Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 122.799 122.72-90 | EURUSD 1.06474 1.0641-51 | AUDUSD 0.72375 0.7220-47 | NZDUSD 0.65636 0.6553-75 | USDCAD 1.33495 1.3324-52 | USDCHF 1.01849 1.01495-1.0205 | GBPUSD 1.5191 1.5180-1.5210 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               123.26 | 122.745

EUR/USD             1.0651 | 1.0600

EUR/JPY               130.79 | 130.57

AUD/USD            0.7249 | 0.7159

NZD/USD             0.6580 | 0.6503

USD/CAD             1.3397 | 1.3326

EUR/CHF              1.0848 | 1.08255

USD/CHF             1.0217 | 1.0186

GBP/USD             1.5196 | 1.5160

EUR/GBP             0.7008 | 0.69935

For today

• EUR: News that the Fed is to meet today (unexpectedly) to discuss the discount rate had the market moving on a Japanese bank holiday, Euro’s opened just short of Friday’s close and started moving steadily lower and pushing through the bids in the market before dipping through the 1.0630 level and quickly testing to the 1.0600 level before holding over the next hour or so and rising just a little from the lows to hold the 1.0610-15 levels into the grey hours. Topside offers are building into the 1.0680 areas however, for the moment the 1.0700 level still remains on the weak side if the market were to test through the levels, with that level weak the move to the 1.0740-60 levels is likely to see stronger offers appearing into the congestion before weak stops through the level opens up the topside run through 1.0800. Downside bids still remain through the 1.0600 levels however, while the current lows are possibly the last significant bids until closer to the 1.0520 areas the market is likely to keep testing to that level however, the fact that the Fed meeting while suggestive, as the major banks would have everyone believe does not categorically preclude anything and although some of the US numbers have been weak, others could suggest something different to how they have been read in the first place and I’d be more comfortable with advancing retail sales and falling inventories than the other way around and treat them as a lagging number rather than assume building inventories means anything other than what looks to be falling sales.
• GBP: Cable followed the general move once the news of the Fed meeting today was announced, moving off the 1.5195 areas in early trading the market slowly slipped lower and through the opening 1.5185 level and then quickly tested to the 1.5160 levels before holding steady and edging slowly to the 1.5175 levels where the market moves into the grey hours. Light offer through the 1.5200 levels with a mixture of orders moving through to the 1.5240 areas, nothing special about the level today and a push through the 1.5260 area with again opening the market to a fresh test through the 1.5300 levels however, once through the level the 1.5340-70 areas becomes key for any fresh moves to test the 1.5400 levels and further with the 1.5500 levels likely to remain the strongly offered areas. Downside bids sees bids into the 1.5150 areas with those bids likely to struggle against any real selling after a positive comment from the Fed and the 1.5100 level only being a minor number on the move lower with weak stops and slightly stronger breakout selling for fresh tests through the 1.5050 levels if it can make it before running out of steam and testing that large sentimental level around 1.5000
• JPY: Opening only a touch higher the move through the early session saw the market edging only slight higher from the 122.90 open however, the news of the Fed meeting was sufficient for the market to quickly move through the 123.00 level and test to the 123.25 areas before finding light resistance on what for me is buying the rumour only. Topside offers continuing through the current highs and running through to the 123.70 areas and then if anything likely to be stronger from there to the 124.00 levels however, with the Japanese away for the day those offers are likely to be in place and not likely to be changed or added to by the corp sellers, even through the 124.00 areas the market while seeing some weak stops will continue to dominated by offers and only a strong push through 125.00 will see a change in general flows with the topside becoming more vulnerable. Downside bids into the 122.50 are light at best with a better showing likely to the 122.00 areas with light profit taking and below the previous ranges then dominate with those bids likely to be into the 121.20 areas and continuing through to the 120.70 levels before market stops become a concern.
• AUD: The Oz opened just short of the closing levels on Friday and slipped slowly lower initially before the news on the upcoming Fed meeting was released and the market started to accelerate lower, moving steadily to the 0.7210 levels and then dropping quickly to the 0.7190 level and continuing to test into the 0.7160 areas before stabilising and moving to hold around the 0.7180 areas to the grey hours. Topside offers are likely to be thin until the 0.7250 areas again and this provides the start of offers through to the 73 cent levels with stronger offers likely to come into play on a test of the area and those offers likely to continue through to the 0.7340 before seeing a mixture appear and possible weakness above the 0.7360 areas in a move to the 74 cent areas, downside bids light through to the 70 cent levels before the bids really start to pile up in the market with the next big figure to the 69 cent level likely to provide plenty of interest from short covering and general buying with those bids increasing the closer the market moves to the 0.6900 areas.

Overnight News

EUR:

Eurogroup Meeting to Go Ahead Monday in Brussels: EU Presidency

JPY:

Japan Considers 3% Annual Increase to Minimum Wage, Nikkei Says

Explosion Heard at Time of Yasukuni Toilet Fire in Tokyo

NZD:

NZ Annual Immigration Gain from Australia First Since 1991

CNY:

China Seeks to Change Individual Income Tax: Eco. Info Daily

China to Offer Malaysia QFII Quota of Up to 50b Yuan: Li

China’s Li Chats With Abe, Urges Japan to Improve Relations

Today’s data

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

08:00     EUR        France Manufacturing PMI Nov (P) C 50.7 | P 50.6

08:00     EUR        France Services PMI Nov (P) C 52.1 | P 52.7

08:30     EUR        Germany Manufacturing PMI Nov (P) C 52.2 | P 52.1

08:30     EUR        Germany Services PMI Nov (P) C 54.3 | P 54.5

09:00     EUR        Eurozone Manufacturing PMI Nov (P) C 52.3 | P 52.3

09:00     EUR        Eurozone Services PMI Nov (P) C 54.2 | P 54.1

15:00     USD       Existing Home Sales Oct C 5.43M | P 5.55M

Weekend News

USD:

Fed’s William’s Sees `Strong Case’ for Dec. If Data Hold Up
Obama Vows No Safe Haven for Terrorists as New Solutions Sought
EUR:

Belgium Warns of Paris-Style Attack, Brussels in Lockdown
Belgium’s Reynders Says Terror Threat ‘Precise, Imminent’: Belga
Greece Has Completed First Set of Milestones, Dijsselbloem Says
JPY:

Bank of Japan’s Shirai Says BOJ Should Keep Policy Accommodative
Japan’s Top Company Executives Pare Economic Outlook, Asahi Says
Japan Car, and Electronic Unions to Pare Pay Hike Goal: Nikkei
Abe Touts Streamlined Loans as China’s AIIB Gets Set to Lend
Japan to Expand Insurance for Overseas Investments, Nikkei Says
AUD/JPY:

NAB, Nippon Life Aim to Be No. 1 in Australia Life Insurance
OIL:

OPEC Members Want Crude Prices at $70 a Barrel: Iran Minister
CNY:

China May Become World’s Largest Net Creditor Nation: Yi
S. China Sea Military Facilities Don’t Mean Militarization: Liu
China Pledges $10b Infrastructure Loans in S.E. Asia: Xinhua
INR/CNY:

Unfair to Blame China for Currency War, Says India’s Rajan
PLN:

Polish Deputy PM Seeks ‘Healthy’ Economic Growth at More Than 4%
CZK:

Singer Says Czech FX Cap Exit Unlikely Before Around End-2016
HKD:

Hong Kong Economy to Face Pressure from Global Slowdown: Tsang

Harry Hindsight

• EUR: A tight range through the Asian session with the Euro holding in the 1.0710-30 range though to the grey hours, the release of poor PPI numbers from Germany was sufficient to break the downside and the 1.0700 saw weak stops on the break only to hold around the 1.0690 levels and after a short period the market slipped into the 1.0670 levels however, even with that selling the market still seemed limited and the market had to wait for the NYK session before the push lower continued with the market slowly pushing to the 1.0640 levels through the session to make the lows in a quiet session overall.
• GBP: Cable like the Euro traded quietly through the Asian session with the market moving in the 1.5270-1.5300 areas, having moved to the 1.5300 level the market was unable to push through the level and spent the second half of Asia drifting away from the areas and towards the lows in the 1.5270 areas, grey hours held the 1.5280 areas German PPI numbers saw the Euro again in trouble and the EURGBP slipped from its highs above the 0.7010 areas to test through to the 0.6985 levels and holding in that area for a few hours, and while the PBSR number was higher than expected the Cable managed to push just beyond the 1.5300 levels to make the highs
• JPY: A choppy day for the USDJPY but well contained with the market struggling on the moves above the 123.00 levels having made a move higher into the Tokyo session and again into the London opening both attempts looked half-hearted at best and the market dropped back from those highs to test the 122.75, the first time in Tokyo as the market closed out long positions as the market moved towards a long weekend and then into the London session with the breakout buyers failing and cutting quickly with the move back to 122.90, the move into NYK provided little action and the range closed up and the market remained trapped between the 122.75 area and the 122.90 to the close. No change in the monetary policy provided nothing for the market to get its teeth in and hence the narrow ranges.
• AUD: The Oz made gains over the session after a very slow start during the Asian session holding for much of the early session around the 0.7190 the market jumped to the 0.7210 levels before holding those levels through to the London session, early London tested the topside resilience and although it was only able to take the market to the 0.7220 areas the market held the levels in the run to the NYK session and gave the market more opportunity to test higher again in a further leg to the 0.7250 and deep into the resistance areas however, as with the other rallies once it got to those areas it struggled to the close drifting only slightly lower.

Friday’s premiership results

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

07:00     EUR        German PPI M/M Oct A -0.40% | C -0.20% | P -0.40%

07:00     EUR        German PPI Y/Y Oct A -2.30% | C -2.00% | P -2.10%

09:30     GBP       Public Sector Net Borrowing (GBP) Oct A 7.5B | C 5.5B | P 8.6B | R 8.3B

13:30     CAD       Retail Sales M/M Sep A -0.50% | C 0.20% | P 0.50%

13:30     CAD       Retail Sales Less Autos M/M Sep A -0.50% | C -0.20% | P 0.00%

13:30     CAD       CPI M/M Oct A 0.10% | C 0.10% | P -0.20%

13:30     CAD       CPI Y/Y Oct A 1.00% | C 1.00% | P 1.00%

13:30     CAD       BoC CPI Core M/M Oct A 0.30% | C 0.20% | P 0.20%

13:30     CAD       BoC CPI Core Y/Y Oct A 2.10% | C 2.00% | P 2.10%

15:00     EUR        Eurozone Consumer Confidence Nov (A) A -6.0 | C -7 | P -7.7

Stay lucky

Andy

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