Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 123.374 | EURUSD 1.08373 | AUDUSD 0.7268 | NZDUSD 0.66438 | USDCAD 1.34987 | USDCHF 1.0000 | GBPUSD 1.50544 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               123.405 | 123.055

EUR/USD             1.0862 | 1.0830

EUR/JPY               133.69 | 133.55

AUD/USD            0.7270 | 0.7219

NZD/USD             0.6650 | 0.6628

USD/CAD             1.3523 | 1.3496

EUR/CHF              1.0849 | 1.0835

USD/CHF             1.0008 | 0.9988

GBP/USD             1.5058 | 1.5037

EUR/GBP             0.7220 | 0.7199

For Today

• EUR: Euro’s hedged higher in quiet trading with a mixed day overall, opening around the 1.0838 the market initially limped into the Tokyo session before pushing through the 1.0840 levels and continuing to just short of the 1.0860 levels in steady buying of the EURUSD and EURAUD after the CNY trade balance numbers were released, from the highs the market drifted lower a little before holding towards the highs in the move to the grey hours. Topside offers into the 1.0860 levels with better offerings likely into the 1.0880-1.0900 levels a push through the 1.0930 areas will likely see stronger offers from the 1.0950 areas especially in any attempt at the 1.1000 level with only really the Eurozone GDP number of note. Downside bids into the 1.0830 levels light with the better bids through the 1.0800 areas and possibly weak stops on a push through the 1.0770 levels to open a test of the 1.0720 levels.
• GBP: A steady drift lower for the Cable as the EURGBP cross gained a little ground over the session moving from below the 0.7200 levels to test the 0.7220 in light trading, this forced the cable to drift back through the 1.0550 levels and test down to the 1.0540 level into the grey hours. Topside offers light into the 1.5090-1.5110 areas before the market opens for a test to the 1.5150 levels with stronger offers to be found around the 1.5200 areas and those offers likely to be in depth to the 1.5250 areas before opening the 1.5300 levels. Downside bids into the 1.5000 areas are likely to be building however, they are not likely to be that strong now and the market has the ability to again test below the 1.4950 areas with strong bids likely to move into the market around the 1.4900 areas.
• JPY: A better than expected GDP print was sufficient for the USDJPY to slip lower and with it the EURJPY however, while the Euro benefited from the stronger JPY the USDJPY took the brunt of the move and slipped initially from just below the 123.40 levels to the 123.25 areas and into the Tokyo session properly, the selling continued once the Tokyo fix was over and the market drifted lower to the 123.05 before finding sufficient bids to hold the market, Topside offers remain strong into the 123.50 areas and although there is likely to be a mixture of stops and offers on a push through the level the stops and offers are likely to match off for the most part and the 123.80-124.00 level is likely to be the strongest point today with plenty of congestion continuing through the figure level and to the 124.30 areas before the market starts to focus on the 125.00 areas however, while the buyers may start pushing it is not likely to be simple to move through cleanly. Downside bids around the 123.00 areas and those bids are likely to continue to the 122.50 areas with a push through that level likely to produce some weak stops but as with the topside the market is likely to see continuing buying into the 122.00 areas before opening up for a move down to the 121.00 areas and a similar but weaker pattern.
• AUD: The Oz saw a continuation of the previous days selling, with the market moving into the Tokyo session only slightly adrift from the opening just below the 0.7270 levels, the release of the weaker than expected CNY trade balance saw the market drift further breaking below the 0.7250 levels and then drifting to the grey hours to test the 0.7220 levels before holding. Downside bids through to the 72 cent levels will likely give way to weak stops through the 0.7190 areas and open the market to further declines into the 0.7130 areas with only light profit taking a possibility in the areas and a possibility of larger fall if the impetus is strong enough. Topside offers light through the 0.7250 areas and the market is likely to see light offers into the 73 cent level before the stronger offers from 0.7360 onwards come into play.

Overnight News

CNY:

China Nov. Exports Fall 6.8% Y/y in USD; Est. -5.0%

China Overtakes Japan as Leader in Asia’s High-Tech Exports: ADB

JPY:

Japan’s Economy Wasn’t in Recession in 3rd Quarter, Data Show

Aso: Capex Played Big Role in Upward Revision of GDP Figures

Japan Ruling Parties Seek Corporate Tax Cut to 29.74% in FY2018

INR/JPY:

India Said to Pick Japan Bullet Train for Mumbai Line: Nikkei

JPY/INR:

Japan, India Discussing High-Speed Train Introduction: Ishii

NZD:

N.Z. Manufacturing Volumes Rise on Meat, Dairy, Beverages

AUD:

Australia Nov. Business Confidence Rises 2 Pts M/m to 5

Australia ANZ Weekly Consumer Sentiment Rises 3.1% to 116.3

TWD/CNY:

Taiwan to Let China Retail Investors Buy Stocks: Comm. Times

GBP:

U.K. LFL Nov. Retail Sales Fall 0.4% YoY, BRC Says

Today’s data

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

NZD       Manufacturing Activity Q3 A 4.20% | P 0.40% | R 1.00%

JPY         GDP Q/Q Q3 (F) A 0.30% | C 0.00% | P -0.20%

JPY         GDP Deflator Y/Y Q3 (F) A 1.80% | C 2.00% | P 2.00%

JPY         Current Account (JPY) Oct A 1.49T | C 1.53T | P 0.78T

GBP       BRC Sales Like-For-Like Y/Y Nov A -0.40% | P -0.20%

AUD       NAB Business Confidence Nov A 5 | P 2 | R 3

CNY        Trade Balance Nov A $54.10B | C $58.00B | P $61.64B

JPY         Eco Watchers Survey: Current Nov A 46.1 | C 48.6 | P 48.2

09:30     GBP       Industrial Production M/M Oct C 0.00% | P -0.20%

09:30     GBP       Industrial Production Y/Y Oct C 1.30% | P 1.10%

09:30     GBP       Manufacturing Production M/M Oct C 0.00% | P 0.80%

09:30     GBP       Manufacturing Production Y/Y Oct C 0.10% | P -0.60%

10:00     EUR        Eurozone GDP Q/Q Q3 (P) C 0.30% | P 0.30%

13:15     CAD       Housing Starts Nov P 198.1k

13:30     CAD       Building Permits M/M Oct P -6.70%

15:00    GBP       NIESR GDP Estimate Nov P 0.60%

Harry Hindsight              

• EUR: Opening around the 1.0875 areas the market made slight gains before the Tokyo market started to move in struggling into the mid 1.0880’s before sliding steadily lower through the early Tokyo session to trade in the 1.0850’s as the weekend dulled the memories of Thursdays ECB dithering, the move to the London session was singularly dull and the move into the grey hours saw the market make a token attempt to reach the open levels, early London were steady sellers and a poor German IP number sent the market lower into the official opening and a quickening pace to the downside falling quickly to the 1.0830 levels before finding some bids through to the 1.0800 levels and a quiet range of 1.0800-20 into the NYK session, a poor Labour conditions number was sufficient to turn the market however, the weakness in the USD was possibly more to do with the oil news and the expected continuation of a glut to keep the prices low for the foreseeable future, the Euro managed to move steadily back to above the 1.0850 levels but struggled on the attempt towards the 1.0860 area with limited volume going through during the several long hours to the close with the market slipping back as light profit taking moved in.
• GBP: A quiet session overall with the market opening around the 1.5105-10 areas and slipping a little to test through to the 1.5095 areas in Asia to recover and touch the 1.5115 levels into the grey hours, early London sold the Cable more as a consequence of the Euro move than anything else with little data to provide independent movement, the market dropped back to trade to the 1.5055 levels and for several hours traded choppily in a 1.5055-90 range before slipping lower once the London session had packed up and left for the day, the market even so only tested to the 1.5045 levels before finishing the day just above the 1.5050 level.
• JPY: Opening slightly higher the USDJPY struggled through the day moving steadily through offers from the opening 123.20 areas, with Asia barely pushing it through the 123.30 levels, the move into London saw late buying from Japan and London combined taking the market to above the 123.45 levels and again the market settled into a two way battle with the buyers pushing against the offers but never quiet having the impetus to threaten the 123.50 levels, the move into the NYK session saw the USD weaken and the USDJPY push to the opening levels and then another long stretch as the market slowly started to regain the 123.30 levels to the close.
• AUD: A very quiet session through Asia with the Oz opening around the 0.7340 levels and drifting into the 0.7320’s to post the lows during the session however, for the most part there was very little interest and the market held around the mid-point through the grey hours and only the London session moved on the oil news and the commodity currencies started to lose ground, Oz then saw the local London players sending the market to the 73 cent level and although there was a couple of hours of trading around the area the market eventually started to drift again as the NYK market entered and the market slipped to the 0.7260 area and remained in a tight range through to the close.

Yesterday’s premiership results

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

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

EUR        German Industrial Production M/M Oct A 0.20% | C 0.80% | P -1.10%

EUR        Eurozone Sentix Investor Confidence Dec A 15.7 | C 17.2 | P 15.1

USD       Labour Market Conditions Index Change Nov A 0.5 | P 1.6 | R 2.2

 

Good Luck,

Andy

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