Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 123.175 | EURUSD 1.06864 | AUDUSD 0.70966 | NZDUSD 0.64919 | USDCAD 1.33315 | USDCHF 1.00974 | GBPUSD 1.52038 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               123.405 | 123.18

EUR/USD             1.0692 | 1.0656

EUR/JPY               131.80 | 131.485

AUD/USD            0.7108 | 0.7083

NZD/USD             0.6496 | 0.6456

USD/CAD             1.3345 | 1.3323

EUR/CHF              1.0790 | 1.0775

USD/CHF             1.0111 | 1.0092

GBP/USD             1.5205 | 1.5171

EUR/GBP             0.7032 | 0.7020

For Today

• EUR: A quiet opening with the market holding around the 1.0685 opening levels into the Tokyo session, the market slowly moved in the first few hours to push at the 1.0690 levels however, quick selling saw the Euro drop back to the 1.0680 levels and light stops saw the market push through the lows from yesterday to probe into the 1.0860 areas and the remaining support area that has held the market over the past 24hrs, having dropped so quickly the market then meandered around the 1.0665-75 levels and slowly trickled lower pushing through the remaining bids and dipping briefly below the 1.0660 level, the market remains around the lows and has been unable to move off the level through the remainder of the session, Downside bids likely through to the 1.0650 levels before opening up for a test of 1.0600 with 1.0620 likely to see support into the figure areas however, a push through the level is likely to find reasonable profit taking and supportive bids appearing through to the 1.0520 areas where bids are likely to increase as the market protects the 1.0500 levels and the years lows just below. Topside offers light through the 1.0700 areas and weak stops could make an appearance on a move through 1.0710 areas and open the topside only to 1.0740-60 levels with possibly stronger offers beyond that level and into 1.0800.
• GBP: Opening above the 1.5200 levels the market followed the Euro lower and tested steadily through to the 1.5190 levels and held for an hour or so before giving up and trading steadily lower and testing to the 1.5180 areas, again the market briefly held but once the Euro started to push through the bids into the 1.0660 levels the Cable was dragged lower and the bids evaporated and left the GBP vulnerable and heading another 10 pips lower and testing through the 1.5170 levels as it approached the grey hours. Topside offers likely into the 1.5200 levels are likely to be weak however, through the level the topside is likely to be patchy with 1.5240-50 likely to provide more resistance, with the potential of a break here providing enough impetus for the market to quickly push to the 1.5300 levels and beyond. Inflationary events today would suggest the topside could be weak if the number improves above the expected 0.00%, Downside bids into the 1.5150 levels are likely to be weak however, better bids are possible into the 1.5100 areas, with the only problem is EURGBP being reluctant to break lower through the 0.7020-00 areas and any move lower by the Euro would have to be matched by the GBP, if the level were to remain, a move through the 1.5100 levels would likely see stronger bids appearing on any dips towards the 1.5050 area and beyond.
• JPY: A quiet session for the USDJPY with the market steadily rising from the opening around 123.25 and pushing into waiting offers on the move up into the 123.40 areas before dipping back away from the highs as the market moved towards the grey hours. Topside offers from the 123.50 areas are likely to be stacked up all the way to the 124.00 areas and possibly needing strong impetus to push through however, a break above the 124.20 areas could see weak stops appearing and the market finding sufficient strength to attract attention and open up an attempt for the 125.00 levels, but it is a tall order, downside bids light into the 123.00 level however, with weak stops below 122.70 being possibly small in nature the downside bids don’t really show strongly until the market moves towards those 122.20 area levels and into the figure, a move through will open up further downside weakness with very little congestion to the more supportive 121.50 level.
• AUD: Opening just below the 71 cent level the initial run was to the downside however, it failed to get any response from the market having pushed below the 0.7090 levels and moved back to move into Tokyo around the 0.7095 level, RBA minutes saw the Oz rise back above the 71 cent level triggering light stops before dropping back once the demand was finished the market drifted back again from the non-event, and over all the market has been fairly lacklustre with the market trading around the 0.7095 areas for much of the session before running at the 0.7080 levels late in the session as the market approaches the grey hours, Topside offers above the 0.7130 areas are likely to continue through to the 0.7160 levels, and although they have the ability to slow any ascent the stronger offers are likely to be around the 72 cent area and continuing to 0.7240 before the market has any chance of moving substantially higher, Downside bids into the 0.7060 levels and although the market is likely to see less bids through the level those bids are only reduced in size and are continuing into the 70 cent level with strong levels from then on.

Overnight News

AUD:

RBA Says Prospects Firmed for Improved Economy, Scope to Ease

RBA’s Kent Sees Limited Potential for Commodity Prices to Rise

Australia ANZ Weekly Consumer Sentiment Falls 0.6% to 115.9

EUR:

ECB’s Praet Sees Risk of Inflation Expectations De-Anchoring

CNY:

China Will Prevent Risks during Financial Reform: Financial News

China May Unveil Policies to Loosen Property Control: 21^st

CNY/JPY:

China Hopes High-Tech Japanese Cos. Can Increase Investment

JPY:

Japanese PM Abe May Order Extra Budget: Economy Minister Amari

Minister Wants to Raise Japan Post Bank Deposit Cap: Nikkei

NZD:

New Zealand 2-Year Inflation Expectations Fall to 1.85%: RBNZ

SGD:

Singapore October Non-Oil Domestic Exports -0.5% Y/y; Est. -3%

Today’s data

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

0:30        AUD       RBA November Minutes

2:00        NZD       RBNZ 2-Year Inflation Expectation Q4 A 1.85% | P 1.94%

9:30        GBP       CPI M/M Oct C 0.20% | P -0.10%

9:30        GBP       CPI Y/Y Oct C 0.00% | P -0.10%

9:30        GBP       Core CPI Y/Y Oct C 1.00% | P 1.00%

9:30        GBP       RPI M/M Oct C 0.20% | P -0.10%

9:30        GBP       RPI Y/Y Oct C 0.90% | P 0.80%

9:30        GBP       PPI Input M/M Oct C 0.20% | P 0.60%

9:30        GBP       PPI Input Y/Y Oct C -12.00% | P -13.30%

9:30        GBP       PPI Output M/M Oct C -0.10% | P -0.10%

9:30        GBP       PPI Output Y/Y Oct C -1.40% | P -1.80%

9:30        GBP       PPI Output Core M/M Oct C 0.00% | P 0.10%

9:30        GBP       PPI Output Core Y/Y Oct C 0.40% | P 0.20%

10:00     EUR        German ZEW (Economic Sentiment) Nov C 5.5 | P 1.9

10:00     EUR        German ZEW (Current Situation) Nov C 55 | P 55.2

10:00     EUR        Eurozone ZEW (Economic Sentiment) Nov C 35.2 | P 30.1

13:30     USD       CPI M/M Oct C 0.20% | P -0.20%

13:30     USD       CPI Y/Y Oct C 0.10% | P 0.00%

13:30     USD       CPI Core M/M Oct C 0.20% | P 0.20%

13:30     USD       CPI Core Y/Y Oct C 1.90% | P 1.90%

14:15     USD       Industrial Production Oct C 0.10% | P -0.20%

14:15     USD       Capacity Utilization Oct C 77.50% | P 77.50%

15:00    USD       NAHB Housing Market Index Nov C 64 | P 64

Harry Hindsight              

• EUR: With the USD opening higher after the events in Paris with European currencies particularly on the back foot and equity markets suffering from the opening the market eventually started to recover over the session, Opening around the 1.0740 levels the market traded into the early part of the session pressing quickly to the 1.0690 levels before holding the initial onslaught eventually pushing back to the 1.0720 levels and trading in a tight range through into the grey hours, early London were steady buyers into the official opening and the market closed the gap on the charts with a test towards the 1.0760 levels before slowly drifting to the 1.0720 areas again with CPI slightly better than expected for the Eurozone and little on data for the rest of the session, news was dominated by the Paris attack and the market continued to reflect on the ramifications of a higher security level for Europe and particularly the borders, the consensus therefore is general flow of goods between the European nations would slow as border checks came into force. The market drifted lower through the NYK session with the market pushing slowly to test into the 1.0680 levels and holding just off those lows into the close on a fairly slow day.
• GBP: Opening only slightly lower than the Friday close safe haven flows were less evident than the EURJPY where the market saw strong selling however, Cable ove the session struggled to break to far from the 1.5200 level as EURGBP was contained at the 0.7020 levels with some healthy buying in the area, Cable dipped from the opening around 1.5225-30 areas to test the 1.5210 in Asia but lifted only marginally into the grey hours before again quickly testing lower into the official opening in London trading to the 1.5180 levels before holding for a long period around the 1.5200 areas through until the close in London, NYK managed to recover some of the losses in early trading however, the market again returned to the 1.5200 levels late into the session and too the close.
• JPY: USDJPY didn’t have it all its own way with early EURJPY selling sending the opening 122.40 market lower to test the 122.20 levels before running out of steam with the end of the EURJPY selling the USD took over and the market managed a meagre rise to the 122.60 levels before drifting for the remainder of the session into early London, London were strong buyers of the USDJPY from the grey hours onwards and the morning session in London saw the market moving steadily higher and pushing through the 123.00 levels before finding light resistance and holding the 123.00-10 areas into the NYK session, after a tentative start in NYK the market again resumed its steady rise and pushed through to the 123.30 levels before closing just off its highs.
• AUD: More or less unchanged on the opening the Oz dropped from that point as increased EURJPY selling impacted on the JPY and the Oz dipped, added to the general USD strength in the market was a good retail sales number and the AUDNZD selling however, that was quickly over with and the Oz held roughly around the 71 cent level and held around the level for several hours before climbing slowly back to 0.7115 and moving into the London session were early buyers took the market to the highs above 0.7130, having been unable to make any significant move to the topside the early buyers cut and sent the Oz back to the 71 cent levels and this time after a couple of slow hours the level gave way and the market drifted to the 0.7080 areas, the market struggled from then to the close and was unable to break back above the 71 cent areas but held close to the level.

Yesterday’s premiership results

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%

EUR        Eurozone CPI M/M Oct A 0.10% | C 0.10% | P 0.20%

EUR        Eurozone CPI Y/Y Oct (F) A 0.10% | C 0.00% | P 0.00%

EUR        Eurozone CPI – Core Y/Y Oct (F) A 1.10% | C 1.00% | P 1.00%

CAD       Manufacturing Shipments M/M Sep A -1.50% | C 0.30% | P -0.20% | R -0.60%

CAD       International Securities Transactions (CAD) Sep A 3.35B | C 4.12B | P 3.11B | R 5.78B

USD       Empire State Manufacturing Nov A -10.7 | C -5 | P -11.36

 

Good Luck,

Andy

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