Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 122.876 | EURUSD 1.06331 | AUDUSD 0.73227 | NZDUSD 0.66721 | USDCAD 1.33585 | USDCHF 1.02593 | GBPUSD 1.50816 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               123.09 | 122.82

EUR/USD             1.0637 | 1.0611

EUR/JPY               130.73 | 130.515

AUD/USD            0.7345 | 0.7305

NZD/USD             0.6681 | 0.6654

USD/CAD             1.3375 | 1.3355

EUR/CHF              1.0916 | 1.0896

USD/CHF             1.0271 | 1.02535

GBP/USD             1.5081 | 1.5062

EUR/GBP             0.70515 | 0.70455

For Today

• EUR: A very quiet session with the Euro seeing limited action and a steady drift lower from the opening around the 1.0635 areas to just above the 1.0610 as the market moves towards the grey hours as USD reclaims some of the lost ground from yesterday, Topside offers into the 1.0640-60 areas with the market lightening a little to the 1.0680 before slightly stronger bids appear into the figure area, a push through the 1.0720 areas is likely to opening the topside to 1.0780 however, inflationary numbers for the Eurozone will likely dominate and until the ECB press conference and rate decision is over with tomorrow the market is likely to be quiet. Downside bids light through the 1.0600 levels with the market well trampled around the area over the past week, bids are likely to appear from the 1.0560 areas onwards and likely to remain strong until a push through the 1.0540 areas, bids continue however, until closer to the 1.0500 levels those bids are likely to be mixed and if the market is there the technical players will be focusing on a breakout below the 1.0490-80 areas to test the years lows.
• GBP: EURGBP held in the 0.7045-50 areas for the most part and the drift of the Euro pulled the Cable with it through the session moving from the opening just above the 1.5080’s the market drifted down into the mid 1.5060’s through the session in slow trading, Topside offers light through the 1.5100 areas and likely to see a little more resistance in a test through the 1.5120 areas, a strong push through the 1.5130-40 areas will likely see the usual sentimental offerings quickly cleared with weak stops likely through the area and the market again looking to test the 1.5200 areas with congestion likely around that levels and limiting the topside for the day, with only minor data today the market is likely to be lead around by the Euro, downside bids light to the 1.5050 areas and then stronger bids starting to appear on a move through to test the 1.5000 levels, weak stops likely through the 1.4990 areas and the downside then opening for a test to the 1.4900-30 areas before more support starts to appear.
• JPY: The USD recovered slightly from yesterday’s selling with the USDJPY moving from the opening around the 122.85 level to start to rally once the Tokyo fixing supply was finished with and the market steadily pushed towards the 123.10 levels in a long slow drive, Topside offers are likely to continue to appear from the 123.20 areas onwards and the higher the market goes the more offers are likely to appear, Kuroda’s comments from earlier in the week likely to be at the back of people’s minds as a warning to further weakening however, a push through the 123.50 could possibly catch some weak shorts out and the market quickly attempting the 123.80 levels which are probably the strongest on the 123 handle with the market needing to push quickly beyond the 124.00 to set up any further gains. Downside bids seem to be stronger than first expected on the 122 handle with the market finding limited support through the 122.80-70 levels and then continuing from the 122.60 levels and down to stronger bids into the 122.30 levels, a push through the 121.70 areas will open the downside a little but only a little with bids likely to quickly move in unless the market expects something from official sources.
• AUD: A better than expected 3Q GDP number helped the Oz spike above the 0.7340 levels however once the initial knee jerk reaction to the number was over with the market dropped quickly back to trigger weak stops from the newly established longs with the strong number merely disguising the weakness in the economy, the market slipped back to trade in the 0.7320-0.7305 levels for the rest of the session in quiet trading. RBA’s Stevens took the opportunity to make a few comments of little import but generally welcomed the improved GDP number without actually offering details on implied growth forecasts. Topside offers through the 0.7340-60 areas are likely to give way to light stops and a run to the 74 cent level could be possible however, from that point on the market is likely to see stronger offers and the market a little more concerned on the push from the 69 cent level of September and the possibility of Steven’s making some late weak speech on the opportunities for him if it continued, Downside bids light into the 72 cent levels with the stronger bids not likely to be seen until the market pushes further into the 71 cent levels with the downside well traversed over the past few months.

Overnight News

GBP:

BRC Shop Price index -2.1%YoY vs. Oct -1.8%YoY

AUD:

RBA Steven’s Interest rates already very low

RBA Steven’s more could be done on that front if needed

USD:

Brainard USD effect in FED model implies delay in lift off

Today’s data

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

JPY         Monetary Base Y/Y Nov A 32.50% | P 32.50%

AUD       GDP Q/Q Q3 A 0.90% | C 0.70% | P 0.20%

09:30     GBP       UK Construction PMI Nov C 58.4 | P 58.8

10:00     EUR        Eurozone PPI M/M Oct C -0.40% | P -0.30%

10:00     EUR        Eurozone PPI Y/Y Oct C -3.20% | P -3.10%

10:00     EUR        Eurozone CPI Estimate Y/Y Nov C 0.20% | P 0.00%

10:00     EUR        Eurozone CPI – Core Y/Y NOV (A) C 1.10% | P 1.10%

13:15     USD       ADP Employment Change Nov C 185K | P 182K

13:30     USD       Non-Farm Productivity Q3 (F) C 2.20% | P 1.60%

13:30     USD       Unit Labour Costs Q3 (F) C 0.90% | P 1.40%

15:00     CAD       BoC Rate Decision C 0.50% | P 0.50%

15:30     USD       Crude Oil Inventories P 1.0M

19:00    USD       Fed’s Beige Book Report

Harry Hindsight              

• EUR: After a slow start an item in the DJ had most of the currencies rallying against the USD, the item in question again stated that the GPIF would be hedging the foreign investments however, there was very little detail and the usual as it was attributed to a source however, it was sufficient to move the market away from the opening 1.0565 levels and move quickly to test the 1.0600 levels into the early part of the Tokyo session, the market then slipped back as interest petered out and the market moved steadily to the 1.0580 areas for the move into the grey hours, light buying into the official opening saw the market rise quickly higher with the same news item catching the imagination and squeezing out some of the weak shorts with the market touching just below the 1.0620 areas before slipping back again to below the 1.0600 areas, the market continued to rise steadily from the move and the move into the NYK session has seen better figures from the Eurozone area, the move into the NYK session saw the market continuing to push higher and the market pushed lightly through the 1.0635 levels with US ISM numbers disappointing the markets however the push higher ran out of steam quickly and the market was unable to really consolidate through the 1.0630 areas and having briefly slipping back to the 1.0610 areas eventually finished the day pushing at the topside levels.
• GBP: Cable followed the early moves into the Tokyo session with the market lifting off the lows just above the 1.5050 areas and rallying to just below the 1.5100 and as with the Euro soon ran out of steam and although the market didn’t drift to far the move into the grey hours saw Cable again pushing at the 1.5100 levels and into the London session, the BoE Financial Stability report helped the market a little bit higher and the market tested through the 1.5120 levels before slipping quickly back as the EURGBP cross started to dominate the market moving from the 0.7015 areas and testing into the 0.7050 levels into the NYK session this left the Cable drifting lower having failed to move ahead above the 1.5120 levels and the market moved into the NYK session testing the opening levels and that 1.5050 level again before eventually rallying to the 1.5080 and a slow drawn out finish today around that area.
• JPY: Early buyers in the Sydney session managed to take the market to the 123.25 areas before moving into the Tokyo session and the early edition of the DJ saw the market drop quickly on the back of the comments on GPIF hedging current foreign holdings, the market had already given up the meagre gains into the Tokyo fix and from the 123.10 levels the market dropped quickly back to test below the 122.70 levels and into the weak bids however, it was sufficient to hold the market and the market moved to the 122.90 levels for the run to London, the London market bought from the opening with less inclination to follow the crowd and USDJPY was again back above the 123.10 levels for the move into the NYK session, poor ISM numbers then saw the market again fest to the 122.80’s with plenty of two way trading hitting the market through the day one has to be surprised at the range really with the market finishing the day around the 122.80-90 areas in a long dull finish to the day.
• AUD: Opening around the 0.7225 areas the early part of the session was limited until the GPIF comments led to strong selling of the JPY with the AUDJPY no different to the other Cross JPY pairs and the Oz moved quickly to the 0.7260 before holding for a short period and then seeing a secondary small rally in the run to the RBA announcement, touching the 0.7280 areas and the better offers, the RBA announcement was pretty much a none event with no change in the communique or the rate itself, the market drifted to the London open before the buyers really started to appear and the market testing to the 73 cent levels for the first time in early London, the market continued to hold close to the level and into NYK and the weak ISM numbers were sufficient to push the market through and trigger some minor stops to the 0.7320 before finding stronger offers standing in the way and the market eventually grinding to a halt just above the 0.7330 areas however, the move to the close was limited and the market still managed to finish some big figure from where it started the day.

Yesterday’s premiership results

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

NZD       Terms of Trade Index Q/Q Q3 A -3.70% | C -2.50% | P 1.30% | R 1.50%

JPY         Capital Spending Q3 A 11.20% | C 2.30% | P 5.60%

AUD       Current Account Balance (AUD) Q3 A -18.1B | C -16.6B | P -19.0B | R -20.5B

AUD       Building Approvals M/M Oct A 3.90% | C -2.40% | P 2.20% | R 2.30%

CNY        Manufacturing PMI Nov A 49.6 | C 49.9 | P 49.8

CNY        Non-manufacturing PMI Nov A 53.6 | P 53.1

CNY        Caixin PMI Manufacturing Nov A 48.6 | C 48.3 | P 48.3

AUD       RBA Rate Decision A 2.00% | C 2.00% | P 2.00%

CHF        GDP Q/Q Q3 A 0.00% | C 0.20% | P 0.20%

GBP       BOE Financial Stability Report

CHF        Retail Sales (Real) Y/Y Oct A -0.80% | C 0.40% | P 0.20%

CHF        SVME-PMI Nov A 49.7 | C 50.8 | P 50.7

EUR        Italy Manufacturing PMI Nov A 54.9 | C 54.3 | P 54.1

EUR        German Unemployment Change Nov A -13K | C -4K | P -5k

EUR        German Unemployment Rate Nov A 6.30% | C 6.40% | P 6.40%

EUR        Eurozone Manufacturing PMI Nov (F) A 52.8 | C 52.8 | P 52.8

GBP       PMI Manufacturing Nov A 52.7 | C 53.7 | P 55.5

EUR        Eurozone Unemployment Rate Oct A 10.70% | C 10.80% | P 10.80%

CAD       GDP M/M Sep A -0.50% | C 0.10% | P 0.10%

USD       Construction Spending M/M Oct A 1.00% | C 0.60% | P 0.60%

USD       ISM Manufacturing Nov A 48.6 | C 50.5 | P 50.1

USD       ISM Prices Paid Nov A 35.5 | C 40 | P 39

 

Good Luck,

Andy

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