Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 123.113 123.21-28 | EURUSD 1.08819 1.0866-69 | AUDUSD 0.73394 0.7331-52 | NZDUSD 0.6746 0.6737-56 | USDCAD 1.33619 1.3361-66 | USDCHF 0.99659 0.9969-85 | GBPUSD 1.51101 1.5104-06 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               123.33 | 123.15

EUR/USD             1.0887 | 1.0854

EUR/JPY               134.13 | 133.805

AUD/USD            0.7359 | 0.7322

NZD/USD             0.6744 | 0.6691

USD/CAD             1.3400 | 1.3363

EUR/CHF              1.0868 | 1.08405

USD/CHF             0.9987 | 0.9964

GBP/USD             1.5114 | 1.5097

EUR/GBP             0.72065 | 0.7193

For today

• EUR: Light buying from the opening in the EURJPY cross saw the Euro move off the opening 1.0870 levels to test into the high 1.0880’s before the market saw the early Japanese sellers move into the market and the market retracing its steps into the Tokyo opening and testing through steadily to the 1.0855 areas before running out of momentum and trading around the 1.0860’s into the grey hours, Topside offers into the 1.0900 areas are likely to be reasonably weak and a move through will see stronger offers likely to be building from the 1.0950 areas and through to the 1.0980 levels and from there becoming stronger into the 1.1000 area with these offers passingly continuing to the 1.1020 levels before weak stops are likely to appear, even so the market is still likely to struggle from the 1.1040-60 areas and only a strong push through the 1.1100 area will open the topside. Downside bids likely from the 1.0820 levels and these bids are possibly reasonably strong with the market requiring a strong break through the 1.0780 levels to negate the move from the ECB announcements and opening the possibility for a move back below the 1.0700 levels and further weakness, and the opening for further tests of the lows.
• GBP: opening around the 1.5105 areas the market tested around the 1.5115 levels into the Tokyo session before slowly drifting to hold around the 1.5100 for the bulk of the session and into the grey hours, Topside offers through the 1.5150 level are light and continue through to the 1.5170 areas before stronger offers are likely into the 1.5200 however, they are not likely to be particularly strong but they are likely to continue with a push through the 1.5250 areas likely to see some weak stops being covered by offers in the area, a strong push towards the 1.5300 levels are likely to see stronger offers moving in, Downside bids light through the 1.5100 as we’ve seen and the bids to the downside remain fairly week until the market pushes into the 1.5000 area wit likely stronger bids starting to build, with further strength on any push below the 1.4950 areas.
• JPY: USDJPY opened slightly higher from Friday’s close and struggled around the 123.20 levels deep into the session before pushing to the 123.30 levels to hold in those areas for the move into the grey hours, offers continue all the way through the 123 handle with little in the way of stops appearing in the market with the 123.50 likely to be the start of stronger offers continuing all the way to the 124.00 areas a push through the 124.20 areas is the point where stops are likely to appear but this is not likely to be particularly strong and offers are again likely to move in quickly once the market clears them out of the way, downside bids around the 123.00 areas extend into the 122.50 areas before the market opens a little with possibly weak stops through the level and the market likely to test the 122.20-121.80 areas a push here will possibly see weakness appearing and the downside opening further.
• AUD: The Oz traded quietly through the session with the market contained in a 15 pip range for the most part and trading around the 0.7330 levels having opened around the 0.7340 areas, early into the Tokyo session the market repeatedly attempted to push through the 0.7320 levels but with very little impetus the market eventually settled to trade tightly around 0.7330 into the grey hours, topside offers into the 0.7370 levels and those offers likely to build into the 74 cent level with the market likely to face less resistance once the market moves through the level, 0.7440 is likely to see some light resistance however, a push through the 0.7460 levels will probably open the topside to further attempts to break through the 75 cent levels with the market having attempted the level back in July with no real success. Downside bids into the 72 cent levels are likely to be the key to a downside penetration and for the moment with very little data for the day likely to be doubtful and the tight ranges seen through Asia possibly continuing through the day.

Overnight News

JPY:

Kuroda Says BOJ Shouldn’t Institute Negative Interest Rate

Kuroda says BOJ’s Monetary Easing Is Exerting Intended Effects

BOJ’s Sato: Japan CPI Data Has Statistical Problems Unlike U.S.

Japan Cabinet Approval Rating Rises 4Ppts to 43%: Mainichi Poll

Japan Cabinet Approval Rating Falls 3Ppts to 48%: Yomiuri Poll

HKD:

HKMA Chan Says U.S. Rate Rise to Lead to Outflow from H.K.: TV

AUD:

Australia’s Nov. Construction Index Falls 1.4 Pts M/m to 50.7

Australia Nov. ANZ Job Ads Rise 1.3% vs 0.3% in Oct.

PLN:

Bratkowski Sees No Sense in Possible Polish Interest-Rate Cut

GBP:

U.K. Consumer Spending Rose 1.1% in Nov., Visa Europe Says

EUR:

E.U. Set to Ease Limit on Foreign Investment in Airlines: FT

Today’s data

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

JPY         Leading Index Oct (P) A 102 | C 102.9 | P 101.6

07:00     EUR        German Industrial Production M/M Oct C 0.80% | P -1.10%

09:30     EUR        Eurozone Sentix Investor Confidence Dec C 17.2 | P 15.1

15:00     USD       Labour Market Conditions Index Change Nov P 1.6

Weekend News

JPY:

Japan’s Economy Minister Revises Estimate for Third-Quarter GDP
Japan to Compile 3.3 Trillion Yen Extra Budget, Nikkei Says
Japan Considers Cutting Corp Tax to 29.74% in FY2018: Nikkei
Japan Considering Property Tax Exemption for Businesses: Amari
Abe Has No Plan to Hold Upper, Lower House Vote Same Day: Kyodo
Japan to Reduce FY2015 Bond Issuance on Tax Rev. Growth: Nikkei
Toshiba Considers Selling White-Goods Business, Kyodo Says
USD:

Bullard Says Take FOMC at Its Word: Rate Hikes Will Be Gradual
Banks Said to Face SEC Probe Into Possible Credit Swap Collusion
Kerry Says Syria Talks Will Take Place in N.Y. in Dec.: Reuters
Obama to Speak as FBI Pursues Terrorism in California Shootings
USD/JPY:

U.S., Japan Fail to Agree on New Slots for Tokyo Airport: Kyodo
NATO:

NATO’s Stoltenberg Says Russia Should Focus Strikes on IS: Welt
OIL:

OPEC Unity Shattered as Saudi-Led Policy Leads to No Limits
Saudi’s Naimi Says Oil-Price Band Not Feasible: Al Eqtisadiah
GBP:

London Police Investigate Stabbing at Tube Station Saturday
ZAR:

South Africa Cut to BBB- by Fitch, Outlook Stable
TRY:

Turkey Affirmed by Moody’s, Outlook Still Negative
EUR:

Greek Lawmakers Approve 2016 Govt. Budget Plan: Speaker

 

Harry Hindsight

• EUR: A nervous day overall, with the market slipping from the opening levels just below the 1.0950 areas and to the 1.0920 level before the market in Tokyo opened with strong late comer buying and the market testing briefly through the 1.0950 levels before a steady drift lower and through to the 1.0900 levels, the move towards the grey hours again saw the market rising slowly towards the 1.0950 areas again, grey hours saw the early traders in Europe selling the Euro again and the market slowly moved to the 1.0920 areas before German factory orders saw a good gain and the market dropped quickly through the 1.0900 levels and moved into the official London opening testing the 1.0860 areas, the market through the early London session ranged from the lows to test the 1.0900 before moving into the NYK session, a poor trade balance saw the market in the Euro rise quickly to the 1.0950 areas and the NFP saw the market drop back to the 1.0860 levels all in a very short period the market continued the sharp moves and the market eventually tested the 1.0950 levels before the market eventually decided that the USD should rise and the market eventually tipped lower moving to the 1.0880 levels and then triggering weak stops in a market suddenly looking weak and tested to the 1.0840 levels before finding some limited buying and then holding through to the end of the market around the 1.0870 areas.
• GBP: A very choppy day however, unlike the Euro the market was a little more contained in the Cable, Early trading saw the market open around the 1.5145 areas, the same early Tokyo buying went through for the market to test to the 1.5155 areas and then a steady decline to trade around the 1.5125 levels through to the grey hours, weakness in the Euro saw the Cable moving lower in relation and the market slipped steadily through the 1.5100 levels and eventually traded to the 1.5080 areas before decent support appeared in the market, EURGBP selling had been continuous through from the 0.7235 levels and the market moved into the official London session testing the 0.7200 levels and trading around the level deep into the session, Cable eventually rose as the pressure on the cross EURGBP continued, Cable held then above the 1.5100 levels trading around the 1.5120 levels for the most part into the NYK session and the release of the US numbers, as with the other markets the USD initially dropped, rallied and then did the same again over the next few hours before settling in to trade quietly around the 1.5100 levels to the close in a quiet session.
• JPY: USDJPY started the day around the 122.60 areas and the move into the Tokyo session saw the market dip to the 122.50 levels before starting a steady rally to the 122.80 levels as USD started a slight recovery, the market again tested the lows in slow trading through to the grey hours before rising slowly and steadily through the early part of London and into the NYK session testing the 123.00 levels, the US releases saw the market dip and then quickly gap higher with the market trading towards the 123.40 levels and moving over the next couple of hours trading choppily before moving to the 123.20 areas and holding around the level into the close.
• AUD: A fairly large range for the most part, with the early session drifting a little lower from the opening around the 0.7330 areas to move into the London session almost unchanged, the move to the US numbers initially fell back to the 0.7280 areas before starting bouncing back to the opening levels, and as the USD rose against the other currencies so the Oz rose to as the commodity currencies fared better than the major currencies with the Oz triggering weak stops through the 0.7340 levels and squeezing through to the mid 0.7385 areas before running into some strong resistance and then drifting off through the end of the session to trade around the 0.7340 levels to the close.

Friday’s premiership results

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

EUR        German Factory Orders M/M Oct A 1.80% | C 1.30% | P -1.70% | R -0.70%

CHF        CPI M/M Nov A -0.10% | C 0.00% | P 0.10%

CHF        CPI Y/Y Nov A -1.40% | C -1.30% | P -1.40%

EUR        Eurozone Retail PMI Nov A 48.5 | P 51.3

USD       Change in Non-farm Payrolls Nov A 211K | C 198K | P 271K | R 298K

USD       Unemployment Rate Nov A 5.00% | C 5.00% | P 5.00%

USD       Average Hourly Earnings M/M Nov A 0.20% | C 0.20% | P 0.40%

USD       Trade Balance Oct A -43.9B | C -40.6B | P -40.8B | R -42.5B

CAD       Net Change in Employment Nov A -35.7K | C -0.7K | P 44.4k

CAD       Unemployment Rate Nov A 7.10% | C 7.00% | P 7.00%

CAD       Trade Balance (CAD) Oct A -2.76B | C -1.7B | P -1.7B | R -2.3B

CAD       Labour Productivity Q/Q Q3 A 0.10% | C 0.20% | P -0.60% | R -0.90%

CAD       Ivey PMI Nov A 63.6 | C 55.3 | P 53.1

Stay lucky

Andy

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