Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 120.972 121.00-08 | EURUSD 1.09926 1.0985-97 | AUDUSD 0.71863 0.7194-0.7206 | NZDUSD 0.6717 0.6705-25 | USDCAD 1.37558 1.3732-67 | USDCHF 0.98275 0.9820-40 | GBPUSD 1.5227 1.5200-40 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               121.20 | 120.63

EUR/USD             1.0995 | 1.0955

EUR/JPY               133.03 | 132.49

AUD/USD            0.7218 | 0.7160

NZD/USD             0.6730 | 1.6692

USD/CAD             1.3766 | 1.3722

EUR/CHF              1.0806 | 1.07925

USD/CHF             0.9858 | 0.9835

GBP/USD             1.5230 | 1.5180

EUR/GBP             0.72275 | 0.7212

For today

• EUR: A steady drift off the opening highs around the 1.0995 areas to drift initially through to the 1.0970 levels before the Tokyo session opened with early sellers of the EURJPY cross looking for a repeat performance of the previous couple of sessions as it was although the cross again tested through to the 1.3150 the market was a little less inclined to follow through into the Tokyo session and the Euro rose into the opening period in Tokyo not far short of the initial opening levels, from there though the market has naturally drifted back through the previous lows and into the 1.0955 areas as the USD rallied a little across the market. Downside bids light into the 1.0930-1.0900 areas with a move through the 1.0870 areas likely to see only light stops and the market congested to the 1.0840 areas, a break through to the 1.0800 levels will see stops appearing on a strong move through the level and the downside to the 1.0600 open, Topside offers likely to be strong into the 1.1040-60 areas and likely to open the topside only a little before further strong resistance into the 1.1100 levels with possibly strong offers continuing through to the 1.1200 areas and the level possibly the key point to further gains however, with the much awaited Fed decision this week the market is likely to be mired in mediocrity until that decision is released.
• GBP: The market opened almost unchanged and immediately tested lower during pre-Tokyo testing to the 1.5180 levels however that was about all she wrote with the market then ranging through to the grey hours from the 1.5180 lows to the 1.5200 areas with only minor cross movement affecting the market. Topside offers light through the 1.5250 areas and very little resistance until the market moves closer to the 1.5300 levels, a strong push through the level will likely open the market to a weak attempt to the 1.5400 and opening the way from fresh attempts to the 1.5500 however, with the inflation reports due tomorrow the market is likely to remain quiet for the time being, downside sees light bids through the 1.5180 and into the 1.5150 levels before giving ground to only slightly stronger support through the 1.5100 level, 1.5000 is likely to be stronger however, even this level has caused not problems this month so limited at best.
• JPY: USDJPY held above the 121.00 level until close to the Tokyo opening and some light EURJPY selling moved in with the market looking for a repeat of the EURJPY selling the market has seen over the last few days, as it was the market was fairly moot and the USDJPY held in the 120.80 areas for the early part of Tokyo before starting a slow rise to push through the 121.10 levels into the second half of the session with Tanken numbers less than inspiring if slightly better than expected but in line with last month’s numbers, light offers through the to the 121.30 levels before the market opens a little and starts to see resistance into the 121.80 levels and these offers likely to continue through to the 122.20 areas, with the USDJPY through those levels the possibility of continuing EURJPY selling through the 134.00 levels in a possibility as this has been the level that selling seems to materialize in the past couple of days. Downside bids from the 120.80 levels seem to strengthen on any moves to the 120.60 however, even through this level the market is likely to find congestion and increasing bids towards the 120.00 levels and then possibly a balancing act as the market finds sufficient bids to hold the market until the Fed make there announcement on Wednesday.
• AUD: The market opened testing the 72 cent levels however, once the market was open it started slipping back to fill the gap in the charts, the move continued with weak selling and a nervous reaction as the market focused on the ZAR. Once the market moved into the Tokyo session the Oz stabilized and held the 0.7160 areas and slowly rose back to the closing levels on Friday with the market now beginning to look like the festive celebrations are starting early, Topside offer light through the 0.7200-20 areas and then increasing as the market moves towards the 0.7250 levels however, even in the area the market remains weak until 73 cents and then stronger offers start to increase through to the 0.7350 levels. Downside bids light into the 0.7150 areas with the market likely to see stronger bids on a move to below 71 cents.

Overnight News

JPY:

Japan Dec. Large Manufacturer Tankan Unchanged at 12; Est. 11

CNY:

Yuan Able to Remain Basically Stable, PBOC Cites Commentator

China 2016 Fixed Asset Investment May Rise ~9%: Sec. Journal

ZAR:

1. Africa’s Zuma Appoints Pravin Gordhan as Minister of Finance

Asia:

FX Flexibility, Policy Bolster Asian Sovereign Credits: Moody’s

GBP:

U.K. December House Prices Fall 1.1% M/m, Rightmove Says

NZD:

N.Z. Economists Lower Near-Term GDP Growth Forecasts, NZIER Says

New Zealand Services Industry Grows at Fastest Pace in 8 Years

RUB:

Russia’s Finance Ministry Warns on Higher ’16 Deficit: Vedomosti

Today’s data

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

JPY         Tankan Large Manufacturers Index Q4 A 12 | C 11 | P 12

JPY         Tankan Non-Manufacturing Index Q4 A 25 | C 23 | P 25

JPY         Industrial Production M/M Oct (F) A 1.40% | C 1.40% | P 1.40%

JPY         Tertiary Industry Index M/M Oct C 0.50% | P -0.40%

10:00     EUR        Eurozone Industrial Production M/M Oct A 0.90% | C 0.30% | P -0.30%

Weekend News

CNY:

China Nov. Industrial Output Rises 6.2%; Est. 5.7%
China Jan.-Nov. Property Development Investment Rises 1.3% Y/y
China Nov. Power Output Rises 0.1%; Crude Processing Gains 3.3%
China Growth Expected to Accelerate From June 2016: Sec. Times
JPY:

BOJ’s JGB Holdings to Exceed That of Domestic Banks, Nikkei Says
Japan’s Ruling Party, Coalition Agree on Food Tax Cut: Nikkei
JPY/INR:

Japan Signs Agreement to Build India’s 1st High-Speed Rail
INR/JPY:

India’s Modi Says He Expects $35 Billion of Japanese Investment
USD:

Senators Close in on Oil-Export Deal Amid Tax-Break Talks
GBP:

UK Affirmed by Fitch; Outlook Stable
EUR:

European Stability Mechanism Affirmed by Fitch
Greek Govt. Submits Bailout Measures Legislation to Parliament
Italy’s ’16 Draft Budget a Credit Negative, Moody’s Says
France’s Ratings Affirmed at AA by Fitch
PLN:

Polish Govt. May Increase Minimum Wage More Than Planned: Fakt
SEK:

Sweden Affirmed at ‘AAA’ by Fitch; Outlook Stable

 

Harry Hindsight

• EUR: A quiet Asian period with the market opening around the 1.0940 areas and drifting through the 1.0930 levels in Tokyo before slowly edging back through to the 1.0950 levels into the grey hours, while the market was a little more active in the London session it was only a little with the market gradually moving towards the 1.0980 levels before struggling and slipping back towards the 1.0950 level into the NYK session, USD then faced some limited selling into the business inventories and Michigan numbers and the market moved quickly to the topside to test through the 1.1000 levels again and then reversed as soon as the numbers were released only to head more sedately to the 1.1000 areas through the session holding the levels deep towards the close and finishing the day just below the area.
• GBP: Cable followed a similar pattern through the Asian session drifting a little lower from the opening above 1.5160 and slipping through the session to test into the 1.5130 levels before recovering into the grey hours, early London were steady sellers and the market tested to its lows as a resurgent EURGBP cross moved up 20 pips leaving the Cable struggling, the move into the NYK session saw the Cross drop back quickly and the Cable move quickly to above the 1.5210 areas and hold in the area leading the Euro higher as the cross chopped around in the 0.7210-30 levels through to the close, Cable continued pushing higher however it was a limited affair and the market could only make the 1.5240 level before holding around the 1.5230 for the close.
• JPY: While USD was broadly slightly lower through the session, USDJPY did make some early gains pushing to above the 122.20 levels into the Tokyo session and then drifting a little lower into the London session and continuing to drift as EURJPY selling continued to weight on the market with the Cross drifting from the highs of 133.80 and pushed to the 132.60 levels and USDJPY slipped through the 121.50 levels into the NYK session with the USDJPY selling increasing to the 121.00 levels and a steady push through the session to trade down to the 120.60 levels before finding some support and into the close around the 121.00 levels.
• AUD: The Oz played a peripheral role through the session drifting from the opening through to the 0.7240 levels and continuing into the London session in the same manner and testing through the 72 cent levels in a very quiet and uninspiring session for the Oz.

Friday’s premiership results

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

EUR        German CPI M/M Nov (F) A 0.10% | C 0.10% | P 0.10%

EUR        German CPI Y/Y Nov (F) A 0.40% | C 0.40% | P 0.40%

USD       Advance Retail Sales Nov A 0.20% | C 0.30% | P 0.10%

USD       Retail Sales Less Autos Nov A 0.40% | C 0.30% | P 0.20%

USD       PPI M/M Nov A 0.30% | C 0.00% | P -0.40%

USD       PPI Y/Y Nov A -1.10% | C -1.20% | P -1.60%

USD       PPI Core M/M Nov A 0.30% | C 0.10% | P -0.30%

USD       PPI Core Y/Y Nov A 0.50% | C 0.80% | P 0.10%

USD       Business Inventories Oct A 0.00% | C 0.10% | P 0.30% | R 0.10%

USD       U. of Michigan Confidence Dec (P) A 91.8 | C 93.1 | P 91.3

Stay lucky

Andy

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