Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 121.458 121.35-50 | EURUSD 1.10176 1.1000-20 | AUDUSD 0.72162 0.7215-30 | NZDUSD 0.67514 0.6730-50 | USDCAD 1.31673 1.3155-70 | USDCHF 0.97882 0.9785-00 | GBPUSD 1.53146 1.5305-20 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               121.60 | 121.045

EUR/USD             1.1040 | 1.0989

EUR/JPY               133.90 | 133.46

AUD/USD            0.7265 | 0.7206

NZD/USD             0.6793 | 0.6730

USD/CAD             1.3184 | 1.3150

EUR/CHF              1.0792 | 1.07765

USD/CHF             0.9795 | 0.9762

GBP/USD             1.5340 | 1.5305

EUR/GBP             0.7199 | 0.7180

For today

• EUR: Opening towards the 1.1100 areas the market steadily moved higher through the session to test into the 1.1140 areas with limited before holding steady in the 1.1030’s for a good period of the session, Topside offers a little scant with light offers possibly through the 1.1050 areas before opening up a move to the 1.1100 levels and possibly better offers however, a push through this the 1.1120-30 areas could see weak stops triggered and the topside open to the 1.1200 and further with the possibility of a short squeeze. Downside bids remain through the 1.1000 areas and likely to continue to the 1.0980 levels before the downside opens a little however the market is likely to see further bids through to the 1.0920 levels and increasing into the 1.9000 areas.
• GBP: Early trading was unable to test through the 1.5300 levels and after several hours the market started to move up through the 1.5320 levels to test into the 1.5340 areas before drifting into the grey hours. Light offers through the 1.5350 levels open to likely weak stops and the market moving towards the stronger offering area of 1.5400 levels and into 1.5420 area, a break here does open further tests to 1.5500 however, those offers are likely to be too far and stronger. Downside bids into the 1.5300 levels and then a possible break will see weak stops through the level and the market open to the better bids in an around the 1.5200 with plenty of congestion in the area.
• JPY: As the Euro and Cable climbed so the USD dipped and the USDJPY dropped into the Tokyo session as USD/Asia selling moved in as the early market decided that the Euro sell off may not be the correct way forward however, trading was limited to some extent and most of the trading was dominated by USD/Asia. Topside offers through the 121.40-60 levels with larger offers likely to be hanging around the 121.80-122.00 levels however, a push here does open the topside to further moves higher and into the 123-125 range from Jul/Aug, the move higher though is likely to continue seeing strong offers in the usual places. Downside bids is likely to be light through the 121.00 however a move lower could see weak stops through the 120.80 levels and the market opening up to test to the 119.00 levels and maintain the current ranges that we’ve seen for the past couple of months.
• AUD: Opening around the 0.7215 areas the market moved quietly into the Tokyo session before a steady decline in the USDJPY allowed the Oz to start rising again, with a steady grind the market eventually pushed back through the 0.7250 levels with small stops triggered and the market holding for a period about the 0.7260 levels before drifting into the grey hours. Topside offers remain into the 73 cent level and while those offers have held for a few days the market pushing through the level will likely see some light stops before stronger offers really appear in a move through the 0.7350 levels and then again into 74 cents. Downside bids into the 72 cent level with stops likely not to appear through the level with further bids around the 0.7150 levels and those bids disappearing until 71 cent.

Overnight News

CNY:

PBOC Says RRR, Interest Rate Cuts Aren’t QE

PBOC’s Lu Calls for Close Attention to Liquidity Condition

China Easing Consistent With Extra Stimulus View, Moody’s Says

China Has Room to Further Loosen Monetary Policy: Researcher

JPY:

Japanese Not Optimistic About Abe’s Economic Policies: Nikkei

Abe’s Public Support Falls 3 Points to 41%, Nikkei Says

Most Polled Don’t Support Abe’s 3 New Arrows, Reshuffle: Sankei

Keidanren’s Sakakibara Sees Importance of Wage Rises, FT Reports

KRW/JPY:

Park, Abe May Meet Separately Around Nov. 1, Chosun Reports

HKD:

Hong Kong Regulator to Expand Clearing for OTC Derivatives

HKMA’s Chan Said No Hot Money Into City’s Property Market: HKEJ

PLN:

Poland’s Next Government Seeks To Tax Bank Assets From January

Today’s data

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

09:00     EUR        German IFO – Business Climate Oct C 108 | P 108.5

09:00     EUR        German IFO – Current Assessment Oct C 113.3 | P 114

09:00     EUR        German IFO – Expectations Oct C 102.3 | P 103.3

09:30     GBP       BBA Mortgage Approvals Sep C 46.2K | P 46.7K

11:00     GBP       CBI Trends Total Orders Oct C -8 | P -7

14:00     USD       New Home Sales Sep C 547K | P 552K

Weekend News

CNY:

Li Says China Won’t ‘Guard to Death’ Growth Target: China News
China to Set Interest Rates Reasonable to Cut Corp Debt: Reuters
China Deposit-Rate Controls Removal Marks New Era: PBOC’s Lu
China to Inspect Financial Regulators for Discipline Violations
USD/CNY:

China Needs Reforms to Speed Up U.S. Bilateral Investment Treaty
CNY/USD:

China’s Yantai Xinchao to buy $1.3B Moss Creek Resources Stake
CNY/PHP:

China Easing May Spur Flows to U.S., Emerging Markets: Tetangco
JPY:

Kansai Electric to Cut Prices for High-Use Households: Nikkei
Toshiba Said in Talks to Sell Image Sensor Ops to Sony: Nikkei
CHF:

SNB’s Zurbruegg Expects CHF to Weaken Further: Zentralschweiz
Credit Suisse to Invest CHF400m in Switzerland, Rohner Tells SRF
EUR:

Greece Has No Time to Waste, EU’s Dombrovskis Tells to Vima
ESM Doesn’t See Greek Debt Haircut as Feasible: Euro Magazine
GBP:

BOE Carney Says 4% Mortgage Holders at Risk If Rates Rise: Mail
U.K. Sets Out Further Steps to Tackle Gender Pay Inequality
TRY:

Turkey’s Zeybekci Says Lira to Continue to Appreciate: Anadolu
HKD:

Hong Kong Financial Secretary Says Needs to Monitor Wage Growth
RUB:

Russia Pushes Syria on Power-Sharing Plan, Advisers Say
PLN:

Poland Voting for Parliament as Discontent Propels Opposition

Harry Hindsight

• EUR: Early efforts to push through the 1.1100 levels each time found sufficient support to gradually drive it back above the level however, having pushed back above the level it never seemed to have the legs to move ahead and the move into London saw better PMI numbers doing little for the market and once the numbers were out of the way the market started to fall back as the market moved towards the NYK session, and the session started with the PBoC reducing deposit/lending and reserve requirements and the USD moved quickly to send the Euro quickly lower to test through the 1.1050 levels however, the move was not all one way and the buyers were seen on the move through that level and the market spent the rest of the session struggling lower to test the 1.1000 levels briefly pushing through however, the market recovered slightly into the close.
• GBP: Cable followed the Euro in early trading however, the market was unable to really push through the 1.5380 level and as with the Euro rose slowly and spent the session the Asia and through early London trading around the 1.5400 levels and testing towards the 1.5420 areas. The move into the NYK session saw USD rise quickly for the most part and Cable dipped lower as the drag of the Euro and the market readjusted to the PBoC, trading down to the 1.5360 levels before trading around the 1.5340 into the end of London, late trading through the NYK session saw the Cable drifting down towards the 1.5300 levels before running out of time. EURGBP saw the market steadily drop lower from the highs of 0.7230 levels to trade through the 0.7170 areas and holding into the close around 0.7180 finishing the day just below the 0.7200 levels.
• JPY: Very quiet trading through the Asian session with Tokyo moving higher in early trading to test towards the 121.00 levels spending a couple of hours in the area before reversing the move and trade around the opening 120.70 levels through into the London session, early London were quick sellers with plenty of weak longs from the attempt to break 121.00 quickly dropping out and the market dipping to the 120.40 levels and then slip a little lower to test into the 120.20 before slowly moving into the NYK session and a quick move higher to 120.80 and then eventually grinding through the offers and through 00, the market continued to struggle however the grind higher continued and the market pushed to the 120.40 into the late session before finishing in the area.
• AUD: After a slow start and the market testing the 72 cent level on the opening of Tokyo the market slowly moved higher through the session pushing gradually through the session to push the 0.7240 areas before finding any meaningful offers, the market briefly stalled and although pushed again struggled into the London session holding the 0.7250 levels, early buyers bought quickly to the 0.7270 level and the market then spent the session basing off that level, the market did finally make a quick move higher but fell short of the 73 cent level to move into the NYK session starting to slip lower before the PBoC release, the move lower from this point thought was quicker and quickly dropped towards the early lows before steadying and holding the 0.7210-20 areas into the close.

Friday’s premiership results

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

JPY         PMI Manufacturing Oct (P) A 52.5 | C 50.6 | P 51

CNY        Conference Board Leading Index Sep A 1.60% | P 1.00%

EUR        France Manufacturing PMI Oct (P) A 50.7 | C 50.2 | P 50.6

EUR        France Services PMI Oct (P) A 52.3 | C 51.9 | P 51.9

EUR        Germany Manufacturing PMI Oct (P) A 51.6 | C 51.9 | P 52.3

EUR        Germany Services PMI Oct (P) A 55.2 | C 54 | P 54.1

EUR        Eurozone Manufacturing PMI Oct (P) A 52 | C 51.8 | P 52

EUR        Eurozone Services PMI Oct (P) A 54.2 | C 53.5 | P 53.7

CAD       CPI M/M Sep A -0.20% | C -0.10% | P 0.00%

CAD       CPI Y/Y Sep A 1.00% | C 1.10% | P 1.30%

CAD       BoC CPI Core M/M Sep A 0.20% | C 0.30% | P 0.20%

CAD       BoC CPI Core Y/Y Sep A 2.10% | C 2.10% | P 2.10%

Stay lucky

Andy

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