Daily FX Market Commentary

Andy Harrison

Good Morning,

LMAX Close

USDJPY 123.63 | EURUSD 1.06593 | AUDUSD 0.7111 | NZDUSD 0.64425 | USDCAD 1.33025 | USDCHF 1.01989 | GBPUSD 1.5235 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               123.65 | 123.09

EUR/USD             1.0719 | 1.0657

EUR/JPY               132.26 | 131.685

AUD/USD            0.7177 | 0.7103

NZD/USD             0.6545 | 0.6468

USD/CAD             1.3314 | 1.3251

EUR/CHF              1.0886 | 1.0866

USD/CHF             1.0200 | 1.0149

GBP/USD             1.5295 | 1.5228

EUR/GBP             0.70075 | 0.6995

For Today

• EUR: It would seem the more that the market talks about the parity level the less likely it becomes a reality with the buyers moving into the Euro as the USD came under pressure during the session, the Euro rose from the opening 1.0660 levels and traded quietly into the Tokyo session pushing to the 1.0990 levels before steadily pushing through the light offers and triggering weak stops through the 1.0710 levels, having pushed above the 1.0690 the return to the level saw sufficient interest to hold the market for the time being. Topside light offers through the 1.0720 levels continue over the next 60 pips with the likelihood of offers every 20 pips or so before running into stronger levels above the 1.0780 levels and through 1.0800, even through this level the market would really need to break strongly above the 1.0840-50 areas to open up a larger move. Downside bids light through the 1.0690 levels and possible weak stops appearing on a dip below the 1.0650 levels before again meeting healthy bid from then and into the 1.0600 areas.
• GBP: Cable was found itself able to rise steadily with the weaker USD impacting across the board, good numbers in NZ actually seemed to have started the move which eventually spilled over to the crosses and the USD in general into the Tokyo session, Cable moved to the Tokyo session pushing the 1.5240 levels and only just off the opening levels, Tokyo took the Cable to the 1.5255 areas on the opening and the push through the 1.5260 level saw a brief period of illiquidity and the market quickly topped above the 1.5290 before the resistance kicked in, the market since then has ranged in the 1.5270-90 areas for several hours in a quiet market. Topside offers into the 1.5300 continue through the level with possible stops in the move through the level however, those offers build steadily into the 1.5350 levels with the chance of further congestion increasing to the 1.5400 level. Downside bids now centred around the 1.5200 levels and the market has struggled to move through to the 1.5150 levels over the past weak however, a push through that level could see stops appearing and a quick move to the steadier but still reasonably light bids around the 1.5100 level.
• JPY: The market waited patiently for the BoJ monetary policy statement and although the market was expecting no change the fact that is what it got was sufficient for the market to move away from the opening levels above the 123.60 opening areas, the market drifted to the release and slipped below the 123.50 levels into the early Tokyo session before starting a steady decline through the day and eventually pushed to the 123.10 areas before finding bids in sufficient size to stop the market from sliding further, the market has since risen back above the 123.20 levels and holds for the moment, Topside offers are likely to be strong on any move through the 123.70 areas and only a push through the 124.10-30 area will open further gains to the topside with the market likely to still remain offered but with the market then focusing on the 125 handle as a target, Downside bids into the 123.00 area are likely to be light and although the market could see weak stops triggered the 122.00 level is likely to provide some relief and the market struggling initially to push through however, a break through here would leave the market able to move back to the ranges from Aug/Oct and the beginning of the year.
• AUD: A steady rise for the Oz helped by the good Kiwi numbers initially and then the JPY monetary policy showing weakness for the USD and the Oz has moved steadily through the session from the opening 0.7110 levels to test above the 0.7170 area, Topside offers into the 72 cent level are likely to continue through into the 0.7240 areas with likely weak stops just beyond on a strong move, even through the level and the stops out of the way the market is again likely to run into further offers as the market makes an approach to the 73 cent level and one suspects a level the RBA would prefer not to see. Downside bids light through to the 0.7070 levels with light bids around that level and a possibility of weak stops however, a push through the level will likely see ever increasing bids appearing in the market the closer the market moves to the 69 cent handle with concentrations particularly around the 0.7040/20/00 areas before moving on to that handle.

Overnight News

JPY:

BOJ keeps policy steady even as Japan slides into recession

Japanese Bought Net 871 Billion Yen Overseas Debt Last Week

Japan Oct. Exports Fall 2.1% Y/y; Est. -2%

CNY:

China Said to Suspend Yuan Trades at Offshore Banks: Standard

Ex-China Forex Official Proposes Strong Yuan Policy in 2016-2020

China Should Better Manage Wealth Funds in Property Sector: Yan

EUR:

Juncker Says EU Will Need to Rethink Europe Architecture One Day

NZD:

N.Z. Producer Output Prices Lifted by Milk Pay-out, Meat

Today’s data

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

NZD       PPI Inputs Q/Q Q3 A 1.60% | C 0.10% | P -0.30%

NZD       PPI Outputs Q/Q Q3 A 1.30% | C 0.20% | P -0.20%

JPY         Trade Balance (JPY) Oct A -0.20T | C -0.38T | P -0.36T

JPY         All Industry Activity Index M/M Sep A -0.20% | C 0.20% | P -0.20% | R -0.10%

07:00     CHF        Trade Balance (CHF) Oct C 3.18B | P 3.05b

09:00     EUR        Eurozone Current Account (EUR) Sep C 18.3B | P 17.7b

09:30     GBP       Retail Sales M/M Oct C -0.40% | P 1.90%

11:00     GBP       CBI Trends Total Orders Nov P -18

12:30     EUR        ECB Monetary Policy Meeting Accounts

13:30     CAD       Wholesale Sales M/M Sep P -0.10%

13:30     USD       Initial Jobless Claims (NOV 14) C 272K | P 276K

15:00     USD       Philly Fed Survey Nov C 0 | P -4.5

15:00    USD       Leading Indicators Oct C 0.50% | P -0.20%

Harry Hindsight              

• EUR: Asia saw the Euro slip a little lower over the session dipping to the 1.0630 levels before steadily rising into the grey hours pressing the 1.0650 levels, the move into the official opening in London saw the market started to move higher with little data and only odd comments that would seem to suggest more stalling, the move higher eventually stalled as the market pushed above the 1.0690 levels with the light offers into the 1.0700 levels sufficient to cap the market for the day, and then drifted to the 1.0660-70 levels for the move into the NYK session, short term Euro longs cut positions during the early part of the session with the market drifting quickly to below the 1.0630 levels before running into the previously tested bids, the market dipped slightly through the level before moving again towards the 1.0650 levels and into the FOMC, while the market took the minutes as a yes for the lift off in December the use of gradualism would suggest that the move would be limited or that’s to my mind however, the market initially took the commentary as an indication for cuts then revised its first thought as the ideas of gradual increases could be seen and the USD rise could be seen as overdone, the market spiked to above the 1.0670 before slipping back and trading quietly to the close.
• GBP: Cable move quietly through the Asian session dragged a little lower in early trading by the Euro losing a little ground as the EURGBP moved back above the 0.7000 levels however, for the most part having dipped from the 1.5220 areas the market held around the 1.5200 level to the London session with only one late attempt lower into the grey hours. Before rallying strongly with the move in the Euro, and EURGBP testing quickly to the 0.7140 from the 0.7040 lows, Cable spiked from the 1.5200 levels to the 1.5250 area, having had the quick move the market drifted through the session steadily moving to test the downside support into the 1.5190 levels again and held for the second time and moved steadily away from the area and into the FOMC release, the movement was less pronounced than the Euro however, there was a dip towards the 1.5200 levels before pushing above 1.5240 and settling down to trade in that area to the close.
• JPY: A quiet day for the USDJPY for the most part moving in a tight range through the early part of the Asian session, drifting around the 123.40 levels before dipping slowly to hold around the 123.25 areas to the grey hours, London slowly bought the USDJPY into the NYK session and the market tested to the 123.60 in early NYK, the market then traded around the 123.50 levels until the FOMC dipping to 123.40 and spiking to 123.75 before returning to the previous range and slowly rising to the close above the 123.60’s.
• AUD: Opening around the 0.7120 levels the market drifted through the Asian session moving into the 0.7090 levels as you would expect on an FOMC day, the market didn’t really improve into London and although the market recovered its losses and pushed towards the 0.7120 level there was never any impetus and it moved into the NYK session struggling around the 71 cent levels, NYK sold the Oz pre FOMC and the market slowly tested the 0.7070 levels, FOMC saw the market touch below the lows before bouncing to the 71 cent levels and then a slow recovery to the 0.7110 areas to the close.

Yesterday’s premiership results

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

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%

CHF        ZEW (Expectations) Nov A 0 | P 18.3

USD       Housing Starts Oct A 1.06M | C 1.16M | P 1.21M | R 1.19M

USD       Building Permits Oct A 1.15M | C 1.15M | P 1.11M

USD       Crude Oil Inventories A 252K | C 2.0M | P 4.2M

 

Good Luck,

Andy

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