Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 121.752 | EURUSD 1.08837 | AUDUSD 0.71437 | NZDUSD 0.6624 | USDCAD 1.31682 | USDCHF 0.99541 | GBPUSD 1.52081 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               121.87 | 121.63

EUR/USD             1.0894 | 1.0877

EUR/JPY               132.525 | 132.41

AUD/USD            0.7158 | 0.7138

NZD/USD             0.6618 | 0.6599

USD/CAD             1.3175 | 1.3158

EUR/CHF              1.0835 | 1.0833

USD/CHF             0.99575 | 0.9949

GBP/USD             1.5220 | 1.5203

EUR/GBP             0.7159 | 0.7153

For Today

• EUR: Another quiet session for Asia saw the Euro pinned in a tight range push through the 1.0890 levels in a slow climb before returning to the opening 1.0880 area opening as you would expect on a NFP day, Topside offers light through the 1.0900 levels and the market not really facing too much in the way of offers until the market approaches the 1.1000 levels with the exception of possibly around the 1.0940 levels however a break through the 1.1000 levels is likely to run into some similar congestion to the 1.1050 areas before opening for a test to 1.1100. Downside bids through to the 1.0840 areas are likely to continue into the 1.0800 level with the possibility of stops appearing through the 1.0770 areas and a light area for orders until 1.0700.
• GBP: A very quiet session for the Cable with the market continuing to hold close to the 1.5200 levels with no real interest to test the level, downside bids are likely to be stiff in the area however, a push through the 1.5180 will likely open a test to the downside and threaten the resent lows just above the 1.5100 levels however, given the fact that BoE’s Carney has put doubt on any rise for the foreseeable future has to be taken into account when any move lower threatens those strong previously held levels. Topside offers light through the 1.5250 areas and possible weak stops making an appearance to open a test of possibly stronger 1.5300 area and a short squeeze if the market has not already adjusted to the new levels. However, today is as always today is likely to be about the NFP than anything else.
• JPY: USDJPY struggled over the session with much of what little volume the market saw absorbed by offers in EURJPY around the 132.50 levels, once the market pushed through the level the USDJPY set its high after opening in the 121.75 areas and moving to above 121.85 before drifting back, early trading because of those EURJPY offers saw the market testing into the low 121.60’s however, there was no real momentum for the moves. Topside offers remain in the 122.00 levels however a push through the level is not likely to see anything significant until the market starts to move towards the 122.80 areas and then a possibility of stronger offers appearing however, the topside is vulnerable to the 124.00 so a strong NFP number could see the market moving quickly, Downside bids light into the 121.20 areas and a break back below the 120.70 areas could see the market in trouble with strong selling and the market looking at a failure on the topside having already seen the obligatory 5 wave movement higher for the techy types, pushing to the 120.20 would possibly see some support however, better support is not likely to really appear until the market is on the 119 handle and the market is moving back towards the low end of the past few months range.
• AUD: A flat session for the Oz and apart from the Tokyo opening flurry to take the market to above the 0.7155 levels the Oz has remained in the 0.7145 area for the whole session, Topside offers light through the 0.7170 levels and possibly better interest from the 72 cent level into 0.7220 however, through that level there is likely continuing offers from the 0.7240-60 areas and building into the 73 cent levels. Downside bids into the 0.7120 levels are limited however, a push through that area will likely see those bids begin to increase as the market runs down to the 70 cent level and beyond with the 0.6950-00 area very strong.

Overnight News

JPY:

BOJ Can Keep Buying Bonds Until 2% Target Reached, Kuroda Says

Japanese Bought Net 882.8 Billion Yen Overseas Debt Last Week

Abe: Will Mull Extra Budget as Japan Tackles Demographic Issues

TPP Statement on FX Won’t Affect Japan’s Currency Policy: Aso

AUD:

RBA Cuts Inflation Forecasts, GDP Little Changed, Jobs Stronger

RBA: Housing Market Risks More Prudently Managed Than Year Ago

Australia’s Oct. Construction Index Rises 0.2 Pt M/m to 52.1

USD:

Bullard Says Fed Challenged to Show Job Slowdown Is Natural: Rtrs

CNY:

China Premier Says Economic Shift to Be Painful, Tough Process

China Should Ready Monetary Policies: Financial News Commentary

Today’s data

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

JPY         Leading Index Sep (P) A 101.4 | C 101.9 | P 103.5

07:00     EUR        German Industrial Production M/M Sep C 0.50% | P -1.20%

08:00     CHF        Foreign Currency Reserves Oct P 541.5B

09:30     GBP       Industrial Production M/M Sep C -0.10% | P 1.00%

09:30     GBP       Industrial Production Y/Y Sep C 1.30% | P 1.90%

09:30     GBP       Manufacturing Production M/M Sep C 0.50% | P 0.50%

09:30     GBP       Manufacturing Production Y/Y Sep C -0.70% | P -0.80%

09:30     GBP       Visible Trade Balance (GBP) Sep C -10.7B | P -11.1B

13:30     USD       Change in Non-farm Payrolls Oct C 180K | P 142K

13:30     USD       Unemployment Rate Oct C 5.10% | P 5.10%

13:30     USD       Average Hourly Earnings M/M Oct C 0.20% | P 0.00%

13:30     CAD       Building Permits M/M Sep C 0.50% | P -3.70%

13:30     CAD       Net Change in Employment Oct C -2.5K | P 12.1K

15:00    GBP       NIESR GDP Estimate Oct P 0.50%

Harry Hindsight              

• EUR: Opening just below the 1.0870 levels the market dipped in early trading with EURJPY offers around the 132.00 levels keeping a lid on any movement higher with the market testing below the 1.0860 levels before rising above the 1.0870 levels after a few hours in very quiet trading. Grey hours selling moved in and the market was forced to the 1.0830 levels before rebounding once the German Factory orders were absorbed, and into the London opening quickly moving back to the opening and pushing quickly through and triggering some weak stops and a test to the 1.0890, ECB bulletin held nothing major and the market remained a little jumpy, successive numbers saw the market again testing lower as each weak number was released, then dovish BoE commentary saw the EURGBP cross lead the way and the Euro again tested higher and into the NYK session just below the 1.0900 areas. The move into NYK saw the market start to quieten down with nothing overly spectacular in the US numbers and the movement in GBP slowing the Euro traded between the 1.0860-90 levels for the remainder of the session rising to finish the day around the 1.0880 levels.
• GBP: Cable range through too the BoE was limited to just above the 1.5380 levels through Asia and then increasing the range to test in early London above the 1.5400 levels onoly to slip back to the 1.5380, the release when it occurred was as expected with no overall change however, the tone of the communique was very dovish and Carney in particular more interested in the world economy suggesting that any hike is still likely to be beyond the US rise and GBP quickly dropped lower moving through the 1.5300 level and then managing to push hard through the bids into the 1.5250 areas and eventually deep into the NYK session trading down to the 1.5210 levels and again to a very narrow range to the close. EURGBP was just as reactive to the announcement with the market having gyrated a little into the London opening then quickly driving to the 0.7120 levels having languished for a while around the opening 0.7060 levels, the market continued pushing through the session to test to the 0.7160 level before closing just off those levels.
• JPY: Through the Asian session the market dipped a little from the opening around the 121.55 levels slipping to the low just below the 121.40 level before light bids held the market steady through to the London opening, London were quick buyers with the market testing the resolve around the 121.80 levels and eventually gaining more impetus as the relevant information strengthened the USD through to the BoE decision, whether the offers into the 122.00 held remains to be seen however, the BoE decision saw a quick move in the GBPJPY and the USDJPY dipped back to the 121.80 levels and never really recovered to challenge the 122.00 again, Euro’s managed to move higher and this pressured the USD lower over the session and the USDJPY slipped below the 121.80 and moved into the NYK session sitting on the 121.70 levels, mixed results for the US numbers managed to take the market back to the opening levels however, the market remained for the most part around the 121.70 levels to the close.
• AUD: The Oz traded more or less independently to everything else with early comments from Steven’s on how the RBA could continue to ease even against the inflationary data or independent movements of the mortgage rates, this sent the market lower from more or less the opening to test the 0.7125 areas before recovering to the 0.7150 levels as the market moved on the movement was repeated into the London opening and the market tested the levels on three occasions before pushing beyond the 0.7150 levels and weak stops pushing the market towards 0.7170 into the NYK opening, the rally was short lived and then the market dipped back to the opening levels around the 0.7145 areas and continued trading around the level for several hours to the close.

Yesterday’s premiership results

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

CHF        SECO Consumer Confidence Oct A -18 | P -19

EUR        German Factory Orders M/M Sep A -1.70% | C 1.00% | P -1.80%

CHF        CPI M/M Oct A 0.10% | C 0.00% | P 0.10%

CHF        CPI Y/Y Oct A -1.40% | C -1.40% | P -1.40%

EUR        ECB Monthly Bulletin

EUR        Eurozone Retail PMI Oct A 51.3 | P 51.9

EUR        Eurozone Retail Sales M/M Sep A -0.10% | C 0.20% | P 0.00%

EUR        European Commission Economic Forecasts

GBP       BoE Rate Decision A 0.50% | C 0.50% | P 0.50%

GBP       BoE Asset Purchase Target A 375B | C 375B | P 375B

GBP       MPC Official Bank Rate Votes A 1–0—8 | C 1–0—8 | P 1–0–8

GBP       MPC Asset Purchase Facility Votes A 0–0—9 | C 0–0—9 | P 0–0–9

GBP       BoE Quarterly Inflation Report

USD       Challenger Job Cuts Y/Y Oct A -1.30% | P 93.20%

USD       Initial Jobless Claims A 276K | C 262K | P 260K

USD       Non-Farm Productivity Q3 (P) A 1.60% | C 0.50% | P 3.30% | R 3.50%

USD       Unit Labour Costs Q3 (P) A 1.40% | C 2.00% | P -1.40% | R -1.80%

CAD       Ivey PMI Oct A 53.1 | C 54 | P 53.7

 

Good Luck,

Andy

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