Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 121.03 | EURUSD 1.09924 | AUDUSD 0.72422 | NZDUSD 0.67789 | USDCAD 1.37321 | USDCHF 0.98527 | GBPUSD 1.51427 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               121.945 | 121.59

EUR/USD             1.09485 | 1.0923

EUR/JPY               133.33 | 132.90

AUD/USD            0.7216 | 0.7188

NZD/USD             0.6779 | 0.6741

USD/CAD             1.3742 | 1.3729

EUR/CHF              1.0837 | 1.0829

USD/CHF             0.9915 | 0.9896

GBP/USD             1.5056 | 1.5032

EUR/GBP             0.7273 | 0.7265

For Today

• EUR: A quiet session as the market awaits the FOMC with the Euro slowly rising from the opening 1.0920 areas to test to the 1.0950 levels before ranging in the 1.0930-50 areas into the grey hours, downside bids light through to the 1.0880 levels and then possibly weak stops appear through the level however, the FOMC is the deciding factor on the matter with expectations of a 0.25% rise, the risk here is that we see this rise and then quickly followed by dovish comments to whip the market around and as we know expectations can be disappointed, a push through the downside levels will quickly expose the 1.0800 levels and while the market may have a few bids in the area a full flowing market could see the downside totally open for a larger decline once the 1.0820-00 area is broken and a further big figure exposed. Topside offers are likely to be light through to the 1.1000 levels and any reversal will quickly find the market testing those levels and very little until 1.1050-60 areas as the would be shorts are quickly taken out and the 1.1100-1.1150 level open to strong tests.
• GBP: Cable slowly moved from the 1.5040 levels to test towards the 1.5060 area with little independent trading in the pair, the market held for the most part around the 1.5050 areas into the grey hours. Topside offers towards the 1.5200 level are light with possibly some interference in the market around the 1.5120 areas however, the 1.5200 levels are not particularly strong with the 1.5250 level likely to provide some resistance and then the 1.5300 exposed however, that would be possibly to far for the market to sustain, Downside bids are likely to be weak through the 1.5000 levels and the market only strengthening once the market tests the 1.4950 levels and through to the 1.4900 area, any break through here does open up a deeper test with congestion from just below 1.4900 area and continuing through the 1.4800 levels.
• JPY: USDJPY opened around the 121.70 areas and moved quietly until the Tokyo opening and the market moved quickly to the 121.90 areas before drifting back to the 121.60 lows, a steady rise from that point saw the market pushing against the light offers into the 121.90 areas to the 122.00 level before holding below this level into the grey hours. Topside offers reasonably light through the 122.00 levels and then congestion from the 122.40 levels onwards with stronger offers likely into the 122.80-123.50 levels, even through those levels the resistance is likely to remain and continue through the 124.00 areas and then possible comments from BoJ/MoF to limit the rise. Downside bids are light through the 120.50 levels and those bids are likely to disappear quickly if the market moves this way and the downside bids are likely to run out around the 119.80 levels and 119.00-118.70 is likely to be the stronger area with plenty of congestion to that level, a push through these levels though will quickly see margin requirements coming under pressure and the downside open to a similar move last seen in August.
• AUD: Rising slowly back through the 72 cent levels the move into the Tokyo session saw cross AUDNZD buying and the market moving quietly to test to the 0.7215 areas in an otherwise quiet session, Downside bids light through to the 71 cent levels and opening up a test to the 0.7000 levels and possibly short dated options in trouble with stops likely through the level before the stronger 69 cent levels and previous lows for the year under threat. Topside offer light into the 0.7270 levels and likely to be limited through to 73 cents and 0.7340-60 levels protecting the 74 cent level and an opening to test higher and back to the ranges from the first half of the year.

Overnight News

USD:

Fed Moving Too Early If Raises This Week, FT Says in Editorial

Congress Reaches Deal to End U.S. Crude-Oil Export Limits

JPY:

Japan Govt. to Forecast Real GDP Growth of 1.7% in FY16: Nikkei

Japan FSA Recommends Law Change to Help Banks Invest in Fintech

Nikkei Japan Dec. Flash Manufacturing PMI 52.5 vs 52.6 in Nov.

CNY:

PBOC Adviser Sees ‘Adjustments’ in China Economy: Sec. Times

ZAR:

South Africa Outlook To Negative from Stable by Moody’s Ratings Affirmed

NZD:

English Says N.Z. Exporters Would Prefer Weaker Kiwi Dollar

N.Z. Current Account Deficit Narrows on Visitor Spending

AUD:

Australia’s Nov. Leading Index Falls 0.16% M/m to 97.55

G20:

G-20 Agrees to Discuss Financial Safety Net Steps, S. Korea Says

Today’s data

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

NZD       Current Account Balance (NZD) Q3 A -4.75B | C -4.85B | P -1.22B | R -1.17B

AUD       Westpac Leading Index M/M Nov A -0.20% | P 0.10%

08:00     EUR        France Manufacturing PMI Dec (P) C 50.6 | P 50.6

08:00     EUR        France Services PMI Dec (P) C 50.7 | P 51

08:30     EUR        Germany Manufacturing PMI Dec (P) C 52.7 | P 52.9

08:30     EUR        Germany Services PMI Dec (P) C 55.5 | P 55.6

09:00     EUR        Eurozone Manufacturing PMI Dec (P) C 52.8 | P 52.8

09:00     EUR        Eurozone Services PMI Dec (P) C 54 | P 54.2

09:30     GBP       Jobless Claims Change Nov C 2.0K | P 3.3K

09:30     GBP       Claimant Count Rate Nov P 2.30%

09:30     GBP       ILO Unemployment Rate 3M Oct C 5.30% | P 5.30%

09:30     GBP       Average Weekly Earnings 3M/Y Oct C 2.50% | P 3.00%

10:00     EUR        Eurozone Trade Balance (EUR) Oct C 22.3B | P 20.1B

10:00     CHF        ZEW (Expectations) Dec P 0

10:00     EUR        Eurozone CPI M/M Nov C 0.10% | P 0.10%

10:00     EUR        Eurozone CPI Y/Y Nov (F) C 0.10% | P 0.10%

10:00    EUR       Eurozone CPI – Core Y/Y Nov (F) C 0.90% | P 0.90%

13:30     USD       Housing Starts Nov C 1.14M | P 1.06M

13:30     USD       Building Permits Nov C 1.16M | P 1.16M

13:30     CAD       International Securities Transactions (CAD) Oct P 3.35B

14:15     USD       Industrial Production Nov C 0.10% | P -0.20%

14:15     USD       Capacity Utilization Nov C 77.50% | P 77.50%

15:30     USD       Crude Oil Inventories P -3.6M

19:00     USD       FOMC Rate Decision C 0.50% | P 0.25%

19:30    USD       FOMC Press Conference

Harry Hindsight              

• EUR: Opening below the 1.1000 levels the market gradually pushed through the 1.1000 levels through the Tokyo session and the move into the grey hours saw strong attempts to break through the 1.1060 levels however, it was just that an attempt and as soon as it failed to move through the market quickly dropped back from the London opening, the move higher coincided with a fresh attempt at the 0.7300 level in EURGBP and with no early numbers in the market the movement higher was curtailed in the cross, the Euro then saw a steady stream of Euro selling and the market started to cut positions, taking the Euro into the end of London trading just above the 1.0900 levels and then ranging around the 1.0910-30 levels to the close in active but one way trading.
• GBP: Opening around the 1.5150 levels the market moved to the 1.5185 areas before running out of steam and drifting back to the opening levels and then ranging through the Asian session from the opening level to the 1.5170 areas and into London, the release of slightly better than expected inflationary data did very little for the market and there was a slight dip from the 1.5170 levels to test through the lows and then range for several hours, NYK saw EURGBP selling which again helped the Cable rise to the highs however, having held its levels through Asia and early London the market dropped back quickly from those highs to the 1.5040 levels as the USD buying switched allowing the EURGBP to recover its losses into the close, Cable having moved to the lows was unable to move back through the 1.5100 levels and managed only a meagre bounce to the 1.5070 levels before drifting to the 1.5030 levels and close just off those lows.
• JPY: A reasonably slow day for the USDJPY in Asia with the market initially testing through the 121.00 levels into early Tokyo before slowly reversing the gains and slipping slowly to the 120.60 levels and into London’s official opening, the market regained its levels in a short period and then steadily tested to the 121.20 levels and the highs of Asia, the move into NYK saw the USD rallying against most currencies as the market adjusted for the upcoming FOMC release and the USDJPY was no different pushing to the 121.70 levels before finding resistance into the 121.80 areas and the market holding to the close.
• AUD: Having opened around the 0.7240 levels the market slowly moved higher with the RBA minutes fairly neutral overall and the market taking advantage and pushing to the 0.7280 levels before drifting back to the opening levels into the London session and was the first currency to really see the USD buying impact against it, the Oz drifted from the 0.7270 levels and traded steadily into the NYK session pushing through the 72 cent level and eventually testing the 0.7160 levels as the London session closed for the day, although the Oz did start to recover the move to the close saw the Oz unable to push through the 72 cent levels.

Yesterday’s premiership results

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

AUD       House Price Index Q/Q Q3 A 2.00% | C 2.10% | P 4.70%

CHF        Producer & Import Prices M/M Nov A 0.40% | C 0.10% | P 0.20%

CHF        Producer & Import Prices Y/Y Nov A -5.50% | P -6.60%

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

GBP       CPI Y/Y Nov A 0.10% | C 0.10% | P -0.10%

GBP       Core CPI Y/Y Nov A 1.20% | C 1.20% | P 1.10%

GBP       RPI M/M Nov A 0.10% | C -0.10% | P 0.00%

GBP       RPI Y/Y Nov A 1.10% | C 0.90% | P 0.70%

GBP       PPI Input M/M Nov A -1.60% | C -0.10% | P 0.20%

GBP       PPI Input Y/Y Nov A -13.10% | C -12.40% | P -12.10% | R -12.30%

GBP       PPI Output M/M Nov A -0.20% | C -0.10% | P 0.00%

GBP       PPI Output Y/Y Nov A -1.50% | C -1.30% | P -1.30%

GBP       PPI Output Core M/M Nov A -0.20% | C 0.00% | P -0.10%

GBP       PPI Output Core Y/Y Nov A -0.10% | C 0.10% | R 0.30%

GBP       DCLG UK House Prices Y/Y Oct A 7.00% | C 6.40% | P 6.10%

EUR        German ZEW (Current Situation) Dec A 55 | C 54.5 | P 54.4

EUR        German ZEW (Economic Sentiment) Dec A 16.1 | C 15 | P 10.4

EUR        Eurozone ZEW (Economic Sentiment) Dec A 33.9 | C 34.4 | P 28.3

CAD       Manufacturing Shipments M/M Oct A -1.10% | P -1.50%

USD       Empire State Manufacturing Dec A -4.59 | C -5.25 | P -10.74

USD       CPI M/M Nov A 0.00% | C 0.00% | P 0.20%

USD       CPI Y/Y Nov A 0.50% | C 0.50% | P 0.20%

USD       CPI Core M/M Nov A 0.20% | C 0.20% | P 0.20%

USD       CPI Core Y/Y Nov A 2.00% | C 2.00% | P 1.90%

USD       NAHB Housing Market Index Dec A 61 | C 63 | P 62

USD       Net Long-term TIC Flows Oct A -$29.5B | P $33.6b

 

Good Luck,

Andy

Any opinions, news, research, analyses, prices or other information contained on this Blog, whether by LMAX, its employees, partners or contributors, does not constitute investment advice nor has it been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the material contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. Whilst information provided on this Blog may help with your investment research you must consider carefully whether you should make (or refrain from making) investment or other decisions based on what you see without doing further research on the investments you are interested in. Participating in this Blog cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you. LMAX has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

LMAX will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the material produced in this Blog was obtained from sources deemed to be reliable, LMAX does not provide any guarantees about the reliability of such sources.

Consequently any person acting on it does so entirely at his or her own risk.

If you currently hold an account with LMAX for the purposes of trading FX and CFD’s, you are encouraged to use a different Username and Password to access the Blog or any other online systems. The Blog is a place to learn, discuss and share information and ideas with Blog followers. It is not a place to slander, use unacceptable language or to promote LMAX or any other FX, Spread Betting and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.