Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 120.461 | EURUSD 1.10455 | AUDUSD 0.71933 | NZDUSD 0.67803 | USDCAD 1.32674 | USDCHF 0.98667 | GBPUSD 1.53013 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.55 | 120.25

EUR/USD             1.10535 | 1.10255

EUR/JPY               133.09 | 132.74

AUD/USD            0.7209 | 0.7112

NZD/USD             0.6780 | 0.6719

USD/CAD             1.3281 | 1.3266

EUR/CHF              1.0899 | 1.0880

USD/CHF             0.9873 | 0.9862

GBP/USD             1.5315 | 1.5296

EUR/GBP             0.7235 | 0.72035

For Today

• EUR: Another quiet day saw the market holding the 1.1045 levels before dipping slowly through to the 1.1025-35 levels for the most part, with the move in the Oz more connected with the dip lower as plenty of EURAUD cross buying could not stave off a drag effect but limited trading in the Euro unable to reverse the losses. Topside offers building into the 1.1080 areas and through the 1.1100 level, likely to see patchy offers at that point and into the 1.1140 levels before the market truly opens and the possibility of a short squeeze however given there has now been a couple of days trading the volatility of the move is likely to be a little reduced and any move towards the 1.1200 level is likely to find some resistance. Downside bids likely to be reasonably strong in a move to the 1.1000 and those bids possibly continuing into the 1.0980 areas before further weakness and the downside opens up for a deeper move however, the market has to break through and from that point there is likely to be patches of bids through to the 1.0920 areas. FOMC today and this will determine the direction with the market likely to be quiet until that point.
• GBP: A very quiet session for the Cable with the market generally holding the 1.5300 areas but unable to push to far beyond the 1.5310 levels, cross buying against the Oz dominated the early part of the session however, that having run its course saw the market drift for the balance of the session. Downside bids through to the 1.5280 levels and then weak stops on a push through will likely to run into some light bids into the 1.5250 areas before the stronger 1.5200 areas play there part with the bids likely to become stronger the lower you go into the 1.51 level, topside offers though light through 1.5350 will likely continue being light on a move above the 1.5400 area with 1.5500 being the key to the upside movement.
• JPY: A nervous day with the USDJPY moving from the opening around the 120.45 areas to initially test higher into the Tokyo session and through the 120.50 levels and indeed looked like pushing to recapture some of yesterday’s losses that is until the Oz CPI numbers and Oz cross selling sending the carry trade quickly lower taking the USDJPY component with it to again test below 120.30, the market recovered somewhat however, with FOMC to come light buying and position reducing seemed to dominate the market and the market remains virtually unchanged after setting the range early in Tokyo. Topside offers light through the 120.80 levels and only once the market pushes through the 121.00 level again will there be a stiffening of resolve and likely better offers appearing, those offers are likely to continue into the 121.50 areas with only minimal possibility of weak stops through that level before the 121.80-122.20 area dominates the topside. Downside bids light through the 120.20 levels and continuing into the 119.80 levels with the distinct possibility of only limited profit taking once 119.70 breaks however, the bids are likely to start becoming stronger as the market moves through the 119.40 levels and only a strong break through the 118.70 areas opens the downside.
• AUD: Early trading saw the market slowly edging back above the 72 cent level before nervous AUDJPY sellers moved in on the Tokyo opening to take the market lower and towards yesterday’s lows of 0.7180 however, the release of Oz CPI numbers saw the market drop back quickly to the 0.7120 levels and bouncing like a soggy cat, in fact the market never really recovered and has steadily slipped below the 0.7120 levels as the session has moved through towards the grey hours and London. Topside offers light through the 72 cent level and increasing once the market moves into the 0.7240-60 levels with stronger offers likely to be congregated around the 0.7300 levels for the moment, even through this level though the market is likely to find a continuation of those offers through to above the 0.7350 levels. Downside bids light through the 71 cent level with the market then starting to see stronger bids appearing in the market once it tests below the 0.7050 areas, while a break through 70 cents opens up fresh chances of a move to test the years lows the bids are likely to be quiet formidable.

Overnight News

EUR:

Coeure Says Downside CPI Risks May Warrant More Steps

JPY:

Abe’s Adviser Hamada Says BOJ Can Sit Tight With Prices Rising

LDP’s Shibayama: ‘Wouldn’t Be Strange’ for BOJ to Ease on Friday

Japan Sept. Retail Sales Rise 0.7% M/m; Est. +1.1%

AUD/JPY:

NAB Sees ~A$1.1b Indicative Loss on Insurance Stake Sale

AUD:

Australian 3Q Trimmed Mean CPI Rose 0.3% Q/Q; Est. 0.5% Gain

Australian Treasurer Says Looking at Pension System Loopholes

CNY:

PBOC Should Cut Reserve Ratio Until PPI Rises, Researcher Writes

China Larger Steelmakers 9-Mo. Loss 28.1b Yuan: Sec. News

NZD:

N.Z. Opposition Labour Party Says RBNZ Needs Broader Mandate

HKD:

Government Advisers Urge Hong Kong to Strengthen ETFs Trading

Today’s data

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

JPY         Retail Trade Y/Y Sep A -0.20% | C 0.60% | P 0.80%

AUD       CPI Q/Q Q3 A 0.50% | C 0.70% | P 0.70%

AUD       CPI Y/Y Q3 A 1.50% | C 1.80% | P 1.50%

AUD       CPI RBA Trimmed Mean Q/Q Q3 A 0.30% | C 0.50% | P 0.60%

AUD       CPI RBA Trimmed Mean Y/Y Q3 A 2.10% | C 2.40% | P 2.20%

AUD       CPI RBA Weighted Median Q/Q Q3 A 0.30% | C 0.50% | P 0.50%

AUD       CPI RBA Weighted Median Y/Y Q3 A 2.20% | C 2.50% | P 2.40%

07:00     EUR        German GfK Consumer Sentiment Nov C 9.4 | P 9.6

12:30     USD       Trade Balance Sep C -64.9B | P -67.2B

14:30     USD       Crude Oil Inventories P 8.0M

18:00     USD       FOMC Rate Decision C 0.25% | P 0.25%

20:00    NZD       RBNZ Rate Decision C 2.75% | P 2.75%

Harry Hindsight              

• EUR: Limited action through the day, moving from the opening 1.1055 areas to dip into the Tokyo session testing the downside and into the 1.1040’s with strong cross JPY selling dragging the Euro however, once the market found sufficient Euro bids the market reversed and broke away from being dominated by the cross, the market moved to the 1.1070 area before holding into the London session, UK numbers then dominated the situation and the Euro initially traded into the 1.1070’s again before drifting lower as the Cable pulled on the Euro and the market dipped lower and to the 1.1030 areas before steadily correcting into the NYK session and posting the highs just short of 1.1080 levels, fortunately time ran out for the move higher and USD buying moved into the market as Cable sellers into NYK took the market quickly lower and dragged the Euro lower and touched the 1.1030 in a quicker period of time than the rally higher, I say fortunately as the longer the market remains below the 1.1100 levels the better the offers building above will be. The market eventually closed below the 1.1050 areas in quiet trading.
• GBP: A quiet Asian session for the Cable trading in the 1.5350-60 levels for the move into the London session and a drip lower to trade in the 1.5340-50 areas before the release of a poor GDP figure that sent the market tumbling to the 1.5310 areas in a quick move before correcting, much has been made of the number however, the limited selling shows a not overly concerned market during the London session at least and only the move into NYK saw the market testing lower and through the 1.5300 level however, the market only managed to move into the 1.5280’s and then returned to above the 1.5300 levels to the close.
• JPY: Strong selling in EURJPY led to USDJPY falling back and taking over the move once the market had moved off the opening 121.10 levels and dipping to 120.80 before breaking and triggering some weak stops to trigger the move to the 120.50 levels before moving back to the 120.70 into the opening in London. London were quick sellers however, the downside was limited and the market gravitated to the 120.20 levels before finding sufficient bids to hold the market for the rest of the session with the market trading around the 120.40 levels for the most part to the end.
• AUD: A very quiet session for the Oz with the market drifting through the session after some nervy movement after the news that a US warship was patrolling in the south China sea near the disputed areas and the market then drifted around the opening levels and maintained a 0.7240-60 range having briefly drifted into the 0.7230’s, the move into London was uneventful and the market continued above the 0.7240 areas until the NYK session saw light selling through slowly to test the 72 cents level, the market tested to the 0.7180 levels but the market was lacking and the market again started to recover.

Yesterday’s premiership results

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

NZD       Trade Balance (NZD) Sep A -1222M | C -822M | P -1035M | R -1079M

JPY         Corporate Service Price Y/Y Sep A 0.60% | C 0.70% | P 0.70% | R 0.80%

CHF        UBS Consumption Indicator Sep A 1.65 | P 1.63

EUR        Eurozone M3 Y/Y Sep A 4.90% | C 5.00% | P 4.80% | R 4.90%

GBP       GDP Q/Q Q3 (A) A 0.50% | C 0.60% | P 0.70%

GBP       Index of Services 3M/3M Aug A 0.90% | C 1.00% | P 0.80%

USD       Durable Goods Orders Sep A -1.20% | C -1.30% | P -2.00% | R -2.30%

USD       Durables Ex Transportation Sep A -0.40% | C 0.00% | P 0.00% | R -0.20%

USD       S&P/Case-Shiller Composite-20 Y/Y Aug A 5.10% | C 5.10% | P 5.00% | R 4.90%

USD       Consumer Confidence Oct A 97.6 | C 102.8 | P 103 | R 102.6

 

Good Luck,

Andy

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