Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 123.439 | EURUSD 1.06426 | AUDUSD 0.71119 | NZDUSD 0.64686 | USDCAD 1.33217 | USDCHF 1.01456 | GBPUSD 1.52126 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               123.48 | 123.26

EUR/USD             1.0648 | 1.06315

EUR/JPY               131.38 | 131.12

AUD/USD            0.7115 | 0.7091

NZD/USD             0.6484 | 0.6460

USD/CAD             1.3331 | 1.3314

EUR/CHF              1.08135 | 1.0790

USD/CHF             1.0170 | 1.0142

GBP/USD             1.5220 | 1.5196

EUR/GBP             0.6999 | 0.69915

For Today

• EUR: Euro’s initially held quietly in the 1.0640 areas however, with very little going on in the market and FOMC minutes for later in the day the market slipped back to test into the low 1.0630’s before returning to the opening levels, Topside offers into the 1.0680 areas are likely to be light with weak stops not likely to be seen until a clear break through the 1.0730 areas, and the market then opening up with only light offers likely to the 1.0800 areas where stronger offers probably await. Downside bids through the 1.0630 levels and likely to be strong for the moment into the 1.0600 areas and likely to continue to the 1.0570 levels before the market sees weak stops likely combined with breakout stops for a quick test of the 1.0500 areas and
• GBP: Cable drifted from the opening to steadily test from the 1.5220 areas to the figure slipping quietly through as the EURGBP cross gained a little to hold above the 0.7000 levels, having been down in the 1.5190’s the market gradually clawed its way back above the 1.5200 levels in late trading and holds there into the grey hours. Topside offers light through to the 1.5250 areas and some possible resistance to a move back to the 1.5300 areas however, a breach here will open up a test to the topside and while the market is only marginally short the chances are that it will struggle without strong impetus created from a dithering yes we will no we won’t Fed. Downside bids light through the 1.5100 levels however, those bids are likely to improve the closer the market moves to the 1.5050 areas and for the moment remains the key level for a push through to the downside and onto the 1.49 handle.
• JPY: USDJPY ranged tightly through the pre-Tokyo session moving around the 123.40 areas before heading into the Tokyo session with light sellers, the longer the market remained stuck in the 123.40 the more frustrated the market seemed to be and so as soon as Tokyo lunch appeared the sellers slowly traded the market lower to push into the 123.20’s and into the grey hours. Topside offers from the 123.50 level are joined by the short term types selling into that resistance area, the offers are likely to continue through the level with only slight lessening of those offers into the 123.60-80 area before resistance increases again, a push through the 124.00 level is not likely to see any sudden moves with congestion continuing into the 124’s however, beyond the 124.50-60 level the market is likely to be focused on the 125. Handle and could cause some impetus to build into pushing to the/through the level if the FOMC minutes are strong enough. Downside bids are light into the 123.00 levels with importers being the main types coming to market however, that could be few and far between if the FOMC minutes are dovish and cast any doubt on the December lift off, below the 123.00 level the market is reasonably open to a move towards the 122.20 areas before the market finds some support however, one has to wonder if importers are buying is that likely to weaken the downside support in the area, a push through the 122.00 levels could open the market to a deeper move and 121.00 areas remains the strong supportive area before dropping back into the Aug/Oct ranges.
• AUD: A very quiet session for the Oz with the market drifting around the 71 cent levels trhough the session and not making much noise, weaker conference board numbers led the market slightly lower however, the general movement has been more to do with the USD flows than anything meaningful in the Oz, Topside offers into the 0.7140-60 areas are likely to give way to some weakness in the run at the 72 cent better offers however, for the moment these offers extend through the level and are likely to be stronger into the 0.7240 areas, downside bids are likely to begin appearing on any dips through to the 0.7070 areas and while weak stops may appear the market is likely to see increasing bids on a move into the 0.7050 levels, and then becoming stronger with any moves onto the 69 cent handle.

Overnight News

AUD:

Debelle Says No Excuse Not to Be Prepared for a Fed Rate Rise

RBA Says Yuan IMF Win Won’t Cannibalize Aussie in World Reserves

RBA Says Risk-Free Rate May Be More Appropriate Than BBSW

Australia `Not Naive’ to Economic Uncertainty, Morrison Says

Australian 3Q Wage Index Rose 0.6% QoQ; Median Est. 0.6% Rise

CNY:

PBOC Researcher Says China Can Endure Global Liquidity Winter

China Banks Sold Net 190.9b Yuan of FX for Clients in Oct.

Net FDI in China Financial Institutions $2.41b in 3Q: SAFE

China Oct. New Home Prices Rise M/m in 27 Cities; 39 in Sept.

China Can Set Joining TPP Long-Term Goal, PBOC Adviser Says

Greenspan Says Yuan Entry Into SDR Is ‘Inevitable’

IDR/CNY:

Indonesia Will Renew Currency Swap Agreement With China: Post

USD/RUB:

Obama Says Sinai May Change Russian Approach to Islamic State

USD:

Obama Says ‘Bold Steps’ Needed to Reduce South China Sea Tension

White House Conducts Call with 34 Governors on Refugee Policy

TPP Members to Ensure Pact Enacted as Fast as Possible: Obama

EUR:

Air France LAX to Paris Flight Diverted on Bomb Threat: KSL 5 TV

Shots Fired in Paris Suburb as Police Surround Suspects: AFP

Today’s data

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

USD       Net Long-term TIC Flows Sep A 33.6B | P $20.4B | R 20.8B

AUD       Conference Board Leading Index Sep A -1.00% | P -0.40%

AUD       Westpac Leading Index M/M Oct A 0.10% | P 0.10%

AUD       Wage Cost Index Q/Q Q3 A 0.60% | C 0.60% | P 0.60%

10:00     CHF        ZEW (Expectations) Nov P 18.3

13:30     USD       Housing Starts Oct C 1.16M | P 1.21M

13:30     USD       Building Permits Oct C 1.15M | P 1.11M

15:30     USD       Crude Oil Inventories P 4.2M

19:00    USD       FOMC Minutes

Harry Hindsight              

• EUR: Euro’s opened around the 1.0685 areas and moved quietly into the Tokyo session pressing towards the 1.0690 levels before cross selling of the Euro kicked in and the market moved quickly to the 1.0670 area, from there the market drifted through the bulk of the session and even into the London session there was very little action with the market drifting steadily to the 1.0650 in slow opening trades, having removed most of the bids the market was still unable to break to the 1.0600 levels and held the 1.0640 bouncing in front of the Eurozone ZEW numbers as weak shorts cut their positions and the market moved back to the 1.0665 areas for a mixed set of numbers and ranging to the NYK session around the 1.0665 levels, inline inflationary numbers allowed the USD to go slightly bid through the NYK session and the Euro again moved lower this time testing to the 1.0630 levels before holding and again ranging through the session to finish the day around the 1.0640 levels.
• GBP: Cable drifted with the Euro through the Asian session and drifted into the pre-London levels around the 1.5155 area having dipped late in the session, obviously expectations for the figures were overcooked a little and the release of figures similar to last month’s saw the market jump back higher and move swiftly back above the 1.5200 levels, generally the market then continued to range above the 1.5200 levels but never making any serious attempt higher until into the NYK session with poor Industrial production figures giving the Cable a little push to stretch the highs to the 1.5240 area before slipping back again to range around the 1.5210 levels in weak trading to the close. EURGBP eventually broke below the 0.7020 levels that had looked reasonably strong during the last week and once through and testing the 0.7000 the market saw a steady move to the 0.6990 with weak stops triggered and the market then struggling to regain the level through the NYK session.
• JPY: The USDJPY remained caught in a reasonably tight range with importers having to pay the current rates against their better judgement and the market saw fewer sellers coming to the market and more offers appearing instead, moving from the opening 123.20 levels the market slowly but surely moved up through the waiting offers to again push above the 123.40 levels however, it was not able to capitalize on the move and early London were quick sellers to take the market towards the opening levels again, London remained quiet through the early part of London and only once the NYK started did the market again press higher this time extending the high but only marginally to just below the 123.50 levels and again struggling against those offers, the market then became a little choppy with no major moves but a steady rise and fall of 10 pips through to the close of the session just off the highs.
• AUD: The Oz slipped back with only a minor blip around the RBA minutes to test above the 0.7105 levels before moving slowly lower again and drift through the Asian session to test into the 0.7070 levels on lacklustre trading, the move into the London session saw the market start to rise and the market found weak stops and shorts covering to accelerate the move and the push through the 71 cent level went without too much problem and continued through into the NYK session pushing into the waiting 0.7140 levels and then slowly drifting back to the close around 0.7110.

Yesterday’s premiership results

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

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

GBP       CPI M/M Oct A 0.10% | C 0.20% | P -0.10%

GBP       CPI Y/Y Oct A -0.10% | C 0.00% | P -0.10%

GBP       Core CPI Y/Y Oct A 1.10% | C 1.00% | P 1.00%

GBP       RPI M/M Oct A 0.00% | C 0.20% | P -0.10%

GBP       RPI Y/Y Oct A 0.70% | C 0.90% | P 0.80%

GBP       PPI Input M/M Oct A 0.20% | C 0.20% | P 0.60% | R 0.50%

GBP       PPI Input Y/Y Oct A -12.10% | C -12.00% | P -13.30% | R -13.40%

GBP       PPI Output M/M Oct A 0.00% | C -0.10% | P -0.10%

GBP       PPI Output Y/Y Oct A 0.00% | C -1.40% | P -1.80%

GBP       PPI Output Core M/M Oct A -0.10% | C 0.00% | P 0.10%

GBP       PPI Output Core Y/Y Oct A 0.30% | C 0.40% | P 0.20%

EUR        German ZEW (Economic Sentiment) Nov A 10.4 | C 5.5 | P 1.9

EUR        German ZEW (Current Situation) Nov A 54.4 | C 55 | P 55.2

EUR        Eurozone ZEW (Economic Sentiment) Nov A 28.3 | C 35.2 | P 30.1

USD       CPI M/M Oct A 0.20% | C 0.20% | -0.20%

USD       CPI Y/Y Oct A 0.20% | C 0.10% | P 0.00%

USD       CPI Core M/M Oct A 0.20% | C 0.20% | P 0.20%

USD       CPI Core Y/Y Oct A 1.90% | C 1.90% | P 1.90%

USD       Industrial Production Oct A -0.20% | C 0.10% | P -0.20%

USD       Capacity Utilization Oct A 77.50% | C 77.50% | P 77.50%

USD       NAHB Housing Market Index Nov A 62 | C 64 | P 64 | R 65

 

Good Luck,

Andy

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