Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 123.148 | EURUSD 1.07249 | AUDUSD 0.70316 | NZDUSD 0.65358 | USDCAD 1.32746 | USDCHF 1.00637 | GBPUSD 1.5119 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               123.22 | 122.74

EUR/USD             1.0774 | 1.0718

EUR/JPY               132.33 | 131.88

AUD/USD            0.7079 | 0.7026

NZD/USD             0.6589 | 0.6529

USD/CAD             1.3280 | 1.3239

EUR/CHF              1.0807 | 1.0788

USD/CHF             1.0062 | 1.0030

GBP/USD             1.5186 | 1.5118

EUR/GBP             0.7098 | 0.70795

For Today

• EUR: The USD slipped over the session with the Euro opening around the 1.0725 levels and gradually moving higher through the session with reasonable volumes moving through, with USDJPY leading the way from the opening Euro’s steadily pushed through to mid-session testing through the 1.0770 levels, topside offers likely into the 1.0780 areas and through to the 1.0800 for the moment there is still likely to be potential for a break through the 1.0800 levels and the market finding very little resistance until the 1.0850-60 areas with better offers likely to the 1.0900 level, as with yesterday the data side of things is a little scarce and possibly limits movement. Downside bids light until the 1.0720 levels and just below today’s opening however, we did briefly test below the 1.0720 levels in early trading and the lows yesterday would suggest some healthy bids still untouched below 1.0700 and likely to continue into the 1.0660 levels and possibly lower before the market could open for a test to the 1.0600 levels.
• GBP: Cable rose steadily through the early session staying in touch with the rise in Euro’s as the USD saw profit taking and steady buying in Euro, the move into the Tokyo session saw the market quickly move up from the 1.5120 levels and push close to 1.5150, when the market eventually moved through that level it quickly moved towards the 1.5190 areas with a lack of offers until the 1.5170 areas surprising the market however, having rallied so quickly the market settled back to trade around the 1.5170 levels into the grey hours. Topside offers into the 1.5200 level for the moment dominate the topside and those offers are likely to continue to just beyond the figure before weak stops and stronger offers into 1.5250 protect a stronger move through to beyond 1.5300, saying that the focus for the day for GBP will be the employment numbers. Downside bids light into the 1.5100 levels and once the market breaks the level bids are likely to become stronger the closer the market moves to the 1.5050-40 levels with possibly less interest for the stops until through the sentimental level of 1.5000.
• JPY: Opening around the 123.20 levels the market started to slip as early Japanese entered the market with possible profit taking and fresh shorts with S&P’s comments on the next sales tax hike, slipping through the 123.00 levels fairly easily the market dipped down to the 122.80 before finding suitable bids to hold the line and less impetus as other cross movements helped to support the USDJPY, topside offers into the 123.40 areas continue every 10 pips or so with strong offers then building through to the 124.00 levels a break above the 124.30 area is likely to see weak stops appearing in the market however, the chances are that longer term offers from exporters and so on are likely to appear in any attempt to the 125.00 levels. Downside bids into the 122.80 levels however, one would not expect them to be particularly strong and could give way and open the markets return to the Aug/Oct ranges that the market saw with light bids likely to run to the 121.00 levels.
• AUD: The Oz tested higher through the session moving away from yesterday’s lows and rallying from the 0.7030 opening levels gradually pushing through the 0.7060 highs of yesterday to trigger weak stops through the 0.7070 levels in a push towards 0.7080 before running out of steam and slipping back a little on a data free day for the Ozzies, Topside offers still remain above the 0.7080 areas and into the 71 cent level however, while those offers are likely to possibly continue through to the 0.7120 areas before the possibility of any meaningful stops the market is all about the USD for the moment and with a lack of data is difficult to see it moving in any meaningful manner. Downside bids likely on dips into the 0.7060-40 areas and increasing once the market moves towards the 70 cent level, through the level will possibly be weak stops however, one would suspect stronger bids appearing the closer the market moves to the 0.6950 levels if it could break through 0.6980.

Overnight News

CNY:

China Oct. Industrial Output Rises 5.6%; Est. 5.8%

China 3Q Current Account Surplus $63.4b

China Should Shift to Targeted Fiscal Expansion, Yu Says: Daily

JPY:

Harada Says He Sees Outlook as Slightly Weaker Than BOJ View

S&P’s Sheard: Japan Sales Tax Hike Risky If Deflation Not Ended

AUD:

Australia Nov. Consumer Sentiment Rises 3.9% M/m to 101.7

NZD:

Wheeler Says Too Soon to Say If Auckland House Prices Cooling

Today’s data

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

AUD       Westpac Consumer Confidence Nov A 3.90% | P 4.20%

JPY         Japan Money Stock M2+CD Y/Y Oct A 3.60% | C 3.80% | P 3.80%

CNY        Retail Sales Y/Y Oct A 11.00 %| C 10.90% | P 10.90%

CNY        Industrial Production Y/Y Oct A 5.60% | C 5.80% | P 5.70%

CNY        Fixed Assets Ex Rural YTD Y/Y Oct A 10.20% | C 10.20% | P 10.30%

JPY         Machine Tool Orders Y/Y Oct (P) A -23.10% | P -19.10%

09:30     GBP       Jobless Claims Change Oct C 1.6K | P 4.6k

09:30     GBP       Claimant Count Rate Oct P 2.30%

09:30    GBP       ILO Unemployment Rate 3M Sep C 5.40% | P 5.40%

Harry Hindsight              

• EUR: Opening around the 1.0750 levels the market was only able to push to the 1.0760 levels before slipping slowly back through the Asian session to the 1.0740 areas in limited trading, early London managed to make a new high pushing to the 1.0765 levels and that remained the high of the day before slowly drifting lower as the market became steady sellers of the Euro pushing through to the 1.0730 levels the move into the NYK saw stronger selling and a quick test of the 1.0700 levels and from this point there was a strong battle between the bids and sellers as the market slowly ground lower pushing through after a few hours to the 1.0670’s before the sellers ran out of steam and the market moved back to 1.0700, while the market focused on the inventory numbers and took that as a signal of increasing output in some areas that will bolster the GDP figure it remains to be seen whether these inventories are through increased activity or a lack of sales feeding through personally I’ve always read the number as a negative if inventories increased. The market then held in the 1.0680-1.0700 areas for several hours before the move through the 1.0700 coincided with the close in London and the market was able to make a little headway to the 1.0720 levels, it then struggled to the 1.0730 and into the close.
• GBP: Cable was kept in a reasonably tight range through the day, drifting a little in Asia the market held for the most part around the 1.5110-20 levels into the London session eventually attempting a move to the downside and through the 1.5100 levels and although the market repeated the move there was sufficient impetus in the EURGBP cross to hold the Cable as Euro selling continued and the cross pushed through the 0.7100 levels to test to the 0.7070 areas before the small late rally in the cross towards the close, the strong cross selling allowed the Cable to make highs just below the 1.5150 levels before drifting back to its Asian range to hold to the close more or less unchanged.
• JPY: USDJPY remained in a tight range through the day moving from the Asian opening to make the lows just above the 123.00 levels before rising slowly into the London session to test the 123.40 levels and plenty of selling interest to hold the market in place, the market then drifted off the level and into the NYK session and a second run to the topside stalled just beyond 123.40 and the same move as London back to the 123.10 levels and the range for the day was set, and as with the Cable the market finished the day very much the same level as the opening.
• AUD: Through the Asian session the Oz remained stuck to the 0.7050 levels moving around that focal point for several hours and only moving to the 0.7060 levels in the move into London, even then the market was unwilling to move to far beyond the level and ranged in the 0.7050-60 areas until the NYK session with the usual day traders obviously taking a day away from the pair, NYK saw some steady selling early in its session and the 0.7020 became a focus for several hours and holding to the close with inventories setting the market back.

Yesterday’s premiership results

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

JPY         Current Account (JPY) Sep A 0.78T | C 1.50T | P 1.59T

GBP       BRC Sales Like-For-Like Y/Y Oct A -0.20% | P 2.60%

AUD       NAB Business Confidence Oct A 2 | P 5

AUD       Home Loans Sep A 2.00% | C 0.10% | P 2.90% | R 1.50%

CNY        CPI Y/Y Oct A 1.30% | C 1.50% | P 1.60%

CNY        PPI Y/Y Oct A -5.90% | C -5.90% | P -5.90%

JPY         Eco Watchers Survey: Current Oct A 48.2 | C 48.2 | 47.5

CHF        Unemployment Rate Oct A 3.40% | C 3.40% | P 3.40%

USD       Import Price Index M/M Oct A -0.50% | C -0.30% | P -0.10%

USD       Wholesale Inventories Sep A 0.50% | C 0.10% | P 0.10%

 

Good Luck,

Andy

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