Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 122.816 122.635-88 | EURUSD 1.05939 1.0589-95 | AUDUSD 0.71936 0.7191-0.7205 | NZDUSD 0.65333 0.6521-42 | USDCAD 1.33749 1.3357-80 | USDCHF 1.02996 1.02905-1.0315 | GBPUSD 1.5034 1.5031-55 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               122.87 | 122.69

EUR/USD             1.0597 | 1.0570

EUR/JPY               130.10 | 129.82

AUD/USD            0.7199 | 0.7171

NZD/USD             0.6551 | 0.6515

USD/CAD             1.3386 | 1.3360

EUR/CHF              1.0915 | 1.0900

USD/CHF             1.03135 | 1.0296

GBP/USD             1.5049 | 1.5015

EUR/GBP             0.7046 | 0.70365

For today

• EUR: Light EURUSD buying from the opening found strong EURJPY selling moving in and the Euro found itself quickly on the back foot and pressing to the lows around the 1.0570 areas into the early part of Tokyo before reversing its losses as the EURJPY selling subsided and a little weakness in the USD moved into the market. Topside offers light through the 1.0600 levels with the strength for the moment around the 1.0640-60 areas before opening up for a test into the 1.0700 levels however, that 1.0680-1.0700 levels a push through the 1.0720 levels will likely see some stops appearing in the market and the momentum could see the market moving quickly to test through the 1.0750 levels before hitting some similar offers as seen around the 1.0700 levels, Downside bids likely to be strong through the 1.0580 levels still and those bids are likely now to continue into the 1.0550 areas and with only a small gap in the market on a move through the 1.0540 before stronger bids into the 1.0500 areas and the lows of the year. However, with a lot of top tier numbers this week early trading is likely to be limited.
• GBP: Cable traded quietly with the market drifting steadily lower into the early Tokyo session and dipping briefly below the 1.5020 levels before moving steadily back to the 1.5030 level and holding the areas through several hours and into the grey hours, Topside offers light through the 1.5090-1.5100 levels and the market is only likely to see offers on the move through the 1.5120 areas with a push through the 1.5150 level possibly seeing weak stops appearing and the market opening for a test through the 1.5200 areas, Downside bids are likely to be fairly substantial into the sentimental level of 1.5000 and a push through is likely to see plenty of congestion to slow the descent however, the ranges from early in the year do come into focus and could possibly come into play with the 1.4900 areas likely to become a downside.
• JPY: Opening around the 122.80 levels the market started to slip lower as the market moved through the early part of the session with reasonably strong EURJPY selling meeting USDJPY buying eventually saw the USDJPY moving slightly lower through the session to test to the 122.70 areas as trading fell away with light numbers showing. Topside offers into the 123.00 levels still remain and those offers likely to continue through with a mix of light stops on the push to 123.20 however, from that point on there is likely to be offers all the way through to the 123.60 levels and then an increase in offers as you close on 124.00 areas. Downside bids light 122.70 before the market opens a little with only small bids appearing until the 122.30-00 areas where the size is likely to improve and continue through to the 121.80 before the market opens for a test to the 121.00 areas.
• AUD: Early selling from the Sydney opening saw the market drop back from the opening around 0.7195 levels to test into the 0.7170’s before a slow and steady grind to the opening levels. Topside offer light through the 0.7200 levels and then a little stronger to the 0.7220, a move through though sees stronger offers still from the 0.7240-60 areas and then offers likely available every 20 pips with strength into the 0.7300-20 areas. Downside bids light into the 0.7170 areas and the market again opening for a test into the 71 cent level and the weakness continuing through the level with very little likely to show until the market starts to look like the 70 cent level could come under pressure.

Overnight News

JPY:

Kuroda: FX intervention is only used in special circumstances

Kuroda: Could intervene if FX deviates from state of economy

Kuroda: True that monetary policy can affect FX in long term

Kuroda: Weak Yen can boost import costs, pressure households

Kuroda: Weak Yen good for exports, profits, can help stocks

Kuroda: Ideal for FX to reflect economic fundamentals

Abe public support rises 8 points to 49%

Abe orders early cut of Japan Corp. Tax rate to under 30% ‘ Kyodo

AUD:

Australia faces A$38B budget blowout to 2018-19 : Deloitte

Australia loan balance rises 0.8% MoM to A$2.2T

NZD:

New Zealand Business survey shows better economic vibe

EUR:

ECB Chief plans new €600bn injection Sunday Times

Today’s data

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

NZD       Building Permits M/M Oct A 5.10% | P -5.70%

AUD       TD Securities Inflation M/M Nov A 0.10% | P 0.00%

JPY         Industrial Production M/M Oct (P) A 1.40% | C 1.90% | P 1.10%

JPY         Retail Trade Y/Y Oct A 1.80% | C 0.90% | P -0.20% | R -0.10%

NZD       NBNZ Business Confidence Nov A 14.6 | P 10.5

JPY         Housing Starts Y/Y Oct A -2.50% | C 2.50% | P 2.60%

08:00     CHF        KOF Leading Indicator Nov C 100.3 | P 99.8

09:30     GBP       Mortgage Approvals Oct C 70K | P 68.9k

09:30     GBP       M4 Money Supply M/M Oct C -0.20% | P -1.00%

13:00     EUR        German CPI M/M Nov (P) C 0.10% | P 0.00%

13:00     EUR        German CPI Y/Y Nov (P) C 0.40% | P 0.30%

13:30     CAD       Current Account (CAD) Q3 C -15.2B | P -17.4B

14:45     USD       Chicago PMI Nov C 54 | P 56.2

15:00     USD       Pending Home Sales M/M Oct C 1.30% | P -2.30%

Harry Hindsight

• EUR: Asia was reasonably quiet with the market moving from the opening 1.0610 levels to test the 1.0600 levels in early Tokyo before rejecting the area and pushing back above the opening levels, the move into the grey hours saw the market start a steady climb through 1.0620 and weak stops pushing the market to above the 1.0630 levels before early London moved in to curb the exuberance and send the market steadily into the opening in London lower and down again to the 1.0600 levels, Draghi comments sending the market lower into the Eurozone numbers, with Draghi reiterating his willingness to cut interest rates further into the negative area and increase QE in the hope of stimulating inflation, maybe it’s time to rethink the idea as I’m sure the more they cut the less likely it is to happen now with consumers concerned, retail sector cutting prices to attract concerned consumers and manufacturers and producers looking at the bottom line all the time to find another small cut to remain competitive, Euro’s traded down into the 1.0575 area and bounced a little with the numbers a little mixed before moving into NYK again drifting a little lower on a USD move rather than Euro however, although the lows were lower it was only around 5 or 6 pips before the market started a steady recovery back to the 1.0600 areas with a lacklustre NYK session.
• GBP: A tight range in the EURGBP having made its way back to the opening 0.7025 levels after dipping to test through the 0.7020 area Cable remained in a dull market through Asia gradually falling away from the opening 1.5100 areas and testing the 1.5080 levels into the grey hours, from that point on the market moved broadly in line with the Euro with EURGBP cross touching the 0.7050 areas and then bouncing between 0.7030 and 0.7050 for much of the early London session, as the Euro dipped so did the Cable and it dropped from the opening levels into the London session and based from that point on the 1.5030 levels and trading around the 1.5050 level through to the end of London and then holding just below that level to the close in quiet trading.
• JPY: USDJPY opened quietly as you’d expect and the market was contained around the 122.60 levels for the most part before on test higher through the 122.70 level on fixing demand, the move into the late part of the session saw the market losing impetus and slowly slipping into the grey hours testing the lows and pushing eventually to the 122.30 levels before the London opening reversed the market and the market quickly moving back to the 122.60 areas and holding the area again until the NYK session moved into the market and the steady rise to the 122.85 started and took several hours to complete with the market trading around the areas to the close.
• AUD: The Oz moved through the day slipping slowly lower for the most part, with the early session seeing the Oz slowly move from the opening 0.7225 areas to test into the 0.7240 level just before the market moved into the grey hours, a quick move lower into the grey hours saw the market touch through the 72 levels from the highs and then an slow drift through the day with the market eventually holding the 0.7185 level to a quiet close.

Friday’s premiership results

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

23:30     JPY         Jobless Rate Oct A 3.10% | C 3.40% | P 3.40%

23:30     JPY         Household Spending Y/Y Oct A -2.40% | C 0.00% | P -0.40%

23:30     JPY         National CPI Core Y/Y Oct A -0.10% | C -0.10% | P -0.10%

23:30     JPY         Tokyo CPI Core Y/Y Nov A 0.00% | C -0.10% | P -0.20%

00:05     GBP       GfK Consumer Sentiment Nov A 1 | C 2 | P 2

09:30     GBP       GDP Q/Q Q3 (P) A 0.50% | C 0.50% | P 0.50%

09:30     GBP       Index of Services 3M/3M Sep A 0.70% | C 0.80% | P 0.90%

10:00     EUR        Eurozone Economic Confidence Nov A 106.1 | C 105.9 | P 105.9

10:00     EUR        Eurozone Business Climate Indicator Nov A 0.36 | C 0.45 | P 0.44

10:00     EUR        Eurozone Industrial Confidence Nov A -3.2 | C -2.1 | P -2

10:00     EUR        Eurozone Services Confidence Nov A 12.8 | C 12 | P 11.9

10:00     EUR        Eurozone Consumer Confidence Nov (F) A -5.9 | C -7.9 | P -6

13:30     CAD       Industrial Product Price M/M Oct A -0.50% | C -0.10% | P -0.30% | R -0.40%

13:30     CAD       Raw Materials Price Index M/M Oct A 0.40% | C 0.40% | P 3.00% | R 2.40%

Stay lucky

Andy

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