Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 122.606 | EURUSD 1.09391 | AUDUSD 0.73408 | NZDUSD 0.66577 | USDCAD 1.33549 | USDCHF 0.99328 | GBPUSD 1.5144 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               122.85 | 122.48

EUR/USD             1.0956 | 1.08995

EUR/JPY               134.20 | 133.75

AUD/USD            0.7349 | 0.7313

NZD/USD             0.6694 | 0.6660

USD/CAD             1.3359 | 1.3336

EUR/CHF              1.0860 | 1.0838

USD/CHF             0.9942 | 0.99115

GBP/USD             1.5160 | 1.5114

EUR/GBP             0.7235 | 0.72085

For Today

• EUR: Better ranges for the Asian session even thought it’s a NFP day, with the market initially drifting a little lower as early sellers moved in on the Sydney session, the move into the Tky session saw the market quickly rise to the 1.0950 levels as Japanese moved into the market as buyers, for the most part the early sellers were more interested in selling the EURJPY and having moved down through the 134.00 levels the Euro rise higher again gave the sellers of the cross sufficient interest to sell again and the Euro again tested to the 1.0900 levels with similar results for the EURJPY in that the cross was able to soak up the selling and gradually rise back to the 134.00 level, Euro moved off the 1.0900 level and again started to push higher in a steady climb into the grey hours holding around the 1.0940 areas with reasonable volumes going through. Prior to yesterday the market was all about selling the Euro in preparation for further easing, that left the market vulnerable for the move we saw however, having now moved towards the 1.1000 levels the market see’s strong offers into the 1.1000 levels with the market possibly interested in reselling the easing story however, a push through the 1.1030-50 areas does again opening up further upside potential with the 1.1200 level likely to be key on any attempt to move towards the ranges in Sep-Oct, Downside bids are likely to be reasonably weak until the market can repopulate and given that it’s a NFP the downside is likely to remain weak and open to the 1.0830 areas before any likely support appears with possible weak stops through the 1.0800 leading to a further test to the 1.0720 areas.
• GBP: A quiet opening and the market drifted to the Tokyo session from the opening 1.5145 only to spike on the Tokyo opening to 1.5155 areas as the Tokyo market traded in the aftermath of the previous days movements, once the initial rush was over though Cable slipped steadily lower to the 1.5120 areas and remained in a tight range through to the grey hours. Topside offers into the 1.5160 levels before larger offers make an appearance on a move to the 1.5200 areas, even so once the market can break through that level the amount of congestion to the 1.5240 areas is likely to slow the market before stronger offers again appear into the 1.5300 level and possibly key to a return to test the 1.5500 levels. Downside bids light through to the 1.5050 areas and the downside is again vulnerable having already tested to the 1.4900 levels which is now the key support level for any further weakness, but as with the Euro the market needs time to recover and so therefore is in a rather dangerous position with NFP to come.
• JPY: The USDJPY has been dominated more or less by the movements in EURJPY with early sellers appearing in the cross to send the market lower to test the 134.00 level, early selling saw the Euro move lower and allowed the USDJPY to test to the 122.75 areas from the opening 60 areas, this move then reversed as the Euro found fresh buyers into the Tokyo session and the USDJPY tested to the 122.50 areas as the pressure on the EURJPY cross continued, the EURJPY then managed to dip to the 133.75 levels and the selling was over allowing both legs to rise steadily and the USDJPY made its highs above the 122.85 levels before drifting through the session to hold for a long period around the opening levels. Topside offers light through the 122.80 areas and likely to continue into the 123.20 areas before the market is likely to see an increase on the offer side in any attempt through to the 123.50 areas with larger offers likely to move into the market from then on to the 124.00 levels, a solid push through the level will open up a renewed interest of the 125-126 areas however, one suspects that the BoJ and MoF will follow that with commentary to keep it in check. Downside bids into the 122.50 levels are light however, these light bids are likely to continue working through to the 122.20 areas and slightly stiffer bids a push through the 122.00 areas is likely to see weak stops appearing quickly and the market quickly pushing to the 121.50 level and only slightly better bids with congestion from there until 120.50 likely to have limited effect on a strong move.
• AUD: The Oz was very quiet with the market drifting from the opening levels with only one brief attempt higher into the Tokyo opening to set the highs around the 0.7350 levels before moving through the session pushing down into the 0.7315 areas and the grey hours, topside offers from the 0.7360 levels are likely to extend through to 74 cents, through the level the market is likely to see a continuation of offers pushing into the 0.7460 levels which is not insurmountable however, these offers protect the possibility of a move back above 76 cents and then the chance of RBA’s Stevens making his way to the nearest microphone to highlight his ability to cut interest rates further. Downside bids limited on a move back through the 73 cent level and the stronger bids into the 72 cent level however, the downside does seem to be the weakest side with no really strong levels until much lower and the market testing through the 71 cent level and moving towards 0.7020 areas where the market remains fairly strong after recent tests.

Overnight News

CNY:

PBOC Official Says Yuan Convertibility Already High

AUD:

Australian Oct. Retail Sales Rose 0.5% M/M; Est. 0.4% Gain

RUB:

Russia Outlook to Stable from Negative by Moody’s

NZD:

N.Z. Export Commodity Prices Declined in November, ANZ Says

Today’s data

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

AUD       Retail Sales M/M Oct A 0.50% | C 0.40% | P 0.40%

JPY         Labour Cash Earnings Y/Y Oct A 0.70% | C 0.40% | P 0.60% | R 0.40%

JPY         Consumer Confidence Nov A 42.6 | C 41.8 | P 41.5

07:00     EUR        German Factory Orders M/M Oct C 1.30% | P -1.70%

08:15     CHF        CPI M/M Nov C 0.00% | P 0.10%

08:15     CHF        CPI Y/Y Nov P -1.40%

09:10     EUR        Eurozone Retail PMI Nov P 51.3

13:30     USD       Change in Non-farm Payrolls Nov C 198K | P 271K

13:30     USD       Unemployment Rate Nov C 5.00% | P 5.00%

13:30     USD       Trade Balance Oct C -40.6B | P -40.8B

13:30     CAD       Net Change in Employment Nov C -0.7K | P 44.4K

13:30     CAD       Unemployment Rate Nov C 7.00% | P 7.00%

13:30     CAD       Trade Balance (CAD) Oct C -1.7B | P -1.7B

13:30     CAD       Labour Productivity Q/Q Q3 C 0.20% | P -0.60%

15:00     CAD       Ivey PMI Nov C 55.3 | P 53.1

Harry Hindsight              

• EUR: A steady drift through the Asian session dipping from the opening around the 1.0580 levels to move into the London session testing the 1.0550 levels as the market dipped on the expectations of changes to the QE and interest rates in the Eurozone area however, they didn’t disappoint my expectations as all the dovish talk turned out to be an illusion with -0.10 lowering of the deposit rate and an extension of the QE by 6 months with further rhetoric however, the market had been expecting further easing and possibly a larger cut, the market moved initially from the lows to test above the 1.0600 levels there was limited period where the market was caught a little with banks struggling to cover positions given to them in the rush higher through 1.0650 and for a short period the market ranged wildly before resuming its move higher to push through the 1.0700 levels, US initial claims numbers came in as expected and slightly higher than the previous month and the Euro again moved higher and this time squeezed higher as much of the short market now frantically covered as the market drove quickly back through 1.0700 and only took a brief gasp at the 1.0800 level before continuing and driving towards the 1.0900 levels so 350 pip in an hours trading, once the market calmed the rise was far from over however, the rest of the session saw a steady rise and the push through the 1.0900 level was several hours later rising from that point steadily to above 1.0970 before running out of steam and settling down to trade around the 1.0950 levels into the close.
• GBP: After a rangy session in Asia with the market opening around the 1.4950 areas to trad through to the London session holding the 1.4920-40 levels for the most part the movement in the Euro left the Cable struggling to keep up with the rise with the EURGBP rising quickly from the ECB announcement from the 0.7060 leels to the 0.7140 area before holding briefly into the US numbers and then continuing to the 0.7240 levels in the same fashion as the previous rise, Cable was therefore dragged by the movement in the Euro in several moves through the session with the early move in Cable pushed to above the 1.5000 before stalling and then continuing on the US release to above 1.5060, the market then settled a little to trade in the 1.5040-60 levels as profit taking from the 1.49 level, the move to the close in London then left the Cable free to continue rising through the session to test to the 1.5160 levels before finding sufficient interest to slow the market in the move through the last few hours.
• JPY: The USDJPY through the Asian session saw strong two way trading with the market slowly trading from the opening 123.25 areas and pushing gradually through the session to test the 123.50 areas, the move into the London session saw further buying into the strong offers and the break through the level was only slight and brief before holding just below the level into the ECB announcement, with the rise in the Euro the USDJPY was forced steadily lower through the period to test back through the 123.00 levels with the EURJPY moving from the 130.30 areas to test to just below the 134.00 levels and waiting offers, the NYK session continued to cover the Euro shorts and the offers in EURJPY continued to push the USDJPY lower to test late into the session to the 122.30 areas before reversing only slightly to finish the day around the 122.60 levels.
• AUD: Less interest in the Oz over the course of the day, with early sellers dropping from the 0.7310 areas to touch through to 0.7285 with a poor trade balance number encouraging the sellers, once the market found it difficult to move through the lows the market steadily reversed and this started a steady rise through the sessions to test the 0.7350 levels into the ECB release, EURAUD buying saw the Oz dip a little before the US release and again the topside was threatened however, the second move proved too much for the pair and the Oz having been dominated by moves in the Euro found itself now free of the movement and rejecting those lows to move steadily back to the highs and managing to push through the 0.7350 levels into the closing hours of the day trading to the 0.7365 levels before slipping back to the close.

Yesterday’s premiership results

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

EUR        Italy Services PMI Nov A 53.4 | C 53.9 | P 53.4

EUR        Eurozone Services PMI Nov (F) A 54.2 | C 54.6 | P 54.6

GBP       UK Services PMI Nov A 55.9 | C 55.1 | P 54.9

EUR        Eurozone Retail Sales M/M Oct A -0.10% | C 0.20% | P -0.10%

USD       Challenger Job Cuts Y/Y Nov A -13.90% | -1.30%

EUR        ECB Rate Decision A 0.05% | C 0.05% | P 0.05%

EUR        ECB Press Conference

USD       Initial Jobless Claims (NOV 28) A 269K | C 269K | P 260K

USD       Factory Orders Oct A 1.50% | C 0.90% | P -1.00%

USD       ISM Non-Manufacturing Composite Nov A 55.9 | C 58.1 | P 59.1

 

Good Luck,

Andy

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