Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 105.164 | EURUSD 1.10258 | AUDUSD 0.77617 | NZDUSD 0.73617 | USDCAD 1.32885 | USDCHF 0.97791 | GBPUSD 1.23808 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.12984 | 1.09907

USDJPY                 105.477 | 101.186

GBPUSD               1.25485 | 1.23544

USDCHF               0.98360 | 0.95518

AUDUSD              0.77705 | 0.75852

USDCAD               1.35259 | 1.32648

NZDUSD               0.73886 | 0.72749

EURCHF                1.08108 | 1.07545

EURGBP               0.90232 | 0.88906

EURJPY                 116.025 | 113.757

For Today

• EUR: Choppy would be an understatement, with the market opening around the 1.1020 levels and slipping a little lower before moving into the Tokyo session pushing from the 1.1010 low to the 1.1050 areas as the first projections started to filter through, early success for Clinton saw the market dip back to push below the 1.1000 levels however as each successive projection came out for Trump the USD Slumped pushing the Euro back through the highs and once through those highs there was no stopping the USD’s slide, with the market pushing through the 1.1100 areas and barely pausing before pushing through the 1.1160 levels, a pause as the reports slowed and then a release of minor states saw Trump pulling further away, even once the California poll hit it didn’t stop the market who into the early hours in London had Trump winning and the Euro pushing through 1.1200 topping out around the 1.1260 levels as the results slowed, the result became more obvious as time ticked on and so did the fall in the USD with the Euro pushing up against the 1.1300 levels by 5am GMT with US equities limit down and closed for a short period as the market draws close to the London session the market has drifted back a little and away from the 1.1300 areas and ranging along the 1.1260 into the grey hours, with theoretically a slim hope for Hillary Clinton but the media already calling Trump the next president. Topside offers into the 1.1300 levels through to 1.1350 congestive but possibly weak in the light of London waking to the news, with the 1.1400 possibly showing stronger offers and stops possibly missing for the moment unless a stronger move opens up through the 1.1500 areas, downside bids possibly mixed with any big move the opposite direction takes time to fill and consolidate and so the downside remains weak through the 1.1200 levels with 1.1100 possibly the stronger point however, renewed buying could enter the market on any move lower.
• GBP: Cable topside was a little more resilient over the course of the session with the market holding the 1.2360 levels in early trading as the early US results started to hit however, once Trump started to pull away the market moved off the lows and tested steadily through to the 1.2480 areas, with limited offers showing into the 1.2500 levels the market started to stall and after a brief struggle pushed through to the 1.2520 levels with strong volumes across the board showing, the market eventually extended to the 1.2540 levels as equity markets in the US slipped to limit down however, once pricing renewed the drag of the USD saw the Cable limping around the 1.2500 areas and while the backdrop of the US election may figure through the day Brexit has not gone away its just deflected the news for the moment, Topside offers likely to hold around the 1.2600-30 areas with a break above the level possibly opening up a larger move with stops a possibility beyond and opening up a stronger move towards the 1.3000 levels in the long term, downside sees light bids into the 1.2450 levels with possible weak stops appearing on a dip through the area to target a push back through the 1.2400 areas where possibly better bids lie.
• JPY: One of the biggest movers of the day with the USDJPY slipping back to the 104.50 areas from the opening and against the early flow for the USD with cross trading dominating the market one suspects however, as the USD started to buckle the highs of 105.50 area were never to be seen again and the USDJPY once through the lows accelerated quickly to the 103.50 areas with only brief pauses as the market ran into importer bids into the sentimental levels, with Trump taking Ohio the push to the 102.00 level was quickly accomplished and better bids eventually curbed the selling and returned the market to the 103.00 areas however, sentiment and selling of anything USD saw the equity markets struggling eventually hitting limit down in the NASDAQ and S&P’s, the USDJPY pushed through bids to test into the 101.50 areas again MoF’s Asakawa entered the fray with watching FX moves and to discuss future actions with Aso, this usually is the first warning that the MoF/BoJ are prepared to smooth any further moves and all though we are probably a long way off from official action the warning is sufficient to curb some of the on shore traders from taking things too far. The market did eventually dip through the 101.50 areas as the results suggested that Trump has won however, the warnings from MoF and BoJ official seems to have put a base in the market for the moment and given the strong movement and volumes is now looking slightly tired as the market moves towards London and fresh interest. Downside bids through the 101.00 levels is likely to be strong with very little in the way of stops and if there are weak stops are likely to be absorbed on any move below the 100.50 areas with bids increasing the closer you move to the 100 level. Topside offers light until closer to the 103.00 levels and the possibility of a short squeeze are not to be dismissed even if the news in the US would counter or seem to counter the upside. Through the 103.00 could see the market pushing quickly towards the 104.00 levels if momentum caught.
• AUD: The Oz was the exception to the rule with the market unable to push beyond the 0.7780 levels during the early Tokyo session found itself under pressure from cross selling as the JPY strengthened outweighing the outright movement of the USD forcing the Oz down through the 0.7740 areas to trigger weak stops and pushing steadily to the 0.7680 areas the break here saw further stops appearing and the market tumbling to the 0.7620 areas before the Oz started to trade outright and less dominated by JPY movements, the Oz continued its slow decline as the cross trading continued through the session with AUDJPY dominating the day but the pressure on Oz offset by other crosses and the weakness in the USD so the market eventually pushed through 76 cents and bottomed around the 0.7580 areas before moving towards London bouncing a little. Topside offers light through to the 0.7780-0.7800 levels then stronger offers appearing around the levels, a push through the level would see some offers into the 0.7840-60 areas however, through that level could see some break out stops appearing and the market targeting through the 79 cent level. Downside bids into the current lows and likely to continue through the 0.7560 levels with possible strong bids in the area, with stops likely through the 0.7540 areas before running into further congestive bids.

NB: Given the moves and the news behind it, all levels are very subjective.

Hillary Clinton concedes and Donald Trump is the next president.

Overnight News

USD:

Trump Poised for Upset Win as Clinton Refuses to Concede Race

JPY:

Japan FX Chief to Take Necessary Action If Rough Moves Continue

Japan’s Asakawa Says Movements in FX Markets Are Harsh

Japan MOF, BOJ, FSA to Hold Meeting on Intl Markets at 3pm

Japan’s Current-Account Surplus Widens to 1.8 Trillion Yen

Japan Bank Lending Rises Most in a Year, Deposits Accelerate

JPY/KRW:

Japan Is Said to See Park Scandal Delaying Korea FX Swap Talks

CNY:

China Oct. Consumer Prices +2.1% Y/y; Matching Estimate

China’s New FinMin to Continue, Even Accelerate, Reforms: MNI

China Service Sector May Account for 60% of GDP by 2025: Daily

GBP:

U.K. Lawmakers Seek Vote to Start Brexit Talks: Telegraph

EUR:

Coeure Says ECB Will Continue to Support Euro-Area Recovery

AUD:

Australia Nov. Consumer Confidence Falls 1.1% M/m to 101.3

Today’s data

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

AUD       Westpac Consumer Confidence Nov A -1.10% | P 1.10%

JPY         Current Account (JPY) Sep A 1.48T | C 1.98T | P 1.98T

CNY        CPI Y/Y Oct A 2.10% | C 2.10% | P 1.90%

CNY        PPI Y/Y Oct A 1.20% | C 0.90% | P 0.10%

JPY         Eco Watchers Survey: Current Oct A 46.2 | C 44.4 | P 44.8

09:30     GBP       Visible Trade Balance (GBP) Sep C -11.3B | P -12.1B

15:00     USD       Wholesale Inventories Sep (F) C 0.20% | P 0.20%

15:30     USD       Crude Oil Inventories P 14.4M

Harry Hindsight              

• EUR: With voting day upon us for the US the market was particularly quiet through the session, slipping initially from the opening 1.1040 levels to test to the 1.1030 in limited trading before rising through to the London session pushing back to the opening levels, London took the markets to the highs around the 1.1065 areas and holding briefly in the area before slipping back again to the opening levels into the NYK session, once the London session wrapped up the USD bulls marginally moved in and the Euro was taken steadily through to post the lows around the 1.1010 areas with only a light bounce into the close around the 1.1025 areas as exit polls remained mixed at best.
• GBP: A choppy nervous day for the Cable and while the back drop of the US elections had some bearing the illiquidity with in the market saw the market ranging far more than you’d have expected, opening around the 1.2400 levels the market moved through the Asian part of the day in a tight range having initially pushed above the 1.2400 levels the market then held broadly in the 1.2390-1.2400 range through to the grey hours finally pushing through 1.2400 in the lead up to the numbers, mixed results saw industrial numbers dipping while manufacturing increased as the low GBP rate helped the exporters push ahead and so the Cable made its move higher to the 1.2440 areas before running into limited resistance and a stronger USD filtering through the market, and the Cable slowly dropped back through the opening levels and pushed eventually to the 1.2360 levels and while the end of the day through the NYK session couldn’t break either side the market remained uncertain and moved freely between the 1.2360-1.2400 range to the close.
• JPY: The USDJPY rose steadily through the session with the market struggling initially in Asia moving from the opening around the 104.50 areas and unable to push through 104.60 drifted lower to test the 104.30 into the London session, London eventually saw a slow rise and the push in the NYK session saw the 104.80 levels tested but with little conviction until the market moved towards London close and the market eventually pushed lightly above the 105.00 levels, holding above the figure though to the close but unable to push beyond the 105.20 areas.
• AUD: Ozzie slipped off the opening 0.7720 areas and through into the early part of Tokyo testing below the 77 cent levels as the market saw limited USD buying in the market, the move through to and through the London session was very uneventful with the market moving around the 77 cent level in a tight range, and once into the NYK session the market started a steady recovery pushing through the 0.7740 levels and triggering some weak stops into the offers for the market to push to the 0.7780 areas and break through the 0.7740 highs we’ve seen over the past 3 months or so, having pushed to those levels though the market stalled into the close.

Yesterday’s premiership results

GBP       BRC Retail Sales Monitor Y/Y Oct A 1.70% | P 0.40%

AUD       NAB Business Confidence Oct A 4 | P 6

CNY        Trade Balance (USD) Oct A 49.1B | C 51.9B | P 42.0B

CNY        Trade Balance (CNY) Oct A 325B | C 366B | P 278B

JPY         Leading Index Sep (P) A 100.5 | C 100.2 | P 100.9

CHF        Unemployment Rate Oct A 3.30% | C 3.30% | P 3.20%

EUR        German Industrial Production M/M Sep A -1.80% | C -0.40% | P 2.50%

EUR        German Trade Balance (EUR) Sep A 21.3B | C 23.4B | P 22.2B

GBP       Industrial Production M/M Sep A -0.40% | C 0.10% | P -0.40%

GBP       Industrial Production Y/Y Sep A 0.30% | C 0.80% | P 0.70%

GBP       Manufacturing Production M/M Sep A 0.60% | C 0.40% | P 0.20%

GBP       Manufacturing Production Y/Y Sep A 0.20% | C -0.20% | P 0.50%

CAD       Housing Starts Oct A 193K | C 195K | P 220.6K | P 219K

CAD       Building Permits M/M Sep A -7.00% | C -5.60% | P 10.40%

GBP        NIESR GDP Estimate Oct A 0.40% | P 0.40% | R 0.50%

Good Luck,

Andy

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