Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 123.242 | EURUSD 1.06145 | AUDUSD 0.73094 | NZDUSD 0.66296 | USDCAD 1.33417 | USDCHF 1.01834 | GBPUSD 1.49508 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               123.46 | 123.225

EUR/USD             1.06195 | 1.0589

EUR/JPY               130.81 | 130.62

AUD/USD            0.7321 | 0.7284

NZD/USD             0.6659 | 0.6628

USD/CAD             1.3355 | 1.3293

EUR/CHF              1.08195 | 1.0800

USD/CHF             1.0210 | 1.0182

GBP/USD             1.4950 | 1.4923

EUR/GBP             0.7104 | 0.7095

For Today

• EUR: A slow climbing USD with light volumes through the Asian session saw the Euro slip from the 1.0610 areas to test into the low 1.0590’s with nothing particularly strong moving through, Topside offers into the 1.0630-50 areas is likely to be followed by weaker offers on the move through the 1.0660 levels with the market seeing stronger offers through the 1.0700-20 areas while there may be some weak stops around the 1.0730 levels those offers are likely to reappear on a test above the 1.0740 levels and the offers continuing weakly through the 1.0780. Downside bids light through the 1.0580 levels with the market seeing stronger bids into the 1.5060-40 areas before the market opens a little however, bids into the 1.0500 are possibly stronger as the market looks to buy in front of the years lows however, given the events for the day these bids could quickly evaporate if the right soundbites are delivered in the ECB press conference not that I particularly believe anything they say, not in the short term anyway, a strong push through the 1.0460 areas could see strong breakout selling moving into the market and the downside becoming more vulnerable to a longer term test to the parity levels.
• GBP: Cable traded very quietly through the session the market selling steadily into the 1.4920’s from the openings around the 1.4950 levels, cross EURGBP remained around the 71 level for the most part however, with the market quiet with the only real news was the vote on action again ISIL in Syria the main focus for the moment, Topside offers likely to be light into the 1.5000 areas and possible weak stops on a move through, 1.5040-60 area is likely to be a little stronger however a push through this level will possibly see continued selling on any move towards the 1.5100. Downside bids into the 1.4900 level with before the market opens to a deeper movement and the 1.4850-1.4800 becoming vulnerable however, the ECB rate decision is likely to be the dominating factor for the day and the cross is likely to be the one to watch.
• JPY: A steady rise for the USD saw the USDJPY slowly testing to the mid 123.40’s from the opening around 123.25 with quiet trading, Topside offers strong into the 123.70-124.00 levels and the market still concerned about the Kuroda comments from earlier in the week, whether that would be of consequence remains to be seen however, a push through the level opens the chance of further tests higher however, I wouldn’t really call the topside vulnerable and we could see plenty of two way flows if the market could push beyond 124.00 and eventually running out of steam. Downside bids now seem to be light through to the 122.80 levels and then some strength every 20 pips on a move to the 122.20 better bids and the market then struggling with sufficient bids to slow any move with weak stops likely to appear below the 121.70 levels.
• AUD: Early selling in front of the Trade balance numbers saw the Oz dip to 73 cents and then continuing the move into the Tokyo session where the release of a poor trade balance figure sent the market quickly lower to the 0.7285 levels however, the market held here and then started a steady rise to trigger weak stops on the move back through 73 cents and then a steady rise to the 0.7320 areas as the market adjusted to the OPEC announcement. Downside bids light into the 0.7280 areas and the market then vulnerable to a move to the 72 cent levels with this level likely to be only lightly defended and leaving the market to a return to the 71 cent handle. Topside offers see strong offers from the 0.7340 areas and then continuing through to 74 cents and stronger offers continuing through the level, a move through the 0.7450 area opens up the range to test possibly through to the 76 cent levels however, the offers are likely to be far stronger and Steven’s appearing on every TV channel to highlight his possibilities.

Overnight News

USD:

SF Fed’s Williams: Won’t Take Much of Shock to Return to Zero

USD: Williams: Fed Has Done ‘Pretty Good Job’ Signalling Lift off Near

Eight U.S. Global Systemically Important Banks Cut by S&P

USD/EM:

Fed Rate Hike Could Be Catalyst for EM Recovery, Hasenstab Says

OIL:

Saudi Arabia Set to Propose Eventual 1m Bpd OPEC Output Cuts: EI

Asia:

ADB Raises China 2015 GDP Growth Forecast as Economy Resilient

JPY:

Japanese Sold Net 156.7 Billion Yen Overseas Debt Last Week

Japan to Lower Corporate Tax to 29.97% in FY2016, Nikkei Says

Toyota Unions to Seek 3,000 Yen Base-Pay Rise Next Year: Nikkei

Japan to Seek End of Free Mobile Phone Deals Next Year: Yomiuri

Nikkei Japan Nov. Services PMI 51.6 vs 52.2 in Oct.

CNY:

IMF’s Zhu Says SDR Inclusion Basis for Financial Reform: Bus. Herald

Caixin China Nov. Services PMI 51.2 vs 52 in Oct.

CNY/AUD:

Australia Most Favoured by Chinese Business Leaders, Survey Shows

GBP:

U.K. Says It Has Conducted First Air Strikes in Syria: AP

AUD:

Australia Oct. Trade Deficit A$3.31b; Est. A$2.6b Deficit

Australia’s Oct. Private New Home Sales Fall 3% M/m

SGD:

Nikkei Singapore Nov. Whole Economy PMI 52.2 vs 50.2 in Oct.

NZD:

Auckland Residential Construction rises 13% y/y to Record

Today’s data

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

AUD       Trade Balance (AUD) Oct A -3.31B | C -2.61B | P -2.32B | R -2.4B

08:45     EUR        Italy Services PMI Nov C 53.9 | P 53.4

09:00     EUR        Eurozone Services PMI Nov (F) C 54.6 | P 54.6

09:30     GBP       UK Services PMI Nov C 55.1 | P 54.9

10:00     EUR        Eurozone Retail Sales M/M Oct C 0.20% | P -0.10%

12:30     USD       Challenger Job Cuts Y/Y Nov P -1.30%

12:45     EUR        ECB Rate Decision C 0.05% | P 0.05%

13:30     EUR        ECB Press Conference

13:30     USD       Initial Jobless Claims (NOV 28) C 269K | P 260K

15:00     USD       Factory Orders Oct C 0.90% | P -1.00%

15:00    USD       ISM Non-Manufacturing Composite Nov C 58.1 | P 59.1

Harry Hindsight              

• EUR: Euro’s slipped steadily from the opening 1.0635 areas to test into the grey hours below the 1.0610 levels with the market moving in anticipation of further talks by Draghi and possible disappointing inflationary numbers from the Eurozone, the move into the grey hours saw light buying to take the market back to the opening areas and the market moved quietly in early London trading, while the numbers were not overly poor there was no real improvement for the CPI estimate and the market dropped quickly with the market reacting to the prospect of the ECB following through with increased QE, the Euro pushed through the 1.0580 levels before fining limited support, then traded quietly through to the NYK opening and the release of stronger ADP numbers with the market triggering light stops to the topside before the release and reversing from the 1.0615 areas to again test the 1.0580 level, and the market eventually trading through the levels to again test the 1.0560 level, the end of the London session saw a brief test lower and into the 1.0550 levels before bouncing strongly off the level and squeezing back through to towards the opening levels.
• GBP: Cable traded quietly through the Asian session drifting from the 1.5080 levels only to hold in the mid 1.5060’s for much of the session, grey hour trading was limited and only once the London session opened and the release of the UK construction number did the market awaken and drop quickly some 20 pips on a less than expected number but still expansionary nonetheless, however the market from that point saw EURGBP buying moving in the market and a steady rise in the cross from the lows around 0.7030 levels, with a tight channelled rise to the 0.7110 area deep into the NYK session, this lead to pressure in the GBP and the market drifted steadily into the 1.5000 levels and broke the level comfortably and continuing the move lower with a final spike lower on the London close to briefly touch through the 1.4900 levels, the market recovered a little and climbed to the 1.4940-50 areas for the move into the close, whether other factors weighed on the market remains to be seen however, the market does seem to have overreacted to the Construction number and although there may have been some technical selling the move into the old 1.48-1.50 range seems strange.
• JPY: A quiet and steady rise for the USDJPY through the Asian session with the market opening around the 122.85 levels and pushing steadily through to the 123.10 areas into the grey hours, London was reluctant to follow the move and the market held the levels until the better ADP employment numbers were released in NYK and the USDJPY then started a steady but strong move through to push into the 123.60 levels before finding sufficient sellers moving in to send the market lower after the London close to the 123.15 levels and a slow session to the close.
• AUD: Overall a quiet day for the Oz with the market limping into the Tokyo session, Oz GDP number initially saw the market spike higher on a kneejerk reaction to above the 0.7340 levels before quickly dipping back to the opening levels around 0.7320 and triggering weak stops and then quiet trading through to the London session with the Oz testing to the 0.7305 levels with RBA’s Steven’s reiterating his ability to cut interest rates if necessary, the move into London saw the market renewing the upside movement and this time the market could only push to the 0.7335 before the NYK data releases started to appear in the market, the market again pushed lower as the last of the data was released and the lows were made into the close in London with the market testing through the 73 cent level, the rest of the session was uneventful with the market having recovered to above the 73 cent levels and holding a tight range around the 0.7305 levels to the close.

Yesterday’s premiership results

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%

GBP       UK Construction PMI Nov A 55.3 | C 58.4 | P 58.8

EUR        Eurozone PPI M/M Oct A -0.30% | C -0.40% | P -0.30% | R -0.40%

EUR        Eurozone PPI Y/Y Oct A -3.10% | C -3.20% | P -3.10%

EUR        Eurozone CPI Estimate Y/Y Nov A 0.10% | C 0.20% | P 0.00% | R 0.10%

EUR        Eurozone CPI – Core Y/Y NOV (A) A 0.90% | C 1.10% | P 1.10%

USD       ADP Employment Change Nov A 217K | C 185K | P 182K | R 196K

USD       Non-Farm Productivity Q3 (F) A 2.20% | C 2.20% | P 1.60%

USD       Unit Labor Costs Q3 (F) A 1.80% | C 0.90% | P 1.40%

CAD       BoC Rate Decision A 0.50% | C 0.50% | P 0.50%

USD       Crude Oil Inventories A 1.2M | C -0.6M | P 1.0M

 

Good Luck,

Andy

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