Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 121.12 | EURUSD 1.09773 | AUDUSD 0.70744 | NZDUSD 0.66843 | USDCAD 1.31726 | USDCHF 0.98947 | GBPUSD 1.53099 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               121.50 | 120.29

EUR/USD             1.09985 | 1.0965

EUR/JPY               133.39 | 132.30

AUD/USD            0.7118 | 0.7067

NZD/USD             0.6758 | 0.6691

USD/CAD             1.3171 | 1.3145

EUR/CHF              1.0871 | 1.0861

USD/CHF             0.9903 | 0.9881

GBP/USD             1.5338 | 1.5308

EUR/GBP             0.71765 | 0.71615

For Today

• EUR: Early trading tested towards the 1.1000 levels however, once the opening Tokyo market failed the Euro drifted and traded around the 1.0980 levels, the quick move in the USDJPY forced the Euro to its lows around the 1.0965 level but held for an hour before returning to the 1.0980 levels. Topside offers light into the 1.1000 areas with the offers and likely weak stops on a move into the 1.1020 and the market possibly open to the 1.1080 areas before offers are likely to start appearing in meaningful amounts, those offers though while likely to be strong could quickly buckle with the amount of data available today, especially those CPI numbers. Downside bids light through to the 1.0920 levels and those bids are likely to continue through the 1.0900 levels however, at that point the market is vulnerable to a drop into the low 1.08 areas before possible stronger bids appear.
• GBP: Only slightly more active than the Euro with the market trading steadily from the 1.5310 areas to test towards the 1.5340 levels in early trading before drifting back to mid-range GBPJPY selling then sent the market a little lower and back to those opening levels before drifting towards the grey hours holding the opening levels. Topside offers into the 1.5350 levels are likely to be light however, there is very little in the way of stops to help the market higher with only slightly stronger offers into the 1.5400 area standing in the way of a further test towards the 1.5500 areas. Downside bids light through the 1.5300 levels and those bids building into the 1.5250 levels however, a move through that level will possibly see stronger bids from the 1.5200 levels with those bids building into the 1.5100 areas before the downside opens up.
• JPY: The USDJPY drifted from the opening with all expectations for something to happen in the BoJ monetary policy, and while there was no change and this year remains unchanged it was reported that were considerations of an introduction of a further 3Tr JPY, this saw the market drop from the 120.90 areas to quickly trade 120.30 before bouncing and back to 121.00 through the 121.10 levels and then pushing steadily 121.50 before finding sufficient resistance to curb the markets enthusiasm, the move to the grey hours saw the market drifting back to the opening levels again around 121.10. Topside offers from the 121.50-60 area are likely to quickly disappear however, from 121.80 onwards the stronger offers reappear, a strong move through the 122.20 areas will again open the market to a larger move with 124-125 becoming vulnerable. Downside bids light through to the 120.40-60 areas and likely to be open into the 120.10 areas and stronger bids continuing through to the 119.70 levels, the market from there on those are likely to see continuing bids and while not likely to be large until the 119.00-118.80 areas they are likely to be plentiful, a push through the downside will likely see the market open but likely to attract buyers.
• AUD: The Oz found locals willing to buy slowly to push the market from the closing 0.7075 areas and into Tokyo quickly testing through the 71 cent level again however, despite a volatile USDJPY the Oz maintained the 71 cent level and peaked just short of 0.7120 in very quiet Friday trading. Downside bids from the 0.7070 levels which is likely to continue to the 0.7040 areas before the market is likely to show any weakness however, the 70 cent levels is likely to see some reasonable bids and any move onto the 69 cent handle will possibly see increased buying interest. Topside offers into the 0.7120 levels are likely to be reasonable however, it could be that the offers move through to the 72 cent with lots of small offerings, and not until the market approaches the 73 cent level does the market find better resistance.

Overnight News

JPY:

BOJ Refrains From Adding Stimulus Even as Inflation Wanes

Japan Considers Extra Budget of More Than 3t Yen, Nikkei Says

Japan Sept. Core Consumer Prices Fall 0.1% Y/y; Est. -0.2%

Japan Sept. Unemployment Rate at 3.4%, Matching Est.

CNY:

China Allows Foreign Central Banks to Open Settlement Accounts

China to Reduce Focus on Growth in Next 5-Year Period: Daily

KRW/CNY:

South Korea May Sell Yuan-Denominated Bonds for the First Time

NZD:

New Zealand September Home-Building Approvals Fall 5.7% M/M

New Zealand Business Confidence Turned Positive in October: ANZ

AUD:

Lending to Australian Firms Grows Fastest Since 2008

Australian Third-Quarter Producer Prices Rise 0.9% Q/Q

GBP:

U.K. Oct. GfK Consumer Confidence +2 vs Est. +4

Today’s data

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

NZD       Building Permits M/M Sep A -5.70% | P -4.90% | R -5.30%

JPY         Unemployment Rate Sep A 3.40% | C 3.40% | P 3.40%

JPY         Household Spending Y/Y Sep A -0.40% | C 1.20% | P 2.90%

JPY         National CPI Core Y/Y Sep A -0.10% | C -0.20% | P -0.10%

JPY         Tokyo CPI Core Y/Y Oct A -0.20% | C -0.20% | P -0.20%

NZD       NBNZ Business Confidence Oct A 10.5 | P -18.9

GBP       GfK Consumer Sentiment Oct A 2 | C 4 | P 3

AUD       PPI Q/Q Q3 A 0.90% | P 0.30%

AUD       PPI Y/Y Q3 A 0.80% | P 1.10%

JPY         Housing Starts Y/Y Sep A 2.60% | C 6.50% | P 8.80%

08:00     CHF        KOF Leading Indicator Oct C 100.1 | P 100.4

09:00     EUR        Italian Unemployment Rate Sep C 11.90% | P 11.90%

10:00     EUR        Eurozone Unemployment Rate Sep C 11.00% | P 11.00%

10:00     EUR        Eurozone CPI Estimate Y/Y Oct C 0.00% | P -0.10%

10:00     EUR        Eurozone CPI – Core Y/Y (OCT A) C 0.90% | P 0.90%

12:30     USD       Employment Cost Index Q3 C 0.60% | P 0.20%

12:30     USD       Personal Income Sep C 0.20% | P 0.30%

12:30     USD       Personal Spending Sep C 0.20% | P 0.40%

12:30     USD       PCE Deflator M/M Sep C -0.10% | P 0.00%

12:30     USD       PCE Deflator Y/Y Sep P 0.30%

12:30     USD       PCE Core M/M Sep C 0.20% | P 0.10%

12:30     USD       PCE Core Y/Y Sep P 1.30%

12:30     CAD       GDP M/M Aug C 0.10% | P 0.30%

13:45     USD       Chicago PMI Oct C 49.7 | P 48.7

14:00    USD       U. of Michigan Confidence Oct (F) C 92.6 | P 92.1

Harry Hindsight              

• EUR: A very quiet day with the Euro gradually moving higher and I mean gradually, opening around the 1.0920 levels and dipping early in the session as EURJPY selling moved through into the Tokyo session and establishing the low for the day just above 1.0900 levels, the move through session saw the Euro steadily moving to above the 1.0940 and into the London session. Weak selling saw the market dip into the German numbers before recovering and pushing to the 1.0970 levels. The move into NYK saw Euro selling as the market started to bet on the GDP in the US rising or at worst staying in the expected area but being a little weaker the Euro started to rise again and this time pushed above the 1.0980 levels and into the weak offers. The market then slowly moved to the close holding in the area.
• GBP: The market drifted through the early part of the day with the Asian session dipping towards the 1.5250 levels before recovering to 1.5270 before moving into the London session, while the range widened a little dipping through the 1.5250 levels however, the weak GDP number from the US and Cable quickly moved through the 1.5300 levels and then trade quietly pushing to the highs just above the 1.5320 level before finishing around the 1.5310.
• JPY: USDJPY opened around the 121.00 levels with the market initially pushing a little higher and towards the 121.20 level before the IP numbers were released and the market dropped to the 120.70 levels with the strong number only managing to push into the bids at which point the market died and remained in a tight range through to the London session holding 120.70, London were steady buyers pushing through to test to the 121.20 levels and holding into the close.
• AUD: The Oz market struggles for the moment with one side thinking that a cut by the RBA would answer the problems of a poor CPI and the other side possibly clearer in conviction that a said cut would have very little impact given that consumers are being squeezed on mortgages which are variable and independent of the RBA so a rate cut would not likely work, or would it, weakening the currency increases the foreign hard cash from the raw exports for the Oz so stabilization of commodity prices are a stronger motive for movements by the RBA than the CPI number, so will they cut or not, for the moment the market is split as with the Fed with early 2016 edging for the moment. Which is why the Oz struggled through the whole day, holding during the Asian around the 71 cent levels testing to the 0.7120 level and barely effected by the early JPY buying from the JPY IP numbers, early London dipped with steady trading looking for a break lower however the market was unable to push beyond the 0.7070 and having bounced from the level the first time gravitated to the level again through into the quiet close.

Yesterday’s premiership results

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%

EUR        German Unemployment Change Oct A -5K | C -4K | P 2k

GBP       Mortgage Approvals Sep A 69K | C 73K | P 71K

EUR        Eurozone Economic Confidence Oct A 105.9 | C 105.2 | P 105.6

EUR        Eurozone Business Climate Indicator Oct A 0.44 | C 0.32 | P 0.34 | R 0.36

EUR        Eurozone Industrial Confidence Oct A -2 | C -2.8 | P -2.2 | R -2.3

EUR        Eurozone Services Confidence Oct A 11.9 | C 12 | P 12.4

EUR        Eurozone Consumer Confidence (OCT F) A -7.7 | C -7.7 | P -7.7

GBP       CBI Reported Sales Oct A 19 | C 35 | P 49

USD       Initial Jobless Claims (OCT 24) A 260K | C 264K | P 259K

USD       GDP (Annualized) Q3 (A) A 1.50% | C 1.60% | P 3.90%

USD       GDP Price Index Q3 (A) A 1.20% | C 1.50% | P 2.10%

CAD       Industrial Product Price M/M Sep A -0.30% | C -0.10% | P -0.30%

CAD       Raw Materials Price Index M/M Sep A 3.00% | C 1.20% | P -6.60% | R -6.80%

EUR        German CPI M/M Oct (P) A 0.00% | C -0.10% | P -0.20%

EUR        German CPI Y/Y Oct (P) A 0.30% | C 0.20% | P 0.00%

USD       Pending Home Sales M/M Sep A -2.30% | C 0.20% | P -1.40%

 

Good Luck,

Andy

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