Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 119.935 | EURUSD 1.13388 | AUDUSD 0.72092 | NZDUSD 0.67268 | USDCAD 1.31408 | USDCHF 0.95956 | GBPUSD 1.54193 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.96 | 119.615

EUR/USD             1.13515 | 1.1330

EUR/JPY               136.055 | 135.60

AUD/USD            0.7239 | 0.7182

NZD/USD             0.6785 | 0.6702

USD/CAD             1.3149 | 1.3110

EUR/CHF              1.0885 | 1.08765

USD/CHF             0.9596 | 0.9591

GBP/USD             1.5436 | 1.5410

EUR/GBP             0.7358 | 0.7348

For Today

• EUR: With the ECB monthly bulletin today the market again has been very quiet and the Euro has moved in a tight 1.1330-50 range, which was the widest points and generally maintaining the 40-50 areas for the most part, Topside offers light through to the 1.1360 levels with stronger offers likely to appear from the 1.1380 levels and into the 1.1400 before weak stops and an opening to test higher into the 1.1500 levels, Downside bids see’s light bids into the 1.1300 levels and then progressively stronger on a move through the 1.1250 areas and into stronger support on a break below 1.1200 however, this could be immaterial on what the ECB says, to QE or not to QE that is the question.
• GBP: Cable rose gradually over the early part of the Tokyo session having held through the early pre Tokyo session around the 1.5415 opening levels, the move over several hours took the market to the 1.5435 levels and then the market stalled for a long period before the Oz news saw a general move in USD as the Oz collapsed and the market rebalanced, Topside offers light through to the 1.5460 levels with the market then likely opening for another test of the 1.5500 levels however, while this levels has held over the last few days one suspects that through the level weak stops have grown with the market having struggled to move beyond the 1.5400 level on the downside however, once through the level and the stops out of the way the impetus is likely to be blunted against the 1.5550 areas and only a break here will open up a test higher and the ranges from August. Downside bids into the 1.5400 levels could well be short term bids however, this week it’s been sufficient to hold the market in a reasonably tight range a push through the level will see further light bids into the 1.5350 areas and 1.5300 level before opening the downside potential and better bids into 1.5200.
• JPY: The USDJPY opened quietly moving from the 119.95 area and slipping quietly back into the Tokyo session to the 119.85 and then ranging deep into the session holding those levels, the move in Oz was sufficient to cause some reasonable carry trade AUDJPY selling as longs cut positions on the move and the USDJPY steadily dropped back into the 119.60 levels as the market moved to the grey hours. Topside offers through the 120.00 level and strong to the 120.20 while there is potential for stops through that level the offers are likely to dominate until a strong push through the 120.60 areas however, whatever stops there may be will be quickly absorbed on any push through the 120.80 levels and into 121.00, Downside bids are light through to the 119.00 areas where the market is likely to see increased bids, a push through the level and down through 118.70 could possibly see weak stops appear however, the yield players while quieter than at the beginning of the year will again possibly appear in the market and the move through to 118.00 will be a little more difficult.
• AUD: The Oz like the other currencies struggled for ideas through the early part of the session opening around the 0.7210 levels, the market then struggled a little higher through the Tokyo session to push towards the 0.7240 levels before trading around the 0.7230 level for several hours, as the market moved to the grey hours the market quickly dropped with strong selling of the Oz across the board with the carry trade selling being particularly strong, the Oz dipped from the 0.7230 levels to quickly drop into the 0.7180 levels before recovering for the move into the grey hours to the 72 cent level, news that Commonwealth Bank had upped its variable rate to 5.60% with a 15BP increase the concerns for the market seem to be the chances of the bubble bursting rather than the removal of risk as core interest rates slowly move lower. Topside offers light through the 0.7250 levels and only once you move towards the 73 cent level do they increase with those offers likely to continue through to the 0.7320 areas, even through this level the market remains offered more or less every 20 pips or so with stronger offers into the 0.7380-0.7400 areas. Downside bids light to the 0.7150 levels and then possibly a little more challenging before breaking lower and then possibly better bids into 71 cent however, a strong push here again opens the chance of further losses to test the 70 cent level and the lows for the year.

Overnight News

CNY:

Fed Policy Normalization to Help Stabilize Yuan Forecast

China Confident to Keep Int’l Payment Balance: SAFE’s Wang

China Cos. See Lower Credit Costs, Unchanged New Orders: MNI

China Banks Sold Net 729.6b Yuan of FX for Clients in Sept.

China’s Growth Won’t Sacrifice Interests of Other Nations: Xi

Roubini: See China Growing Close to 6.5% This Yr and 6% Next Yr

JPY:

Japanese Bought Net 491.5 Billion Yen Overseas Debt Last Week

BOJ Says Loan Demand of Cos. Rises to 7 in Oct. From July

Abe Adviser Urges 2.5t Yen in Cash Payments to Elderly, Others

JPY/CNY:

Honda to Delay Construction of New China Plant on Slowing Demand

AUD:

RBA’s Edey Says Global Economy Some Way From Returning to Normal

CBA Raises Standard Variable Mortgage Rate by 15 Bps to 5.60%

NZD:

NZ Must Reshape Fiscal Strategy to Manage Through Cycle: English

USD:

Obama Administration Says It Won’t Rescue Puerto Rico

EUR:

German Tax Revenue Up 5.7 Percent This Year, Government Says

Today’s data

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

AUD       NAB Business Confidence Q3 A 0 | P 4

08:00     EUR        ECB Monthly Bulletin

08:30     GBP       Retail Sales M/M Sep C 0.40% | P 0.20%

11:45     EUR        ECB Rate Decision C 0.05% | P 0.05%

12:30     CAD       Retail Sales M/M Aug P 0.50%

12:30     CAD       Retail Sales Less Autos M/M Aug P 0.00%

12:30     USD       Initial Jobless Claims (OCT 17) C 266K | P 255k

13:00     USD       House Price Index M/M Aug C 0.50% | P 0.60%

14:00     EUR        Eurozone Consumer Confidence Oct (A) C -7.5 | P -7.1

14:00     USD       Existing Home Sales Sep C 5.35M | P 5.31M

14:00    USD       Leading Indicators Sep C 0.00% | P 0.10%

Harry Hindsight              

• EUR: A limited session with the market edging up through the Asian from the opening 1.1340 areas to test above the 1.1365 levels before holding around the 1.1360 levels for several hours into the London session, grey hours selling took the market back towards the opening levels, as with the previous day the London session quickly bought the market and tested towards the 1.1380 levels however, the result was the same with the move running out of steam into the offers and turning quickly lower with weak stops triggered through the 1.1345 levels before holding the 1.1350 areas for the move into the NYK session, NYK was a little slower and the market traded slowly lower testing into the lows around the 1.1335 levels to the close.
• GBP: The move through the Asian session was slow and for the most part there was barely 5 pips in it before moving into the grey hours where EURGBP buying moved into the market and Cable was pushed steadily lower and down below 1.5420, the move into the London opening saw the Cable move steadily higher and the PBSR number helped the market move through the opening areas and trigger weak stops to trade through to the NYK session between the 1.5450-60 level, NYK sold a little to put the market back into the opening range for a few hours. A quick move higher towards the end of London failed towards the 1.5480 area before the next two hours were spent falling back through to test into the 1.5410 areas and a slow end to the day just off those lows.
• JPY: A very quiet day overall with the market moving around the 119.95 levels for the most part, opening around the 119.85 levels and dipping to its lows below 119.80, the move into the Tokyo session saw the market move quickly higher into light fixing demand and testing to the 119.95 levels the market held those levels to just before the grey hours where buying emerged to take the market briefly through the 120.00 levels and finally touching the 120.05 areas, the move into the official London session the market drifted back from the highs, and although NYK tested the topside again to around 120.09 the market was then defined by the early lows and that high to the close to finish only slightly above the opening.
• AUD: A quiet Asian session saw the market slowly move from the opening 0.7260 levels to test to the 0.7275 levels before moving into the grey hours and solid selling moving in from then into the London session, while the selling was continuous and took the market back to the 0.7210 levels overall the volumes going through were limited and having reached the levels the market ran into the waiting bids, several times the market tested the downside but with less conviction as the day moved on however, any recovery was limited and the market struggled to push through the 0.7230 areas and remained in the tight range to the close, finishing close to the lows.

Yesterday’s premiership results

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

AUD       Conference Board Leading Index Aug A -0.40% | P 0.30%

AUD       Westpac Leading Index M/M Sep A 0.10% | P -0.30%

JPY         Trade Balance (JPY) Sep A -0.36T | C -0.07T | P -0.36T | R -0.37T

JPY         All Industry Activity Index M/M Aug A -0.20% | C -0.30% | P 0.20% | R -0.10%

GBP       Public Sector Net Borrowing (GBP) Sep A 8.6B | C 9.1B | P 11.3B

CAD       BoC Rate Decision A 0.50% | C 0.50% | P 0.50%

USD       Crude Oil Inventories A 8.0M | C 3.5M | P 7.6M

Good Luck,

Andy

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