Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 122.611 122.36-37 | EURUSD 1.07714 1.0751-54 | AUDUSD 0.71271 0.7104-16 | NZDUSD 0.65376 0.6504-46 | USDCAD 1.33244 1.3321-30 | USDCHF 1.00586 1.0052-73 | GBPUSD 1.52364 1.5211-46 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               122.605 | 122.23

EUR/USD             1.0778 | 1.0687

EUR/JPY               131.63 | 130.66

AUD/USD            0.7134 | 0.7099

NZD/USD             0.6580 | 0.6519

USD/CAD             1.3337 | 1.3302

EUR/CHF              1.0830 | 1.0785

USD/CHF             1.0085 | 1.0060

GBP/USD             1.5237 | 1.5208

EUR/GBP             0.7051 | 0.70245

For today

• EUR: After the events of Friday Night in Paris the Euro and EURJPY in particular saw strong pre-market selling and the Euro opening around the 1.0740 levels and then dipping from the opening to trade down to the 1.0690 levels as the EUR/JPY selling continued and the move to safe haven currencies however, having hit the lows around the 1.0690 levels the market again moved steadily higher and pushed to hold around the 1.0720 levels for the bulk of the session. Topside offers into the 1.0800 area and through to the 1.0830 with the market then opening for a test to the 1.0880 areas and more solid offerings in the area and likely to continue to the 1.0920 areas before the chance of some weak stops appearing, downside bids through the 1.0700 and into the 1.0680 levels a push through the 1.0670 levels will leave the 1.0600 levels vulnerable and possibly strong bids protecting the move onto the 1.05 handle and the downside lows for the year.
• GBP: Cable opened just short of the close on Friday around the 1.5230 levels and while Cable held up better than the Euro, the EURGBP cross moved during the first couple of hours to test towards the 0.7020 levels before recovering to trade around the 0.7050 opening areas, with the movement of Euro’s to safe currencies it would seem strange that the market moved into the GBP to some extent and the Cable held around the 1.5210 for the bulk of the session. Topside offers likely to appear as the market probes towards the 1.5280-1.5300 levels with only minor interference on a run to that level around the 1.5250 area, through the 1.5300 levels there is only minor congestion of a test to the 1.5350 levels and the bulk of offers are likely to start appearing through the 1.5400 area. Downside bids light into the 1.5200 level again with the market likely to see support from the 1.5160 levels and through to the 1.5140 areas before further weakness appears in a run to 1.5100 and minimal bids, a move through this level though will likely see increasing bids on a move towards the 1.5050 areas and only a push to the 1.5040 will see weak stops and the market opening a little to the 1.5000 level and stronger support.
• JPY: Strong JPY buying especially against the Euro from the opening saw the USDJPY continue the pre-market sell off opening the USDJPY around the 122.40 levels and continuing to test into the 122.20-s before the Tokyo buyers started to move into the market and the EURJPY and USDJPY started steadily to reverse the losses on the day with USDJPY heading steadily to fill the gap on the charts and test briefly above the 122.60 levels before settling down to trade in a quiet range around the 122.45-50 areas for the session. Topside offers light into the 123.00 areas with those offers likely to be building above the level and through to the 123.30 levels before the market opens a little even so one would expect offers to reappear from the 123.40-60 levels and then increasing in size as the market moves towards the 123.80 levels, downside bids into the 122.20 areas and likely to continue through the 122.00 levels and into the 121.80 before the market looks at the downside, however, given the current situation a continuation of safe haven flows could be a possibility if may be a little premature.
• AUD: The Oz played second fiddle to the European currencies and the JPY with the initial selling of AUDJPY forcing the Oz into a test of the 71 cent level where the market held for a few hours before beginning a steady recovery to the 0.7115 areas where the market continued to trade for several hours and never really looking to test the opening levels around the 0.7125 area. Topside light offers from the 0.7140 areas and likely to continue to the 0.7160 area before stronger offers start to make an appearance from the 72 cent level and likely to continue through to stronger offers from the 0.7240-60 areas, a push here will likely open a test into the 73 cent areas. Downside bids with weak stops on a move through the 0.7080 areas and then congestion from the 0.7060-40 areas with better bids likely to start appearing as the market pushes to the 0.7020 level and through onto the 69 cent handle with those bids likely to increase the lower the market moves.

Overnight News

EUR:

ECB’s Mersch Says of QE Expansion ‘Nothing Has Been Decided on’

Greece, Creditors Continue Negotiations: Greek Govt. Official

France Bombs Islamic State Targets as Attacks Tied to Syria

JPY:

Japan 3Q GDP Falls Annualized 0.8% Q/q; Est. -0.2%

Amari: Not Considering Simulative Steps Just to Boost Demand

CNY: Yuan Entry into IMF’s SDR Symbolic, Impact Modest, Moody’s Says

China Big Four Banks End-Oct. Total Loans Fall from End-Sept.

China End-Oct. Yuan Forex Positions Rise 12.9b Yuan M/m

NZD:

Fonterra Raises Earnings Forecast, Maintains Pay-out Estimate

New Zealand 3Q Retail Sales Rise 1.6% Q/Q, Led by Autos

New Zealand Services Growth Slowed in October, PSI Shows

GBP:

U.K. November House Prices Fall 1.3% M/m, Rightmove Says

Today’s data

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

NZD       Retail Sales Q/Q Q3 A 1.60% | C 1.00% | P 0.10%

NZD       Core Retail Sales Q/Q Q3 A 1.00% | C 1.40% | P 0.10%

JPY         GDP Q/Q Q3 (P) A -0.20% | C -0.10% | P -0.30%

JPY         GDP Deflator Y/Y Q3 (P) A 2.00% | C 1.70% | P 1.50%

GBP       Rightmove House Prices M/M Nov A -1.30% | P 0.60%

10:00     EUR        Eurozone CPI M/M Oct C 0.10% | P 0.20%

10:00     EUR        Eurozone CPI Y/Y Oct (F) C 0.00% | P 0.00%

10:00     EUR        Eurozone CPI – Core Y/Y Oct (F) C 1.00% | P 1.00%

13:30     CAD       Manufacturing Shipments M/M Sep C 0.30% | P -0.20%

13:30     CAD       International Securities Transactions (CAD) Sep C 4.12B | P 3.11B

13:30     USD       Empire State Manufacturing Nov C -5 | P -11.36

Weekend News

EUR: Hollande Blames Islamic State for `Act of War’ in Paris Killings
Merkel Says Paris Terror Attacks Aim at Freedom Everywhere
G20: Paris Bloodshed Lifts Terrorism Fight to Top of G-20 Agenda
USD: Kerry Says Syria Talks to Include Opposition by Jan. 1
CNY: Yuan Set to Join IMF Basket in Move to Currency Big Leagues
PBOC Welcomes IMF Staff’s Proposal on Yuan’s SDR Inclusion
China to Accelerate Exchange-Rate Liberalization: Xinhua
China’s Avg. ’16-’20 GDP Target Should Exceed 6.5%: Ndrc’s Xu
China End-Oct. Yuan Positions on PBOC Balance Sheet 25.9t Yuan
China Oct. Surveyed Unemployment Rate Little Changed M/m: Xu
JPY:

Japan Govt. May Compile 3.5t Yen Extra Budget for FY15: Sankei
JPY/CNY:

China Slowing Affecting Japan Regional Economies: Nikkei Survey
CAD:

Morneau: G-20 Working on Collaborative Effort to Boost Growth
Freeland Says Canada May Join Asian Infrastructure Bank
TRY/CNY:

Turkey Sees China Joining G-20 Unity Against `Currency Wars’
SGD/TRY:

Singapore and Turkey Sign Free Trade Agreement: Prime Minister
ZAR:

Fed Move Probably Already Priced in by Rand Investors, Nene Says

Harry Hindsight

• EUR: Having peaked in the previous session the market opened around the 1.0815 levels and drifted into the Tokyo session testing the 1.0800 levels, EURJPY selling continued through the session and steadily pushed the Euro to the 1.0780 levels before moving into the London session slowly continuing the move with GDP figures mixed at best pushing the Euro back towards the 1.0800 areas, The move into the NYK session saw the selling of the Euro renewed and the market again tested to the 1.0750 levels before the US numbers, as with the European numbers they were also mixed with retail sales in line with expectations with the help of a stronger Autos no’s and poor PPI numbers, business inventories saw a rise in Sep and the optimism of increasing GDP seem limited in my eyes however, the movement in the market first lower for the USD and the Euro pushing again to the 1.0800 levels and then straight back down to test through the 1.0750 and touch the 1.0720 after a short period saw the market hold those levels, the market then pushed higher on through to the close as weak shorts took profit and the market finished the day around the 1.0770 levels.
• GBP: Cable for the most part was held in a tight range for most of the day apart from the period around the US numbers, opening around the 1.5230 levels and holding the levels into the Tokyo session the market dipped with cross JPY selling driving the early action and the market moved in 3 waves over the course of the Asian session to test the 1.5200 levels and into the grey hours and strong early buying to reverse most of the loses to then spend the session ranging between the 1.5210-30 and into the US numbers, the range was made at this point with the market quickly rising on the weak PPI numbers and trading through the 1.5260 levels before dropping back just as quick to the 1.5230 levels and holding for a short time before the market saw the Business inventories and dropped steadily lower and traded through the 1.5200 levels easily before stalling around the 1.5190 levels, the rise was steadier from this point with the market putting a little more effort to read the results and the market saw weak stops on the push back through 1.5210 and profit taking into the close as the shorts continued to close positions and the market finishing little different from the opening.
• JPY: USDJPY ranged quietly through the Asian session and into the London session, opening around the 122.60 levels and then pushing a little higher to the 122.75 levels with light USDJPY levels into the Tokyo fix before drifting off again to test towards the 122.50 levels with cross JPY selling, the market continued to range in that area over the course of early London with European numbers generally ignored and the market saw the market drop quickly lower on the release of the retail sales numbers and bouncing from the lows in the 122.40 area and returning quickly to the 122.70 areas, the market then slowly moved higher through the end of London and tested towards the 123.00 areas and the end of London saw the market starting to slip back and the market moved to the opening levels into the close.
• AUD: The Oz slowly rose a little over the early part of the session opening around the 0.7125 areas and pushing towards the 0.7140 level in quiet Oz trading, the move into the grey hours saw quick sellers and the market dipping to the 0.7120 level and into a rising London session with the market slowly moving to above the 0.7150 levels before drifting too the US numbers, the market spiked to the 0.7160 area on the release before slowly pushing back to the opening levels, inventory numbers saw the Oz continue to drift and the market making its lows around the 0.7110 levels before a steady rise to the close as with the others to finish the day almost unchanged.

Friday’s premiership results

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

JPY         Industrial Production M/M Sep (F) A 1.10% | C 1.00% | P 1.00%

JPY         Tertiary Industry Index M/M Sep A -0.40% | C 0.20% | P 0.10%

EUR        French GDP Q/Q Q3 (P) A 0.30% | C 0.30% | P 0.00%

EUR        German GDP Q/Q Q3 (P) A 0.30% | C 0.30% | P 0.40%

CHF        Producer & Import Prices M/M Oct A 0.20% | C -0.20% | P -0.10%

CHF        Producer & Import Prices Y/Y Oct A -6.60% | C -6.90% | P -6.80%

EUR        Italian GDP Q/Q Q3 (P) A 0.20% | C 0.30% | P 0.30%

EUR        Eurozone Trade Balance (EUR) Sep A 20.1B | C 19.4B | P 19.8B | R 19.0B

EUR        Eurozone GDP Q/Q Q3 (A) A 0.30% | C 0.40% | P 0.40%

USD       Advance Retail Sales Oct A 0.10% | C 0.20% | P 0.10%

USD       Retail Sales Less Autos Oct A 0.20% | C 0.40% | P -0.30% | R -0.40%

USD       PPI M/M Oct A -0.40% | C 0.20% | P -0.50%

USD       PPI Y/Y Oct A -1.60% | C -1.20% | P -1.10%

USD       PPI Core M/M Oct A -0.30% | C 0.10% | P -0.30%

USD       PPI Core Y/Y Oct A 0.10% | C 0.50% | P 0.80%

USD       Business Inventories Sep A 0.30% | C 0.00% | P 0.00%

USD       U. of Michigan Confidence Nov (P) A 85.6 | C 91 | P 90

Stay lucky

Andy

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