Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 122.935 | EURUSD 1.08921 | AUDUSD 0.72165 | NZDUSD 0.66403 | USDCAD 1.35855 | USDCHF 0.99242 | GBPUSD 1.50083 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               123.05 | 122.64

EUR/USD             1.09225 | 1.0880

EUR/JPY               134.00 | 133.805

AUD/USD            0.7237 | 0.7209

NZD/USD             0.6660 | 0.6623

USD/CAD             1.3592 | 1.3566

EUR/CHF              1.08295 | 1.08145

USD/CHF             0.99435 | 0.9921

GBP/USD             1.5024 | 1.5005

EUR/GBP             0.72715 | 0.72495

For Today

• EUR: Early trading saw the market slowly drift from the mid 1.0890’s to the 1.0880 levels into the Tokyo session however, as USD selling started to move in the market the Euro was able to steadily rise once the Tokyo fix was finished with and the market spent the next couple of hour pushing through the 1.0910 level before holding above the 1.0900 areas deep into the session however, the release of comments from GPIF head Mitani that said they were ready to hedge against fluctuations in the FX market immediately had an impact and the Euro moved to the 1.0920 levels. Topside offers light through the 1.0940-60 levels with the offers increasing as the market moves towards the 1.0980 levels and through to the 1.1000 levels, a mixture of orders above the level is likely to see a push through the level and then struggling to the 1.1020 areas with possible weak stops continuing and opening the market only a little with offers likely through the 1.1040 level onwards, a push through to the 1.1080 level is likely to see a similar structure to the market however, a strong move through the 1.1100 levels is likely to see the topside opening to beyond the 1.1200 levels. Downside bids weak through the 1.0900 levels with weak bids likely to appear around the 1.0850 areas and better bids into the 1.0820 level and going through to the 1.0780 area.
• GBP: A quiet session for the Cable with the market moving for the most part around the opening 1.5010 areas with only brief attempts above the 1.5020 level in quiet trading for the pair, Topside offers light into the 1.5050 levels with the 1.5100 likely to be a slightly stronger level and weak stops through the level and opening further topside risk to the 1.5150-60 areas and stronger offers. Downside bids weak until the market moves to yesterday’s lows, with strong bids into the 1.4900 levels and possibly strong stops on a test through to the 1.4800 areas opening the market for a test much lower and the years lows possibly under threat.
• JPY: The USDJPY opened around the 122.95 levels and dipped in early trading to the 122.85 area before early Tokyo started to move in and steadily push through the 123.00 level to set up the highs, once the Tokyo fix was finished with the market slipped lower and early buyers were quick to cut their positions with the market slipping through the opening levels and through the 122.80 before finding some support, the market then drifting around through the session until the release of the GPIF head Mitani comments about hedging against fluctuations in USD and Euro holdings, this caused the market to dip further and traded into the 122.65 levels before holding into the grey hours. Downside bids into the 122.20 levels are likely to be limited and a push through the 122.00 level is likely to see weak stops appearing through 121.80 levels and the market open to a test to the 121.00 and possibly stronger bids. Topside offers are likely to be light till the 123.50 areas and then the market then sees strong offers from there onwards and into the 124.00 levels with little respite.
• AUD: The Oz had a very quiet range with the market opening around the 0.7220 levels and moving steadily higher into the Tokyo session and testing above the 0.7235 levels however, AUDJPY sellers were reasonably strong and the market in the Oz slipped steadily lower and testing into the 0.7210 levels to set the lows with the market moving into the grey hours around the 0.7215 areas, Topside offers light through the 0.72 cent handle and those orders while limited in size are possibly strong numbers with weak sellers to the 73 cent levels, through the 73 cent levels the market begins to strengthen with 0.7340-60 levels possibly a strong initial level and then continuing higher to the 74 cent. Downside bids sees possibly reasonable amounts into the 72 cent levels with a strong break through the 0.7190 levels and opening the downside to 71 cent however, again these bids are likely to be limited and only a push through to the 0.7050 areas will see the market hitting stronger levels.

Overnight News

JPY:

Japan’s GPIF says ready to hedge against currency move – RTRS

Japan Govt. May Greenlight Pension to Invest in Stocks: Nikkei

Japan to Increase Sales of 40-Year Bonds, Nikkei Says

Japan Oct. Core Machine Orders Rise 10.7% M/m; est. -1.5%

LDP Bids to Replace Japan Car Purchase Tax w/ Eco Levy: Document

NZD:

English Says Inflation Targeting Still Best Option for NZ

AUD:

Australian Home Lending to Investors Lowest Since June 2014

AUD: Australia Dec. Consumer Sentiment Falls 0.8% M/m to 100.8

CNY:

China Nov. Consumer Prices +1.5% Y/y; Est. +1.4%

CNY: China Regulator Warns Fund Managers of Bond Risks: Bus. Herald

CNY: China Govt Investment Fund Should Not Invest in Stocks, Bonds

CNY: China Cuts Yuan Reference Rate to Weakest Level Since 2011

CAD/CNY:

Canada Pension Plan Invests $500m in China Postal Savings Bank

SGD:

Singapore’s Economy May Expand 2.2% Next Year, MAS Survey Shows

GBP:

BCC Cuts U.K. Growth Forecast as Global Prospects Deteriorate

Today’s data

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

AUD       Westpac Consumer Confidence Dec A -0.80% | P 3.90%

JPY         Machine Orders M/M Oct A 10.70% | C -1.50% | P 7.50%

AUD       Home Loans Oct A -0.50% | C -1.00% | P 2.00%

CNY        CPI Y/Y Nov A 1.50% | C 1.40% | P 1.30%

CNY        PPI Y/Y Nov A -5.90% | C -6.00% | P -5.90%

JPY         Machine Tool Orders Y/Y Nov (P) A -17.9% | P -22.90%

06:45     CHF        Unemployment Rate Nov C 3.40% | P 3.40%

07:00     EUR        German Trade Balance (EUR) Oct C 19.2B | P 19.4B

15:00     USD       Wholesale Inventories Oct C 0.00% | P 0.50%

15:30     USD       Crude Oil Inventories P 1.2M

20:00     NZD       RBNZ Rate Decision C 2.50% | P 2.75%

Harry Hindsight              

• EUR: A combination of OPEC’s decision on continuing supply numbers and poor CNY trade balance numbers the USD suffered through the session with the Euro moving higher into the Tokyo session from the lows around the 1.0830 levels and trading quickly through the 1.0850 and then steadily rising to the 1.0860 areas before ranging quietly to the grey hours, early Europeans bought steadily back to the 1.0860 levels and then early London extended those highs before the official opening saw the market pushing to 1.0880 areas, having peaked in the 1.0880 levels and light offers the market drifted back lower through into the releases in the UK and the Eurozone numbers before starting a steady rise higher through into the opening in NYK to test through the 1.0880 levels and pressuring the 1.0900 levels, the market continued to range through the NYK session testing that 1.0900 levels and eventually pushed lightly though the level late into the session before settling just off those highs.
• GBP: As with the USD it would seem that the concerns of further delays to a rate hike are likely to increase with Energy products again likely to weaken with the news that production numbers in the OPEC cooperative are to continue with the oversupply, the Cable moved quiet through the Asian session drifting around the 1.5050 areas and dipping to the 1.5040 level however, the market struggled on any move above the 1.5050 levels, the move into the London session saw the Cable drifting lower through the session with the EURGBP moving from below the 0.7200 levels and heading steadily to the 0.7280 levels before drifting back to range in the 0.7250-60 levels, Cable was forced eventually through the 1.5000 levels with limited bids holding for a couple of hours before giving ground and pushing into the NYK session to the 1.4960 levels and slightly stronger bids, NYK USD selling was sufficient to boost the Cable back above the 1.5000 levels ranging around the 1.5010 levels through to the close.
• JPY: A limited day for the USDJPY however, the market slipped lower through the day, opening around the 123.35 levels the market initially tested slightly higher before running into the Tokyo session and a steady decline from the opening with the market testing to the 123.05 levels and into the waiting bids, the move into the grey hours saw the 123.00 levels tested repeatedly before light buying through early London saw the market edging only to the 123.20 levels before the market again started to slip lower with continual USD selling and the market trading steadily to the 122.70’s before finding limited bids the market moved off the loads to test above the 123.00 level and then trading through the session around the 122.90 levels in a quiet end to the day.
• AUD: As with the USD commodity currencies were affected by the OPEC news and the Oz was particularly affected by the Trade balance numbers with the market dripping back from the early attempts to move higher and the 0.7270 level highs and then dropping to the 0.7250 in the run to the number, the release of the CNY number saw the market dip through the 0.7250 level and the market continued moving steadily lower, grey hours buying helped the market a little higher before the sellers again moved in on the opening of the London session and the market tested to the 72 cent area, the move to the NYK session was quiet with limited buying to the 0.7220 level before pushing through to the 0.7190 levels from the NYK opening and then struggling through the remainder of the day attempting to push convincingly above the 0.7220 levels but struggling.

Yesterday’s premiership results

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

GBP       Industrial Production M/M Oct A 0.10% | C 0.00% | P -0.20% | R 0.00%

GBP       Industrial Production Y/Y Oct A 1.70% | C 1.30% | P 1.10% | R 1.50%

GBP       Manufacturing Production M/M Oct A -0.40% | C 0.00% | P 0.80% | R 0.90%

GBP       Manufacturing Production Y/Y Oct A -0.10% | C 0.10% | P -0.60% | R -0.40%

EUR        Eurozone GDP Q/Q Q3 (P) A 0.30% | C 0.30% | P 0.30%

CAD       Housing Starts Nov A 212K | C 200K | P 198.1k

CAD       Building Permits M/M Oct A 9.10% | C 3.00% | P -6.70%

GBP       NIESR GDP Estimate Nov A 0.60% | P 0.60%

 

Good Luck,

Andy

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