Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 102.981 | EURUSD 1.11057 | AUDUSD 0.76833 | NZDUSD 0.73252 | USDCAD 1.33971 | USDCHF 0.97393 | GBPUSD 1.24617 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.11097 | 1.10869

USDJPY                 103.271 | 102.829

GBPUSD               1.24820 | 1.24536

USDCHF               0.97575 | 0.97370

AUDUSD              0.76974 | 0.76645

USDCAD               1.34094 | 1.33868

NZDUSD               0.73390 | 0.78008

EURCHF                1.08223 | 1.08159

EURGBP               0.89152 | 0.88896

EURJPY                 114.543 | 114.194

For Today

• EUR: Quiet selling of EURGBP saw the Euro slip slowly through the 1.1100 levels over the day, dipping from the opening saw the market attempt to push back higher towards the opening 1.1105 levels before slowly slipping to trade the 1.1090-95 areas for the bulk of the day, Topside offers through the 1.1120 levels is likely to see some weak stops appearing however, congestion through the 1.1150 levels for the moment is likely to see offers running ever higher and deep rather than strong until the 1.1250 levels where stronger offers appear, downside bids light through the 1.1050 levels with the 1.1000 only slightly better and weak stops likely to appear quickly and the downside opening to a larger drop, more PMI figures for the day with US trade balance, NFP and unemployment numbers likely to be of concern for the day.
• GBP: Cable moved a little higher from the opening 1.2460 levels to test the 1.2480 areas weakly before drifting off late in the session to push below the 1.2460 and the run into London. Topside offers into the 1.2500 level are likely to be sentimental only and a push through will likely see stops appearing and the market opening for another leg higher with the 1.2600 levels likely to be just as weak and the market open to the fall back from 7^th Oct, downside bids light into the 1.2400 levels and that weakness more to do the quick move higher however, a move through the level should see better bids moving into the 1.2350 1.2300 areas, with strong stops likely through the levels and opening to 1.2200.
• JPY: USDJPY ranged in a tight mode through the session seeing early buying pushing to the 103.20 levels before dropping back on fixing supply to test the 102.80 again and returning once that supply was sated, the market then returned to above the 103.00 levels and held deep in the session in a very quiet period before pushing above the 103.20 levels as the market moved to the grey hours and towards the London session, Topside offers light through the 103.30 levels with a possibility of weak stops however, the market for the moment sees congestion on any move towards the 104.00 levels and only a strong set of US numbers will free the topside, downside bids below the 102.60 are holding the market for the moment with better bids likely on a move through the 102.00 levels and downwards through 101.50.
• AUD: The Oz remained strong in the move through to the Tokyo session with the market testing towards the 77 cent level in a stab higher however, the offers proved too much into the Tokyo session and started to drift away from the levels to hold for a period around the 0.7680 level and then dropping again as we moved towards the London session to make lows around the 0.7665 areas. Topside offers into the 77 cent level and likely to be strong through to the 0.7740 where the market has repeatedly stopped over the past 3 months, Downside bids light through the 76 cent level and increasing through to 0.7580 areas, possible limited stops on a drop back through however, the market is likely to see congestive bids continuing through to the 75 cent levels.

Overnight News

USD/KRW:

U.S. to Deploy Thaad in S. Korea within 8-10 Months: Yonhap

JPY/USD:

Japan PM Abe May Visit U.S. in Feb. If Clinton Wins: Kyodo

JPY:

Japanese Bought Net 891.9 Billion Yen Overseas Debt Last Week

Nikkei Japan Oct. Services PMI 50.5 vs 48.2 in Sept.

CNY:

China Local Govt. Swapped 7.2t Yuan Debt as of End-Sept.: MOF

CNY/CAD:

China Said To Start Direct Trading of CNY & CAD in the Near Term

AUD:

RBA Forecasts Little Changed; Notes Housing, Labour Uncertainty

Australia Sept. Retail Sales Rise 0.6% M/M; Est. 0.4%

EUR:

Coeure Says Lack of Fiscal Policy No Excuse for ECB to do Less

ECB’s Coeure Says Need Public Debt to Be Safe in the Euro Area

GBP:

BOE’s Broadbent: Uncertainty Means Pound Likely to be Volatile

TRY:

Turkey Police Round Up Kurdish Party Leaders in Midnight Raids

Today’s data

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

AUD       RBA Statements on Monetary Policy

AUD       Retail Sales M/M Sep A 0.60% | C 0.40% | P 0.40% | R 0.50%

08:45     EUR        Italy Services PMI Oct C 51.6 | P 50.7

08:50     EUR        France Services PMI Oct (F) C 52.1 | P 52.1

08:55     EUR        Germany Services PMI Oct (F) C                54.1 | P 54.1

09:00     EUR        Eurozone Services PMI Oct (F) C 53.5 | P 53.5

10:00     EUR        Eurozone PPI M/M Sep C 0.00% | P -0.20%

10:00     EUR        Eurozone PPI Y/Y Sep P -2.10%

12:30     USD       Trade Balance Sep C -39.2B | P -40.7B

12:30     USD       Change in Non-farm Payrolls Oct C 150K | P 156K

12:30     USD       Unemployment Rate Oct C 4.90% | P 5.00%

12:30     USD       Average Hourly Earnings M/M Oct C 0.30% | P 0.20%

12:30     CAD       International Merchandise Trade (CAD) Sep C -1.7B | P -1.9B

12:30     CAD       Net Change in Employment Oct C -10.0K | P 67.2K

12:30     CAD       Unemployment Rate Oct C 7.00% | P 7.00%

14:00     CAD       Ivey PMI Oct P 58.4

Harry Hindsight              

• EUR: Early gains into the Tokyo session with the market moving off the 1.1095 lows into the Tokyo opening and pushing through to the 1.1125 over the course of an hour or two, the market held for the rest of the Asian session above the 1.1110 levels and ran into the ECB monthly bulletin, the failure of the topside was the market dropping quickly back and then the commentary set the market on a steady decline all the way back through the 1.1080 levels to test the 1.1060 levels, what can we take from the monthly bulletin, not a lot the usual wishy washy commentary with very little substance or meaning, as it was the movement in GBP took over the market with the Services PMI and discussions on inflationary pressures beginning to build, with EURGBP quickly slipping from the 0.9020 areas to the 0.8920 level, Euro’s held the 1.1060 levels for the move into the NYK session before starting a steady recovery to the 1.1120 levels late into the session before drifting to the close around the 1.1100 areas.
• GBP: Cable was a steady buy through the Asian session pushing from the opening 1.2300 levels and pushing to the 1.2340 levels before moving into the London session and decent PMI numbers taking the market higher with talk of increasing inflationary pressures and the removal of the easing bias with economic expectations doing better than expected having pushed through the 1.2400 levels triggering weak stops on the move and spiking initially the market continued pushing onwards and again pushed above the 1.2440 levels, with the initial buying over with the next item of interest was the supreme court’s decision that PM May’s determination to push ahead with Brexit on the mandate of the referendum does not meet constitutional legality’s and the motion to issue Article 50 must be voted on within Parliament so can face delay, watering down to the soft option or even force a second referendum, this of course will likely anger those that voted to leave in the first place that is the 52% who bothered to vote out, this could warrant a general election in the near term if it all gets too messy and a reprieve for a limited period. This led to another leg higher pushing to the 1.2500 levels and falling only just short of the level before settling in to range around the 1.2460 areas to the close.
• JPY: Opening around the 103.30 areas the early buyers managed to push the market to the 103.40 areas before the Tokyo sellers moved in with a follow on of the previous days action, with the market quickly dropping through to the 102.60 levels before finding a base and the market held the levels through into the London session, movement in the GBP helped the USDJPY move off the lows and through into the Tokyo session the market had managed to make the opening levels before slipping back to range through the session around the 103.00 areas in what for the USDJPY was the light day.
• AUD: The early part of the day was a little choppy with the Trade balance numbers better than expected and a decent revision on the previous month and the market moved from the lows around the 0.7650 levels to push steadily to the 0.7680 levels, the market then tumbled quickly back, well a deficit is a deficit even so and the market dipped through the 0.7640 levels, while the market again recovered the market remained from then to the close in a tight range slowly rising to push eventually through the highs but not by much with the market finishing around the 0.7685 areas.

Yesterday’s premiership results

AUD       Trade Balance (AUD) Sep A -1.23B | C -1.71B | P -2.01B | R -1.89B

CNY        Caixin China PMI Services Oct A 52.4 | C 52.5 | P 52

CHF        SECO Consumer Confidence Oct A -13 | C -13 | R -15

EUR        ECB Monthly Bulletin

GBP       Services PMI Oct A 54.5 | C 52.5 | P 52.6

EUR        Eurozone Unemployment Rate Sep A 10.00% | C 10.00% | P 10.10%

USD       Challenger Job Cuts Y/Y Oct A -39.10% | P -24.70%

GBP       BoE Rate Decision A 0.25% | C 0.25% | P 0.25%

GBP       BoE Asset Purchase Target A 435B | C 435B | P 435B

GBP       MPC Official Bank Rate Votes A 0–0—9 | C 0–0—9 | P 0–0–9

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

GBP       BoE Inflation Report

USD       Non-Farm Productivity Q3 (P) A 3.10% | C 1.70% | P -0.60% | R -0.20%

USD       Unit Labour Costs Q3 (P) A 0.30% | C 1.50% | P 4.30% | R 3.90%

USD       Initial Jobless Claims (OCT 29) A 265K | C 258K | P 258K

USD       ISM Non-Manufacturing Composite Oct A 54.8 | C 56 | P 57.1

USD       Factory Orders Sep A 0.30% | C 0.20% | P 0.20%

USD       Natural Gas Storage A 54B | C 55B | P 73B

Good Luck,

Andy

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