Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 121.543 | EURUSD 1.08658 | AUDUSD 0.71476 | NZDUSD 0.65916 | USDCAD 1.3150 | USDCHF 0.99324 | GBPUSD 1.5386 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               121.61 | 121.39

EUR/USD             1.08765 | 1.0857

EUR/JPY               132.14 | 131.90

AUD/USD            0.7156 | 0.7126

NZD/USD             0.6598 | 0.6582

USD/CAD             1.3172 | 1.3145

EUR/CHF              1.07965 | 1.0791

USD/CHF             0.99375 | 0.99245

GBP/USD             1.5396 | 1.5378

EUR/GBP             0.70705 | 0.7058

For Today

• EUR: Resistance in EURJPY around the 132.00 levels saw the Euro initially squeezed a little lower to the below the 1.0860’s before rallying slightly once the USDJPY gave a little ground allowing the Euro to move into the 1.0870’s in very quiet trading with ECB Bulletin likely to dominate right up to the point where they tell the market they’ll continue to wait, one has to remember it took some 6yrs for the ECB to react to the financial crisis in the first place so additional action could take just as long, ok so I’m a cynic but the fact remains. Topside offers light into the 1.0900 levels with possibly better offers from the 1.0940-60 areas leaving the 1.1000 then vulnerable to a strong test some light congestion from then on with a mix of weak stops could see the market then test through to stronger levels into 1.1100. Downside bids into the 1.0850 levels remain however, better bids are likely to appear from the 1.0820 levels and into the 1.0800 through the level the possibility of break out stops and a combination of weak stops could possibly drive the market lower quickly with the possibility of only light bids to protect the 1.07 handle.
• GBP: Cable dipped a little in early trading from the opening above 1.5390, the market though could only dip to the 1.5380 levels and the market held the levels through the session and ranged between the open and those lows. Bids likely to the 1.5350 levels with some minor congestion then continuing to the 1.5300 levels a break here though will open the downside to further losses with the 1.5250 levels likely to be the next strongest point and this protects the lows from the beginning of October. Topside offers limited all the way to the 1.5500 levels were strong offers are likely to continue to dominate the market with willing sellers in front of the level and slightly through the level, a push through 1.5510-20 levels opens a test to the 1.5550 levels and then a further big figure if the market has the impetus.
• JPY: EURJPY resistance around the 132.00 level dominated the market today although it was very quiet, USDJPY dipped through the 121.50 levels and then continued to trade in the 121.40-50 levels for much of the session. Topside offers continue into the 122.00 levels with current highs around the levels from the end of August and at the highest level of the range we’ve seen since that point, a push through the 122.00 level however, will allow the market to open the topside with the 124 levels becoming exposed however, there is a possibility of continuing offers through to the 123.00 levels before stronger offers appear around 124.00. Downside bids into the 121.00 levels light with the possibility of weak stops appearing through the 120.70 and then a little bit of weakness until 120.20 areas and the beginning of stronger bids that are likely to continue in patches through the next big figure with 119.00 likely to be stronger.
• AUD: The selling in the Oz continued from the 0.7150 areas with Stevens making comments about the RBA’s policy is likely to continue in the same vein and CPI inflation is clearly no impediment to easing or a change of policy and certainly not a tightening, this sent the market to below 0.7130 levels, this could be true however, would you want to cut interest rates when inflation is dropping, so yes keeping the Oz low helps balance the lower prices from exports but attempting to balance a two tier economy in the manner that the economy is now running to control the property bubble while keeping businesses happy while inflation is falling as those same commodity prices drop could be a headache waiting to happen. As the market absorbed those comments it began to recover in weak trading through the session and again traded back to the 0.7150 levels. Topside offers through the 72 cent level and to the 0.7220 levels before possible weak stops and a push through to test into the 0.7260 levels; from there 73 cent is likely to be stronger and could contain the market on purely Euro news. Downside bids into the 71 cent levels will possibly see weak stops building below the level and then weakness into the 0.7050 areas before better bids start to be seen, from that point the bids gradually grow as the market moves to the 70 cent levels and then through onto the 69 handle with larger bids towards the mid-levels.

Overnight News

USD:

Fischer Advocates for Fed Policy Independence in Post-Crisis Era

Fed’s Fischer Says U.S. Inflation Is ‘Not as Low as You Think’

AUD:

RBA’s Stevens Says Accommodative Policy Likely for Some Time Yet

Stevens: Potential Growth Rate Assumption ‘Lowered a Little Bit’

JPY:

Some BOJ Members: CPI Gains Are Driven in Part by Weak Yen

CNY/JPY:

China Asks Japan Not to ‘Complicate’ South China Sea Situation

SGD/MYR:

Singapore-Malaysia High Speed Rail Said to Cost 65b MYR: NST

TWD/CNY:

Taiwan’s Ma Pledges No Secret Deals in Meeting with China’s Xi

Taiwan Sees Trade in Goods Talk with China to Accelerate: Daily

SEK:

Swedish FSA Considering Introduction of Loan-to-Income Ratios

PLN:

Poland’s Election Outcome Is Credit Negative, Moody’s Reports

Today’s data

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

06:45     CHF        SECO Consumer Confidence Oct P -19

07:00     EUR        German Factory Orders M/M Sep C 1.00% | P -1.80%

08:15     CHF        CPI M/M Oct C 0.00% | P 0.10%

08:15     CHF        CPI Y/Y Oct C -1.40% | P -1.40%

09:00     EUR        ECB Monthly Bulletin

09:10     EUR        Eurozone Retail PMI Oct P 51.9

10:00     EUR        Eurozone Retail Sales M/M Sep C 0.20% | P 0.00%

10:00     EUR        European Commission Economic Forecasts

12:00     GBP       BoE Rate Decision C 0.50% | P 0.50%

12:00     GBP       BoE Asset Purchase Target C 375B | P 375B

12:00     GBP       MPC Official Bank Rate Votes C 1–0—8 | P 1–0–8

12:00     GBP       MPC Asset Purchase Facility Votes C 0–0—9 | P 0–0–9

12:00     GBP       BoE Quarterly Inflation Report

12:30     USD       Challenger Job Cuts Y/Y Oct P 93.20%

13:30     USD       Initial Jobless Claims C 262K | P 260K

13:30     USD       Non-Farm Productivity Q3 (P) C 0.50% | P 3.30%

13:30     USD       Unit Labour Costs Q3 (P) C 2.00% | P -1.40%

15:00    CAD        Ivey PMI Oct P 53.7

Harry Hindsight              

• EUR: A slow drift through the early part of Asia dipping through to the 1.0940 level from the opening above 1.0960 as early EURJPY selling was sufficient to tilt the Euro, the move into the London session saw the market falling from the 1.0950 levels and pushing to the 1.0920 as each PMI figure and the PPI numbers from the Eurozone disappointing the market with numbers underperforming expectations, the Euro having held the 1.0920 levels managed to recover to the 1.0940 levels for the move in the NYK session, better than expected ADP was sufficient to set the USD moving higher and the market broke again to the downside this time pushing through to the 1.0910 levels before the market saw strong selling from breakout sellers and the market fell quickly to the 1.0880 levels bouncing before the decent ISM numbers before again dropping again for a test through the 1.0850 levels, comments from Yellen helped the USD higher overall with a better set of numbers than we’ve seen in a while.
• GBP: Opening around the 1.5420 level the market hugged the level through the Asian session with the range gradually increasing as the market moved into the London session, PMI services provided the first test higher and the market moved quickly into the 1.5445 areas before gradually drifting lower as the Euro continued to drag on the market pulling the Cable to the 1.5400 levels and light support, US numbers saw the USD rally and Cable moving more steadily towards the 1.5360 levels after the brief struggle through the 1.5400 area, the market then held the 1.5370-90 areas for the bulk of the remaining session finishing the day just above the 1.5390 levels.
• JPY: The USDJPY opened around the 121.10 levels and pushed to the 121.40 levels before again giving up the ground late into the session and testing back to the 121.00 levels, with the Euro giving ground a little the USDJPY was able to push a little ahead however, that selling lasted only a short period before moving into the London session holding those lows. London bought a little to push the market back towards the 121.30 levels and then ranged to the NYK session, mixed reactions on the release of the early US numbers saw the market eventually move higher and test briefly through the 121.70 levels having managed to break through the topside the market continued to hold into the close above 121.50.
• AUD: The Oz saw AUDNZD buying into the Tokyo session having opened around the 0.7185 areas, the move into the Tokyo session properly saw reasonable carry trade AUDJPY buying and the market moved to the 0.7220 levels before heading into the London session, London sold from just after the opening and the market dropped back to the 0.7190 areas and traded quietly through the session holding around that level, that is until the release of US data and Yellen’s commentary and the Oz broke to the opening levels and then steadily dropped back through the session to test to the 0.7140 on what was really a quiet day.

Yesterday’s premiership results

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

NZD       Unemployment Rate Q3 A 6.00% | C 6.00% | P 5.90%

NZD       Employment Change Q/Q Q3 A -0.40% | C 0.40% | P 0.30% | R 0.10%

NZD       Labour Cost Private Sector Q/Q Q3 A 0.40% | C 0.50% | P 0.50%

JPY         Monetary Base Y/Y Oct A 32.50% | C 36.20% | P 35.10%

GBP       BRC Shop Price Index Y/Y Oct A -1.80% | P -1.90%

AUD       Trade Balance (AUD) Sep A -2.32B | C -2.85B | P -3.10B

AUD       Retail Sales M/M Sep A 0.40% | C 0.40% | P 0.40%

CNY        Caixin China PMI Services Oct A 52 | C 51 | P 50.5

JPY         Consumer Confidence Oct A 41.5 | C 41 | P 40.6

EUR        Italy Services PMI Oct A 53.4 | C 53.5 | P 53.3

EUR        Eurozone Services PMI Oct (F) A 54.1 | C 54.2 | P 54.2

GBP       Services PMI Oct A 54.9 | C 54.5 | P 53.3

EUR        Eurozone PPI M/M Sep A -0.30% | C -0.50% | P -0.80%

EUR        Eurozone PPI Y/Y Sep A -3.10% | C -3.30% | P -2.60%

USD       ADP Employment Change Oct A 182K | C 180K | P 200K

CAD       Trade Balance (CAD) Sep A -1.73B | C -1.90B | P -2.53B

USD       Trade Balance Sep A -40.8B | C -$41.20B | P -$48.33B

USD       ISM Non-Manufacturing Composite Oct A 59.1 | C 56.5 | P 56.9

USD       Crude Oil Inventories A 2.8M | C 2.5M | P 3.4M

 

Good Luck,

Andy

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