Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 120.76 | EURUSD 1.10154 | AUDUSD 0.71465 | NZDUSD 0.67411 | USDCAD 1.30954 | USDCHF 0.98705 | GBPUSD 1.54166 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.85 | 120.645

EUR/USD             1.1020 | 1.1007

EUR/JPY               133.105 | 132.895

AUD/USD            0.7213 | 0.7110

NZD/USD             0.6781 | 0.6730

USD/CAD             1.3100 | 1.3080

EUR/CHF              1.0873 | 1.0868

USD/CHF             0.9873 | 0.98695

GBP/USD             1.5428 | 1.5412

EUR/GBP             0.7144 | 0.7138

For Today

• EUR: Euro’s opened around the 1.1015 areas and traded quietly into the Tokyo session however, once Tokyo opened the market eased down through the 1.1010 levels however, bids were sufficient for the market to move steadily higher again and back to the 1.1020 levels in quiet trading, the RBA announcement had little impact as going into the number the market looked generally neutral. Topside offers into the 1.1070 levels and likely to continue through the 1.1100 areas with the possibility of weak stops likely through the level and opening a test into the 1.1150 and possibly stronger offers however, the market at this point is vulnerable to a larger move, if the market can clear the congestion above that level, Downside bids into the 1.1000 levels are likely to continue through to the 1.0980 levels however, stronger bids are not likely to appear until the 1.0900 levels.
• GBP: Cable edged a little higher through a quiet session moving from just below the 1.5420 levels and moving close to the 1.5430 areas, a little movement around the RBA announcement saw the range defined dipping close to the 1.5410 levels and then bouncing back towards the 1.5430 levels however, apart from that movement the market has remained towards the top end. Topside offers remain around the 1.5500 levels and remain the key to any further move higher, with a strong move through this level likely to run into some interference around the 1.5550 levels however, it does open the market to further gains towards the 1.5650 areas. Downside bids light through the 1.5400 levels with better congestion around the 1.5350 levels however, downside bids are likely to be stronger on any move to the 1.5300 levels, data is lacking today and as always it’s all speculation on my part.
• JPY: Opening around the 120.75 areas the market made an early push into Tokyo testing the resolve of the 120.80 areas and touching through to the 120.85 level before starting a steady stream of selling as the rise in the Oz limited the upside potential of the USDJPY and movement in the carry trade AUDJPY as it was the movement of the Oz saw the cross move wildly testing through 86.50 and touching into the 86.20 areas before immediately bouncing and testing the 87.00 level before settling back a little, this movement coincided with the movement low for USDJPY to push to the 120.65 level and the market has held in the 120.60’s for awhile to move into the grey hours. Topside offers are not likely to be as strong as you’d expect but are likely to be there on a move towards the 121.00 levels however, a move through will see increased offers as the market pushes towards the 121.50 levels as the market remains in this fairly tight range dating back to August. Downside has light bids into the 120.00 levels however; the market is likely to see stronger bids on a move through the 119.00 levels, into the 119.60-40 area and again towards the 119.00 level in particular.
• AUD: The market edged steadily higher from the dull trading in the previous session, pushing to the 0.7170 levels and holding there for several hours until the release of the RBA decision, firstly there was no change however, the commentary had something for everyone and nothing for anyone, the fact mentioned previously that mortgage interest rates are totally independent of the RBA interest rates mean that that said RBA rate has little impact on CPI or any other measurable inflation rate and so no change, so the market initially dropped as everyone read room for easing, before bouncing quickly on no cut with gradual improvements, downside was almost as savage as the move higher with Interbank players talking about a big figure range in a minute however, the general market was a little more limited but just as quick in movement testing the 0.7140 levels before bouncing to the 0.7210 area, and again dipping to 0.7140 before reverting to the 0.7170 levels the market had started at, from there though the market did again start to rise and pushed briefly through the 0.7210 levels and held for awhile above the 72 cent levels. Light bids into the 71 cent levels with the market in between the current levels and to the 71 cent likely to take time to develop however, a move down onto the 70 cent level sees stronger bids moving in and the sentimental levels in particular showing the most strength, around 0.7050, 0.7000 areas. Topside offers through the 0.7200 cent levels and likely to continue through the 0.7250 areas, nothing that’s likely to be too large but possibly continual through to the 73 cent levels.

Overnight News

AUD:

RBA’s Stevens Keeps Benchmark Interest Rate at 2% (Full Text)

Australia ANZ Weekly Consumer Sentiment Rises 1.6% to 115.2

JPY:

Suga Urges Incentives for Firms to Boost Wages, Capex: Kyodo

NZD:

New Zealand House Prices Rise at Fastest Pace in Nine Years

SGD:

Singapore Dollar’s NEER Rises in October: MAS

HKD:

H.K. Financial Secretary Says Economy Faces Pressure: Ming Pao

Today’s data

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

AUD       RBA Rate Decision A 2.00% | C 2.00% | P 2.00%

09:30     USD       Construction PMI Oct C 58.8 | P 59.9

14:45     USD       ISM New York Oct P 44.5

15:00    USD       Factory Orders Sep C -0.90% | P -1.70%

Harry Hindsight              

• EUR: A quiet session overall with the market opening higher around the 1.1030 and pretty much mid-range for the day with the market trading through the Asian session around those opening levels with only a minor dip to the 1.1020 areas, the move into London saw the market initially testing to the 1.1050 levels before running out of steam to drift back and test to the 1.1000 levels and the lows for the day, the move into NYK saw very little difference to the reaction in London with the market heading to the 1.1050 levels to set the highs just above and again drifting off from those highs to again threaten the downside before closing quietly just above the 1.1010 levels in quiet late trading.
• GBP: A very quiet session in Asia with the market opening only slightly higher from Fridays close and drifting only slightly from those opening levels around the 1.5440 area, the move into the London session saw the market rally quickly higher from the release of the UK PMI numbers to peak just short of the 1.5500 levels before running out of steam and ideas and drifting steadily lower through the session, EURGBP traded quietly and overall finished more or less unchanged on the day however, the market did make a move lower in the cross pushing to the 0.7110 levels before rising slowly and spiking during the NYK session as weak stops were triggered in Cable through the 1.5440 levels and the market then recovering from the lows just below 1.5410 to finish the day around the 1.5420 levels.
• JPY: A reasonably quiet day contained for the most part, Asia were limited sellers with the market dipping from a weak opening to test from the 120.50 levels and touching down into the 120.20’s before slowly moving into the grey hours with fresh buying appearing and testing eventually to the 120.70 areas and then resting around the levels into the NYK session, NYK were light buyers with mixed US numbers and the market pushing towards the 120.80 levels into the close.
• AUD: With the market waiting for the RBA announcement the Oz was stuck in a very tight range all through the day with the market remaining largely neutral in positioning, rising from a weak opening around the 0.7120 levels the market moved to range in the 0.7130-50 levels for the whole session with the high just beyond that range but generally holding the levels.

Yesterday’s premiership results

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

CHF        Retail Sales (Real) Y/Y Sep A 0.20% | C 0.20% | P -0.30% | R -0.60%

CHF        SVME-PMI Oct A 50.7 | C 50.1 | P 49.5

EUR        Italy Manufacturing PMI Oct A 54.1 | C 53.1 | P 52.7

EUR        Eurozone Manufacturing PMI Oct (F) A 52.3 | C 52 | P 52

GBP       PMI Manufacturing Oct A 55.5 | C 51.3 | P 51.5

USD       Construction Spending M/M Sep A 0.60% | C 0.40% | P 0.70%

USD       ISM Manufacturing Oct A 50.1 | C 50 | P 50.2

USD       ISM Prices Paid Oct A 39 | C 39.5 | P 38

 

Good Luck,

Andy

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