Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 121.439 | EURUSD 1.10253 | AUDUSD 0.72304 | NZDUSD 0.66354 | USDCAD 1.35786 | USDCHF 0.98311 | GBPUSD 1.51808 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               122.235 | 121.60

EUR/USD             1.0947 | 1.09265

EUR/JPY               133.62 | 133.00

AUD/USD            0.7281 | 0.7235

NZD/USD             0.6762 | 0.6736

USD/CAD             1.3660 | 1.3625

EUR/CHF              1.0812 | 1.0804

USD/CHF             0.9890 | 0.98815

GBP/USD             1.5165 | 1.5135

EUR/GBP             0.7225 | 0.7217

For Today

• EUR: A reasonably quiet session with the Euro testing towards the 1.0950 levels before light buying in USDJPY saw the Euro ease back to the 1.0930 levels only to hold the levels again and gently range in the 1.0930’s for much of the day, Topside offers light through the 1.0960 and those offers are likely to continue into the 1.1000 before the stronger offers begin to appear with the strongest offers likely into the 1.1050 areas, a break here is likely to open a test of the 1.1100 levels and this is likely to be key to any further movement to the topside and the opening for a move through 1.1200. Downside bids into the 1.0930 remain fairly strong for the moment and the move through the 1.0880 areas will allow the market to test the downside triggering weak stops through the level and light bids likely protecting a test lower again.
• GBP: Cable drifted through the session as the EURGBP cross gained some limited ground, the Cable opened around the 151.60 areas and gradually slipped to the 1.5130’s before becoming stale and holding in the 1.5140 areas with little interest in the market to move it in any direction, light bids through the 1.5120 levels with a push through the 1.5100 area likely to see weak stops appearing and the market open for a test through a possibly light 1.5050 area and to the 1.5000 areas with slightly stronger bids suspected a break here however, is likely to open up a deeper move again to challenge the 1.4900 lows.
• JPY: Opening around the 121.60 areas the early market slowly rose however, once the market moved into the Tokyo session stronger buying in the USDJPY saw the market move quickly through the 121.90 areas and fixing demand was sufficient to help the market through the 122.00 levels and then holding through the session around the 122.10 levels with only one brief test of the 122.20 levels before returning to that 122.10 level. Downside bids into the 121.80 areas are likely to be reasonably weak and a move down through that area will see only light protection before reaching the 121.20 areas and a stronger level with those bids likely to continue through to the 120.70 areas before stops appear in the market, Topside offers through the 122.40 areas are likely light however, the higher the market moves the stronger the offers are likely to be with the 122.80-123.20 from there the offers are likely to continue to the 124.00 levels before the possibility of a breakout to the topside.
• AUD: The Oz continued to drift lower through the session from the close around the 0.7280 areas, with little news to hold the market and a general consensus that nothing has significantly changed on the subject, slowly slipping to below the 0.7240 areas before finding running out of steam. Downside bids light to the 72 cent levels and the possibility of weak stops appearing through that levels and opening further weakness however, with the market concentrated for the most part on the retail sales numbers the 71 cent level could prove difficult to get onto if everything remains in line. Topside offers through the 73 cent level and into the 0.7340-60 area being particularly wrong, and a very weak number in the US to even contemplate the 73 cent being reached the market looks set for a quiet day to that point at least.

Overnight News

JPY:

Japan Winter Bonuses Increase 3.3% Y/y: Nikkei Survey

NZD:

New Zealand Manufacturing Growth Quickened in November: PMI

New Zealand Consumer Confidence Edges Back in December: ANZ

CNY:

China to Expand Yuan Cross-Border Use in Three Free-Trade Zones

China Aims to Cut Losses for Central State-owned Cos. in 2 Years

Today’s data

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

NZD       Business NZ Manufacturing Index Nov A 54.7 | P 53.3 | R 53.2

07:00     EUR        German CPI M/M Nov (F) C 0.10% | P 0.10%

07:00     EUR        German CPI Y/Y Nov (F) C 0.40% | P 0.40%

13:30     USD       Advance Retail Sales Nov C 0.30% | P 0.10%

13:30     USD       Retail Sales Less Autos Nov C 0.30% | P 0.20%

13:30     USD       PPI M/M Nov C 0.00% | P -0.40%

13:30     USD       PPI Y/Y Nov C -1.20% | P -1.60%

13:30     USD       PPI Core M/M Nov C 0.10% | P -0.30%

13:30     USD       PPI Core Y/Y Nov C 0.80% | P 0.10%

15:00     USD       Business Inventories Oct C 0.10% | P 0.30%

15:00    USD       U. of Michigan Confidence Dec (P) C 93.1 | P 91.3

Harry Hindsight              

• EUR: Early movements saw the market move slowly through the 1.1020 levels and just below into the Tokyo session, then appeared a period of strong EURJPY selling impacting on both legs the Euro saw steady decline during the session into the 1.0990 levels into the grey hours, added to the early EURJPY the market also saw some strong EURAUD selling as the Oz employments impacted on the whole FX levels, the move into the grey hours saw the pressure subside until the opening in London that is and then solid and strong EURJPY selling reappeared as Tokyo came back from Lunch and the market in the Euro dropped steadily through the early part of the session to trade deep into the 1.0930’s before finding bids sufficient to hold the market throughout the day with the market ranging as cross Euro selling dominated the market, with the range eventually closing up to trade around the 1.0940 levels to the close.
• GBP: Cable held its levels fairly well through most of the day with the market trading in the 1.5170-95 range through the Asian session before dipping into the London session to test the 1.5160 levels, visible trade numbers though poor had little impact as the EURGBP was already moving lower and testing from the 0.7250 levels into the 0.7205, the market eventually moved higher before the release of the BoE decisions and as expected there was very little news on that front with a similar statement on the release seeing the market dropping quickly to the 1.5110 levels before moving steadily back to the 1.5180 levels and into the NYK session, the market then ranged for the rest of the session slowly slipping back to the 1.5150 areas into the close.
• JPY: USDJPY had a reasonable range over the day with the market unable to push down through the 121.30 to far and then recovering after each attempt, the major mover was the EURJPY with the market seeing several pushes lower, USDJPY initially rose to the 121.70 levels before the first set of EURJPY selling moved in and the market was driven to the 121.30 area, once the initial cross selling was over with the market rose steadily back to trade into the London session testing again to the 121.90 areas and this was in the face of renewed EURJPY selling with the cross moving from the 133.90 level and spending the London session moving through to the 132.80 levels before finding enough support to hold the levels through into the NYK session, again the USDJPY was unable to test beyond the 121.30 levels and steadily rose through the NYK session with little impact from the initial claims numbers and finishing the day just above the opening levels.
• AUD: The Oz market was all about the employment numbers with the market moving around the 0.7230 levels on the opening and then quickly rising on the release of a larger than expected number, quickly trading to the 0.7330 levels however, questions start to arise over the fact that the mining industry is declining and declining fast yet the employment changes are increasing dramatically, the reaction over the rest of the day was steady trading around the 73 cent level through to the end of London before the market saw steady trading lower through to the close around the 0.7280 levels.

Yesterday’s premiership results

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

NZD       RBNZ Rate Decision A 2.50% | C 2.50% | P 2.75%

JPY         BSI Large Manufacturing Q/Q Q4 A 3.8 | C 12.1 | P 11

JPY         Domestic CGPI Y/Y Nov A -3.60% | C -3.80% | P -3.80%

AUD       Consumer Inflation Expectation Dec A 4.00% | P 3.50%

GBP       RICS House Price Balance Nov A 49% | C 47% | P 49% | R 50%

AUD       Employment Change Nov A 71.4K | C -10.0K | P 58.6K | R 56.1K

AUD       Unemployment Rate Nov A 5.80% | C 6.00% | R 5.90%

CHF        SNB Sight Deposit Interest Rate A -0.75% | C -0.75% | P -0.75%

GBP       Visible Trade Balance (GBP) Oct A -11.8B | C -9.8B | P -9.4B

GBP       BoE Rate Decision A 0.50% | C 0.50% | P 0.50%

GBP       BoE Asset Purchase Target Dec A 375B | C 375B | P 375B

GBP       MPC Official Bank Rate Votes A 1–0—8 | C 1–0—8 | P 1–0–8

GBP       MPC Asset Purchase Facility Votes A 0–0—9 | C 0–0—9 | P 0–0–9

CAD       Capacity Utilization Rate Q3 A 82.00% | C 82.10% | P 81.30%

CAD       New Housing Price Index M/M Oct A 0.30% | C 0.10% | P 0.10%

USD       Import Price Index M/M Nov A -0.40% | C -0.70% | P -0.50% | R -0.30%

USD       Initial Jobless Claims (DEC 5) A 282K | C 266K | P 269K

USD       Monthly Budget Statement Nov A -64.6B | C -68.2B | P -136.5B

 

Good Luck,

Andy

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