Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 121.091 | EURUSD 1.09242 | AUDUSD 0.71114 | NZDUSD 0.67232 | USDCAD 1.31907 | USDCHF 0.99418 | GBPUSD 1.52644 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               121.18 | 120.58

EUR/USD             1.09345 | 1.09005

EUR/JPY               132.36 | 131.595

AUD/USD            0.7119 | 0.7092

NZD/USD             0.6710 | 0.6650

USD/CAD             1.3213 | 1.3190

EUR/CHF              1.0864 | 1.0856

USD/CHF             0.99545 | 0.99345

GBP/USD             1.5271 | 1.5254

EUR/GBP             0.7162 | 0.7145

For Today

• EUR: Opening just above the 1.0920 levels the market moved slowly to test as strong EURJPY selling moved in to test the 1.0900 levels before the Euro saw sufficient bids to hold it in place and USDJPY on its lows the Euro was able to move back through the opening area and trade steadily to a high close to the 1.0935 levels before settling back to the opening range. Topside offers into the 1.1000 levels with the possibility of weak stops through the level and an opening to the 1.1100 areas however, the weak stops that would have appeared above the 1.1100 areas and opening the market to a short squeeze are now likely to be closer and now of less consequence than they were and the market in between 1.1040-60 areas likely to see renewed interest to sell. Downside bids into the 1.0900-1.0880 levels and with possibly stronger bids continuing down through the 1.08 levels with possible bids evenly spaced on a move down to the 1.0800 areas. German unemployment numbers of note.
• GBP: Cable steadily drifted through the session as the EURGBP moved a little higher and Cable testing to just above yesterday’s lows. Topside offers into the 1.5300 areas are likely to be light with better offers likely into the 1.5350 levels and building to into the 1.5400 and light stops through the level and only limited interest before the stronger 1.5500 areas. Downside bids are light through the 1.5250 areas however the bids are likely to increase on any move through the level and into the 1.5200 area, a push through this level will likely see weak stops but only light at best with the better bids then entering the market as it moves through the 1.51 levels and the possibility of another test of the years lows.
• JPY: Strong EURJPY, USDJPY selling with better IP numbers released the USDJPY dropped from the opening areas to test into the 120.60 levels before holding and drifting for several hours around the 120.70 levels. Topside offers again continue through the 121.00 level and into the 121.30 areas with possible stops through there before stronger offers again move in protecting the 122.00 levels, Downside bids light through the 120.50 levels with those bids likely to continue through to the 119.70 level then a distinct possibility of weak stops and the downside becomes open to a strong quick move into the 119.00-118.80 levels and possible entry for yield plays and or importer bids, market is again chattering about the possibility of further easing although it remains stuck in the current range.
• AUD: The Oz remained in a tight range opening around the 0.7110 levels and although early session selling took the market through 71 cent level it remained through the level for only for a brief period before holding above 71 cent but unable to do anything meaningful. Topside offers light through the 0.7120 level and possibly stronger offers into the 0.7140-60 areas with limited interest until the 72 cent level and likely to contain a quiet market however, a push through the 0.7230 areas will likely to see stops appearing and the market opening towards the 73 cent areas, downside bids are likely to give way through the 0.7080 areas with limited stops making an appearance however, the downside is likely to see stronger bids appearing as the market moves lower and through the 70 cent areas. The current low levels find the market confused to some extent with the poor CPI numbers would suggest the RBA easing however, that would have little effect with mortgages rates increasing independently and so deflecting the costs and only negligible change.

Overnight News

CNY:

Li Said to Say China Needs 6.53% Growth in Next 5 Years

China Interest Rate Move Room ‘Relatively Large’: Yin

China Reserve Ratio at Relatively High Level: PBOC’s Yin

China Property to See Positive Sales Momentum Into 4Q: Moody’s

CNY/EUR:

China, Airbus Sign 17b Euros Deal for 130 Aircraft

JPY:

Japan’s Factory Output Has Biggest Positive Surprise in 2 Years

Japanese Bought Net 463.2 Billion Yen Overseas Debt Last Week

NZD:

RBNZ’s Wheeler Signals Further Easing After Holding Steady

New Zealand Central Bank Says It Bought Net NZ$138m in September

USD:

Lew Says Debt Limit Can’t Be Used to Extract Concessions

MYR/GBP:

Malaysia’s EPF Says Constantly Gets Offers for U.K. Properties

AUD:

Australia’s Sept. Private New Home Sales Fall 4% M/m

Australian 3Q Export Prices Unchanged Q/Q; Est. 0.6% Gain

HKD:

HKMA Says Market Will Be Volatile Once U.S. Rates Start to Rise

Today’s data

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

NZD       RBNZ Rate Decision A 2.75% | C 2.75% | P 2.75%

JPY         Industrial Production M/M Sep A 1.00% | C -0.60% | P -1.20%

AUD       Import Price Index Q/Q Q3 A 1.40% | C 1.00% | P 1.40%

08:55     EUR        German Unemployment Change Oct C -4K | P 2k

09:30     GBP       Mortgage Approvals Sep C 73K | P 71.0k

10:00     EUR        Eurozone Economic Confidence Oct C 105.2 | P 105.6

10:00     EUR        Eurozone Business Climate Indicator Oct C 0.32 | P 0.34

10:00     EUR        Eurozone Industrial Confidence Oct C -2.8 | P -2.2

10:00     EUR        Eurozone Services Confidence Oct C 12 | P 12.4

10:00     EUR        Eurozone Consumer Confidence (OCT F) C -7.7 | P -7.7

11:00     GBP       CBI Reported Sales Oct C 35 | P 49

12:30     USD       Initial Jobless Claims (OCT 24) C 264K | P 259K

12:30     USD       GDP (Annualized) Q3 (A) C 1.90% | P 3.90%

12:30     USD       GDP Price Index Q3 (A) C 1.50% | P 2.10%

12:30     CAD       Industrial Product Price M/M Sep P -0.30%

12:30     CAD       Raw Materials Price Index M/M Sep P -6.60%

13:00     EUR        German CPI M/M Oct (P) C -0.10% | P -0.20%

13:00     EUR        German CPI Y/Y Oct (P) C 0.20% | P 0.00%

14:00    USD        Pending Home Sales M/M Sep C 0.20% | P -1.40%

Harry Hindsight              

• EUR: Asia was reasonably quiet with the market drifting slightly lower from the open but holding in the 1.1030-40 levels for a move into the London session, the initial selling from the opening was related to the Oz CPI numbers however, once that was over very little effected the market. London buyers then moved in and although the market only moved slowly higher it did make its way through to the 1.1080 levels and gradually pushed into the 1.1090’s and held in the areas for several hours until the release of the FOMC, the market dropped quickly and while the there was no change the policy statement however, had slight changes with a downgrading of the recent performance of the labour markets and upgrading its assessment on consumer and business investment however, global market conditions had played some part in the hold off for a time now there will be less focus and the most likely reasoning behind the stronger USD. The policy statement therefore left the market with the opinion that some data has played out and the possibility of the meeting in December a being lift off in the mind of the market saw USD’s rally and the Euro quickly pushing through the 1.1000 level and continuing to the 1.0940 levels before the market saw some support however, too little too late and the market dropped through the 1.0900 briefly and only managed to push into the 1.0920’s before slowly trading the areas to the close.
• GBP: Cable opened around the 1.5300 levels and then held that level for a long period unable to push much beyond the 1.5310 areas but holding it value deep into the London session, although the market did test lower into the opening of London quickly reversed and several further hours of quiet trading and a more gradual easing to the 1.5280 levels, as the market moved towards the NYK session it gradually recovered and strengthened with the markets expectations of further dovish comments from the FOMC and Cable managed to climbed towards the 1.5350 levels and holding towards that end of the market before the release and a quick drop to the 1.5260 levels and the market found strong support, struggling to the 1.5250 levels the market started to move back steadily to the 1.5270 level and into the close.
• JPY: As with any normal FOMC day the market remained in a very tight range through the session in Asia and through the London market to trade the 120-50-30 levels before starting a little rally to above 120.50 into the final couple of hours before the release, no change saw the market drop quickly and then the details turned the market away from the 120.00 level and quickly through to the 121.00 level and the waiting offers, the market then moved off the 120.80 areas to push through the 121.30 levels with the volumes increasing as those offers continued to weigh on the market and the market finishing around the 121.00 levels
• AUD: Moving from the opening the Oz initially moved to above the 72 cent level before again drifting into the Tokyo session around the opening 0.7190 levels, the release of the CPI numbers saw the Oz drop quickly as the numbers frightened the market dropping quickly to the 0.7120 levels then the market set into the FOMC trading pattern holding the levels and moving steadily through to a slow rise into the NYK session to push slowly to the 0.7160 levels and then the release, a USD rally ensued and the market dropped quickly down to the 0.7080 levels on the FOMC release and then traded quietly back through the 71 cent level to finish around the area.

Yesterday’s premiership results

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%

EUR        German GfK Consumer Sentiment Nov A 9.4 | C 9.4 | P 9.6

USD       Trade Balance Sep A -58.6B | C -64.9B | P -67.2B

USD       Crude Oil Inventories A 3.4M | C 3.7M | P 8.0M

USD       FOMC Rate Decision A 0.25% | C 0.25% | P 0.25%

NZD       RBNZ Rate Decision A 2.75% | C 2.75% | P 2.75%

 

Good Luck,

Andy

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