales numbers started the move lower, dropping to the 119.30 level initially before slowly dipping to 119.10 area as continual selling now started to grind lower and through the relevant bids, once the beige book was out in the market the market again pushed hard and through the 119.00 levels before steadily pushing through 118.80 and into some weak stops, the market managed to hold the 118.60’s and then trading around the 118.80 levels into the close.
• AUD: The Oz having tested to the 72 cent levels through the Asian session found a little bit of a respite moving into the London session with the bargain basement day traders moving into the market and the market pushed gradually through to the 0.7270 and negating much of the previous 24hrs losses, London was unable to capitalize on the movement and only the US numbers moved the market, retail sales pushing Oz to 0.7290 and then the beige book sending the market steadily through the 73 cent levels and leaving the market on that level to the close.

Yesterday’s premiership results

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

AUD       Westpac Consumer Confidence Oct A 4.20% | P -5.60%

JPY         Domestic CGPI Y/Y Sep A -3.90% | C -3.90% | P -3.60%

JPY         Japan Money Stock M2+CD Y/Y Sep A 3.80% | C 4.30% | P 4.20%

CNY        CPI Y/Y Sep A 1.60% | C 1.80% | P 2.00%

CNY        PPI Y/Y Sep A -5.90% | C -5.90% | P -5.90%

GBP       Jobless Claims Change Sep A 4.6K | C 1.0K | P 1.2K

GBP       Claimant Count Rate Sep A 2.30% | C 2.30% | P 2.30%

GBP       Average Weekly Earnings 3M/Y Aug A 3.00% | C 3.10% | P 2.90%

GBP       ILO Unemployment Rate 3M Aug A 5.40% | C 5.50% | P 5.50%

EUR        Eurozone Industrial Production M/M Aug A -0.50% | C -0.50% | P 0.60% | R 0.80%

CHF        ZEW (Expectations) Oct A 18.3 | P 9.7

USD       Advance Retail Sales Sep A 0.10% | C 0.20% | P 0.20% | R 0.00%

USD       Retail Sales Less Autos Sep A -0.30% | C -0.10% | P 0.10% | R -0.10%

USD       PPI M/M Sep A -0.50% | C -0.30% | P 0.00%

USD       PPI Y/Y Sep A -1.10% | C -0.90% | P -0.80%

USD       PPI Core M/M Sep A -0.30% | C 0.10% | P 0.30%

USD       PPI Core Y/Y Sep A 0.80% | C 1.20% | P 0.90%

USD       Business Inventories Aug A 0.00% | C 0.10% | P 0.10% | R 0.00%

Good Luck,

Andy

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