Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 123.173 123.07-28 | EURUSD 1.07409 1.0730-35 | AUDUSD 0.7043 0.7025-58 | NZDUSD 0.65236 0.6512-40 | USDCAD 1.3303 1.3295-1.3309 | USDCHF 1.00557 1.00415-74 | GBPUSD 1.5047 1.5035-70 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               123.48 | 123.16

EUR/USD             1.07715 | 1.0720

EUR/JPY               132.89 | 132.20

AUD/USD            0.7061 | 0.7016

NZD/USD             0.6565 | 0.6505

USD/CAD             1.3310 | 1.3281

EUR/CHF              1.0805 | 1.0777

USD/CHF             1.0060 | 1.0040

GBP/USD             1.5076 | 1.5043

EUR/GBP             0.71465 | 0.7126

For today

• EUR: The opening saw the Euro trading in the 1.0730’s and holding the 1.0720 levels before early Tokyo appeared in the market and reversing the market and taking it to the 1.0740 into the opening of Tokyo, the market then moved quietly before strong EURJPY and Euro buying in general moved in and a steady rise then ensued taking the market to the 1.0770 levels before holding the levels for a few hours and into the grey hours, light offers into the 1.0800 levels and a push through could see weak stops on a move through the 1.0810-20 levels, likely light offers on any move higher until the 1.0880 areas where stronger offers are likely to be seen in the market a move through the 1.0920 levels has the possibility of setting up a small short squeeze higher. Downside bids from the 1.0720 levels are likely to continue through into the mid 1.0660 areas with patches of support spread through that area before the 1.0600 level becomes exposed and then nothing to stop the market from testing over time the lows of the year around 1.0500.
• GBP: As with the Euro the Cable opened around the 1.5050 areas and slowly rose with less conviction than the Euro steadily rising to the 1.5075 areas before stalling and looking for fresh impetus, Topside offers light through the 1.51levels and likely to see a little more interest on a test to the 1.5150 level before weak stops are likely to make an appearance and the possibility to test back to the 1.5200 levels however, very little data wise so it is likely to struggle through the day, EURGBP buying has been light with the market pushing from the lows in the 0.7120 areas towards the mid 0.7140’s with little interest. Downside bids likely to be fairly strong into the 1.5000 with congestion formed towards the beginning of the year likely to attract attention however, a push through the 1.5000 levels is likely to see stops appearing and the market therefore open for a test lower with the 1.4800 vulnerable.
• JPY: USDJPY opened slightly higher however, although the market has pushed slightly higher with cross buying moving into the market it has generally struggled to make to much of a headway with the market initially drifting to test the 123.20 levels before testing towards the 123.50 levels before failing and drifting back a little to hold just below 123.40. Light topside offers above the 123.50 areas will leave the market vulnerable to a test to 124.00 on a push through the level however, one suspects that the 124.00 areas will see strong offerings around and the market struggling to find traction for a solid move through the level with little in the way of data available. Downside bids will likely see light bidding through the 123.00 areas and the market opening for another move back to the 122.00 levels and possibly weak stops on a move through the level and again pushing into the ranges the market has kept since the end of August.
• AUD: Opening around the 0.7030 levels the market steadily rose through the session with light AUDJPY carry trade buying and the USD seeing some selling through the session as the market moved off the low, the market tested to the 0.7060 levels before running out of steam and holds towards the grey hours. Downside bids into the 0.7020-00 area are likely to be substantial a push through the level could see some weak stops however, while the next support level is some distance from the 70 cent level the market is likely to see plenty of buying through to the strong support areas around the 0.6930 and continuing through the 69 cent levels. Topside offers likely to be weak through the current highs before running into the 0.7080-0.7100 levels and slightly heavier offers, however through that level the market is likely to see some weak stops and the market possibly attempting a squeeze through to the 0.7170 areas, it’s a possibility however, I would suspect that for this to happen there would need to be a squeeze on more than one currency and movement in Euro could be a catalyst.

Overnight News

NZD:

Fonterra CEO Says NZ Could Lose China Mkt Share to EU: NZ Herald

CNY:

China Needs Avg. 6.523% Growth to Meet 2020 Target: Sec. Journal

JPY:

Japan Coalition Partner Wants Stimulus Steps Based on 3Q GDP

AUD:

Australia Oct. ANZ Job Ads Rise 0.4% vs 3.8% in Sept.

OIL:

OPEC Says Asia to Remain ‘Hub’ for Oil Demand Growth Until 2040

Today’s data

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

JPY         Labour Cash Earnings Y/Y Sep A 0.60% | C 0.50% | P 0.50% | R 0.40%

7:00        EUR        German Trade Balance (EUR) Sep C 22.3B | P 19.6B

9:30        EUR        Eurozone Sentix Investor Confidence Nov C 12.4 | P 11.7

13:15     CAD       Housing Starts Oct C 198K | P 230.7K

Weekend News

CNY: China Oct. Exports Fall 6.9% Y/y in Dollar; Est. -3.2%
China Foreign-Exchange Reserves Post First Rise in 6 Months
China May Have Bought About 14 Tons of Gold in Oct., Data Show
China’s Xi Says Asia Security Ties Lag Economic Cooperation

CNY/TWD:

Leaders of China and Taiwan Hold Historic First Meeting
USD:

SF Fed’s Williams Says October FOMC Decision Was a ’Close Call’
Fed’s Williams Says Wants to See Data between now and December
EUR:

Costa Says Portuguese Socialists Should Try to Form Government
CHF:

Swiss Unemployment May Settle at 3.7%: SNB’s Zurbruegg in Basler
HUF:

Hungary’s Outlook Changed to Positive from Stable by Moody’s

Harry Hindsight

• EUR: A quiet start to the day as you’d expect for NFP day, rising slowly from the 1.0880 level and managing to test into the 1.0890 levels before drifting into the grey hours around the opening level, early Europeans sold the market down through the 1.0870 levels in light trading before the market recovered to above the 1.0880 levels and so the market remained until the release of NFP, German IP numbers were generally ignored, a better than expected NFP number of 271K left the unemployment rate at the technically known full employment point and the market dropped from the 1.0860’s area dropping quickly with a gap in the market before hitting the 1.0750 level and minor supportive bids slowed the market, having taken the edge of the fall the market managed to test to below the 1.0710 levels and sufficient bids held the market through the NYK session with only a minor bounce if you could call it that to the 1.0750 areas and then range the 1.0720-50 to the close with the market trading around the 1.0740 level for a great period.
• GBP: Quiet through the Asian session and holding for the most part around the 1.5210 levels after the previous day’s losses, the move into London though saw steady selling and the numbers doing nothing special on the day with a poor monthly IP number offset with better MP and Visible trade balance however, having broken through the 1.5200 levels the market slowly gravitated to the 1.5150 levels and while it moved through the level easily remained the focus up until the NFP release, at which point the market gapped lower and quickly traded to the 1.5050 levels bouncing only slightly before again seeing sellers move back into the market on the close of London and the market dropping to the 1.5030 areas before finding sufficient interest to hold the market, the run to the close was a slow rise back to the 1.5050 levels but very quiet.
• JPY: USDJPY struggled through the Asian session unable to move very far until late in the session with the market moving off its lows around the 121.70 to again push to the 121.90 levels before limping into the London session holding around the 121.90 level and unable to commit to a run through the 122.00 level, NFP released and the market suddenly traded through the 122.40 areas and only struggled in the move through the 123.00 levels spiking initially as it ran into offers and dropping back below 122.80 as the sellers completed their offers and then continuing through the 123.00 levels again, the third move through the level saw the market move steadily through to the 123.20 levels and then sit around that level for several hours into the close.
• AUD: A quiet opening saw the market move from those 0.7140 area levels to test towards the 0.7160 area in early Tokyo helped by carry trade buying before slipping back again, the market then ran to the London session basing off the 0.7140 levels and unable to push back above those 0.7150 levels until early London buyers chased the market to the 0.7170 levels and the resistance from the day before, having made the highs the market then spent the rest of the period to the release of the NFP drifting back through the 0.7150 levels, the release saw a strong USD across the board and although the market in the AUD seemed a little more supportive the initial move did see the market drop from 0.7150 levels to 0.7080 before starting find bids in the way a second successive attempt to the downside though did see a steady drop to the mid 0.7020’s before a light reversal failed to break the 0.7050 levels and the market ran out just below the level.

Friday’s premiership results

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

EUR        German Industrial Production M/M Sep A -1.10% | C 0.50% | P -1.20%

CHF        Foreign Currency Reserves Oct A 551B | P 541.5B

GBP       Industrial Production M/M Sep A -0.20% | C -0.10% | P 1.00% | R 0.90%

GBP       Industrial Production Y/Y Sep A 1.10% | C 1.30% | P 1.90% | R 1.80%

GBP       Manufacturing Production M/M Sep A 0.80% | C 0.50% | P 0.50% | R 0.40%

GBP       Manufacturing Production Y/Y Sep A -0.60% | C -0.70% | P -0.80%

GBP       Visible Trade Balance (GBP) Sep A -9.4B | C -10.7B | P -11.1B | R -10.8B

USD       Change in Non-farm Payrolls Oct A 271K | C 180K | P 142K | R 137K

USD       Unemployment Rate Oct A 5.00% | C 5.10% | P 5.10%

USD       Average Hourly Earnings M/M Oct A 0.40% | C 0.20% | P 0.00%

CAD       Building Permits M/M Sep A -6.70% | C 0.50% | P -3.70% | R -3.60%

CAD       Net Change in Employment Oct A 44.4K | C -2.5K | P 12.1K

CAD       Unemployment Rate Oct A 7.00% | C 7.10% | P 7.10%

GBP       NIESR GDP Estimate Oct A 0.60% | P 0.50%

Stay lucky

Andy

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