Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 120.616 120.275-565 | EURUSD 1.10043 1.1014-16 | AUDUSD 0.71347 0.7105-15 | NZDUSD 0.67766 0.6732-86 | USDCAD 1.30746 1.3067-82 | USDCHF 0.9879 0.9852-755 | GBPUSD 1.54265 1.5427-58 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.58 | 120.255

EUR/USD             1.1045 | 1.1016

EUR/JPY               132.935 | 132.64

AUD/USD            0.7150 | 0.7105

NZD/USD             0.6786 | 0.6732

USD/CAD             1.3081 | 1.3065

EUR/CHF              1.0890 | 1.08745

USD/CHF             0.98755 | 0.9852

GBP/USD             1.5458 | 1.5428

EUR/GBP             0.7150 | 0.7138

For today

• EUR: Opening higher the market has since traded in a narrow range from the opening 1.1030 levels dipping slightly to trade the 1.1020 before recovering to the opening levels. Topside offers into the 1.1040 levels are likely to fizzle out and the market opening to the 1.1080 levels with offers likely to increase into the level, weak stops likely on a move through the 1.1130 areas before stronger offers into the 1.1150 however with congestion over the next 100 pips the market could be a little choppy with stops and offers competing for dominance, downside bids not overly strong with only light offers into the 1.1000 levels with likely weak stops on a move through the 1.0980 areas and then stronger bids on any move to the 1.0900 levels.
• GBP: Opening only slightly higher the market initially pushed through the 1.5450 levels however, having failed the level the market has slowly drifted into the 1.5420’s in a very quiet move. Topside offer through the 1.5450 levels with possible weak stops through the 1.5460 levels however, for the moment the offers are likely to build into the 1.5500 levels and have held for a month with only slight tests through the levels, any push through strongly will possibly open the market for further tests above the 1.5550 areas. Downside bids are light into the 1.5400 levels with the market pushing through the areas likely to open up some downside weakness and opening the market to a return below the 1.5300 levels before stronger bids start to appear.
• JPY: As with the other pairs USD was weaker from the opening and having opened around the 120.50 levels before drifting gradually lower through the session briefly testing through the 120.30’s before holding for a while just above the 120.30 level. Downside bids into the 120.00 levels and a push through the 119.80 will likely see further bids moving in and the market struggling to the 119.50 levels, weak stops are then a distinct possibility and the potential for a push to the 119.00 level but there are likely to be stronger bids likely in that area. Topside offers light around the 121.00 levels however the market is likely to quickly see stronger offers on any push towards the 121.50 and continuing through to the 122.00 levels.
• AUD: Oz opened lower in the face of a weaker USD which would suggest some AUDJPY cross selling causing the market in Oz to open around the 0.7120 areas and gradually recovering to push gradually to the 0.7150 levels before levelling off and trading around the 0.7140 levels to the grey hours. Weak offers into the 0.7150 levels before opening a test to the 72 cent level and possibly stronger offers, with those offers likely to continue through to the 0.7250 levels before some chance of a break however, the offers are likely to continue to appear on any move towards the 73 cent levels. Downside bids likely to see light bids through the 71 cent levels and continuing into the stronger 70 cent levels, any move below this level will see stronger bids as the market moves lower.

Overnight News

CNY:

Caixin China Oct. Manufacturing PMI 48.3; Est. 47.6

NZD:

RBNZ Shouldn’t Be Judged on Inflation Outcomes Alone: McDermott

N.Z. Treasury Sees Annual GDP Growth at Less Than 2% in 4Q

AUD:

Australia Sept. Building Approvals Rose 2.2% M/M; Est. 1% Gain

Australia’s Oct. TD Monthly Inflation Gauge Unchanged. M/m

Australia Oct. Manufacturing Index Falls 1.9 Pts M/m to 50.2

JPY:

Nikkei Japan Oct. Manufacturing PMI 52.4 vs 51 in Sept.

KRW/JPY:

Park Says in Meeting with Abe Trust Most Important in Diplomacy

USD/KRW:

U.S., S.Korea Approve Joint Plan against N.Korea Nuclear Missile

TRY:

Erdogan’s Party Sweeps Back to Power in Turkey with Surprise Win

Davutoglu Calls for Turkey Parties to Work on New Constitution

Today’s data

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

AUD       TD Securities Inflation M/M Oct A 0.00% | P 0.30%

AUD       Building Approvals M/M Sep A 2.20% | C 1.00% | P -6.90% | R -9.50%

JPY         Manufacturing PMI Oct (F) A 52.4 | C 52.1 | P 52.5

CNY        Caixin PMI Manufacturing Oct A 48.3 | C 47.6 | P 47.2

08:15     CHF        Retail Sales (Real) Y/Y Sep C 0.20% | P -0.30%

08:30     CHF        SVME-PMI Oct C 50.1 | P 49.5

08:45     EUR        Italy Manufacturing PMI Oct C 53.1 | P 52.7

09:00     EUR        Eurozone Manufacturing PMI Oct (F) C 52 | P 52

09:30     GBP       PMI Manufacturing Oct C 51.3 | P 51.5

15:00     USD       Construction Spending M/M Sep C 0.40% | P 0.70%

15:00     USD       ISM Manufacturing Oct C 50 | P 50.2

15:00     USD       ISM Prices Paid Oct C 39.5 | P 38

Weekend News

CNY:

China Oct. Manufacturing PMI 49.8; Est. 50.0
China’s Domestic Demand Potential Is Huge, Premier Li Says
China to Boost Consumption and Stabilize Foreign Trade, CCTV Says
China Imports, Exports Still Under Downward Pressure, NBS Says
CNY/KRW:

Li Says China to Further Opening Up to Boost Trade With S. Korea
China to Increase South Korea’s RQFII Quota to 120b Yuan
China Agrees to Set Up CNY-KRW Mkt in Shanghai: S. Korea
CNY/JPY/KRW:

China, Japan, S.Korea to Boost Efforts to Sign Free Trade Deal
EUR:

Draghi: ‘Open Question’ Whether Further Stimulus Is Necessary
ECB Finds EU14.4b Capital Shortfall in Greek Bank Stress Test
EU Commission Is ‘Encouraged’ by Greek Stress Test Results
ESM Says Greek Banks May Not Need More Than EU10b in Aid Funds
USD/EUR:

U.S. Treasury Says Governance Is Next Challenge for Greek Banks
USD:

1. China Sea Disputes Boost Calls for U.S. Security Role: Rtrs
   NZD:

N.Z.’s English Says Interest Rates May Have Further to Fall
JPY:

Japan Considers Cutting Corp Tax to Below 31% in FY2016: Sankei

Harry Hindsight

• EUR: A quiet move through the Asian session, trading from the 1.0980 levels and dipping into the 1.10970 in very quiet trading before starting a steady rise once the market moved into the London session, although there was a little impact on the release of the CPI numbers for the Eurozone with the rate as expected at 0.00%, the move into the NYK session saw the market quickly rise to test to the 1.1070 levels with US numbers little different to those for the Eurozone and boosting the Euro, the market reversed as the market in London came to a close and finished the day testing back to the 1.1000 levels to the close.
• GBP: Quiet flow through the Asian session trading around the 1.5320 levels before the market saw quick early buying to take it to the 1.5360 in the grey hours before again trading in a quiet range to the NYK session, while the Euro started rising early on and the cross EURGBP lost a little ground the headline CPI numbers had more effect once the NYK session opened having moved to a high just below the 0.7200 levels and quickly dropping once the NYK session moved in fully and the market moved initially quickly to the 0.7150 levels before continuing to the 0.7125 levels and finding sufficient support, this allowed the Cable to rise steadily through the session to test through the 1.5460 levels and although the market stayed in the areas for a couple of hours but unable to break through and drifting to a close around the 1.5430 levels.
• JPY: Monetary policy was in Japan dominated the market, opening above the 121.10 levels and trading slowly lower until the release, no change was overshadowed by contemplation of additional Y3trln enough to turn the market from the lows of 120.30 before trading quickly to the 120.90 and breaking through and testing higher as weak stops appearing through the 121.00 levels and then slipping steadily back as the market moved into the grey hours, the move into the London session saw the market holding the 120.70 and again the no change was sufficient to move the market to the 120.30 levels for the second time, the move back to the closing areas was strongest into the London close and the market finished quietly around the 120.70 areas.
• AUD: The Oz remained reasonably quiet through the session, with the market moving up from the 0.7070 areas to test to the Tokyo session rising quickly to 71 cents, and although the market tested into the 0.7110-20 areas it was unable to move ahead until the grey hours and early London buyers taking the market to above the 0.7130 before meeting some resistance, through London though the market slowly ebbed lower and back to the 0.7100/0.7090 areas for the move into London. NYK and US numbers saw the USD dropping steadily and the Oz move higher over the course of the next few hours and only stalling once the London players left for the weekend, and finishing the day trading in the 0.7150-30 areas.

Friday’s premiership results

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%

CHF        KOF Leading Indicator Oct A 99.8 | C 100.1 | P 100.4 | R 100.3

EUR        Italian Unemployment Rate Sep A 11.80% | C 11.90% | P 11.90%

EUR        Eurozone Unemployment Rate Sep A 10.80% | C 11.00% | P 11.00%

EUR        Eurozone CPI Estimate Y/Y Oct A 0.00% | C 0.00% | P -0.10%

EUR        Eurozone CPI – Core Y/Y (OCT A) A 1.00% | C 0.90% | P 0.90%

USD       Employment Cost Index Q3 A 0.60% | C 0.60% | P 0.20%

USD       Personal Income Sep A 0.10% | C 0.20% | P 0.30% | R 0.40%

USD       Personal Spending Sep A 0.10% | C 0.20% | P 0.40%

USD       PCE Deflator M/M Sep A -0.10% | C -0.10% | P 0.00%

USD       PCE Deflator Y/Y Sep A 0.20% | P 0.30%

USD       PCE Core M/M Sep A 0.20% | C 0.20% | P 0.10%

USD       PCE Core Y/Y Sep A 1.30% | P 1.30%

CAD       GDP M/M Aug A 0.10% | C 0.10% | P 0.30%

USD       Chicago PMI Oct A 56.2 | C 49.7 | P 48.7

USD       U. of Michigan Confidence Oct (F) A 90 | C 92.6 | P 92.1

Stay lucky

Andy

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