Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 105.67 | EURUSD 1.09088 | AUDUSD 0.76361 | NZDUSD 0.7283 | USDCAD 1.34235 | USDCHF 0.9845 | GBPUSD 1.24062 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.09541 | 1.09115

USDJPY                 105.959 | 104.954

GBPUSD               1.24437 | 1.23954

USDCHF               0.98504 | 0.9821

AUDUSD              0.76780 | 0.76366

USDCAD               1.34251 | 1.24052

NZDUSD               0.73052 | 0.72345

EURCHF                1.07596 | 1.07437

EURGBP               0.88249 | 0.87827

EURJPY                 115.655 | 114.973

For Today

• EUR: With the election over with the markets settled down to ponder the result and the economic news, Euro’s has obviously been less hectic but not as slow as the lead up to the election with volumes reasonable, trading from the opening 1.0910 areas to test steadily through to the 1.0950 areas before finding limited offers and drifting through to the London session in a tight 1.0940-50 areas, Topside offers into the 1.0960 levels are likely to be light with weak stops likely to make a brief appearance and the 1.1000 levels opening for a quick test, stronger offers into the 1.1050 levels however, given yesterday’s action the topside is likely to remain weak into the 1.1100 levels. Downside bids into the 1.0900 areas before the market opens briefly with possibly stronger bids around the 1.0860 levels and the lows from the beginning of the year likely to provide support into the 1.0840 area before technical sellers appear and the downside opens for a possible deeper move. Initial Jobless claims early in NYK to watch for before the monthly budget statement later in the day.
• GBP: Opening around the 1.2420 areas the market ranged around the level through the day with early buying taking the market to the 1.2440 levels before finding light offers and the drift off to the lows around the 1.2400 areas in quiet trading for the pair, EURGBP made minor gains having fallen over the previous session towards the 0.8760 levels to push back above the 0.8800 levels and hold quietly there. Topside offers light into the 1.2450 areas with stronger offers likely to be above the 1.2500 areas with the 1.2550-60 area likely to be stronger still and the market then opening to the 1.2630 areas and possible technical buying moving in beyond. Downside bids likely to increase into the 1.2350 areas with the market being in the second week above the level and weak stops through the level opening the market to a retracement back into the 1.2150-1.2250 ranges.
• JPY: USDJPY found the 106.00 levels a little too much after yesterday’s action, and struggled from the opening around the 105.70 levels, testing into the Tokyo session above the 105.90 areas before drifting back through to mid-session with a light push through the 105.00 levels as the safe haven flows removed themselves from the market, the market then recovered to the 105.50 areas and held through the remainder into London ranging around the level. Topside offers likely to be strong into the 106.00 areas with a push through the level likely to see weak stops and technical types joining the move and possible weakness through towards the 107.00 levels with limited congestion into the area the topside could possibly open further. Downside bids light through to the 101.50 levels and the point where BoJ/MoF officials spoke yesterday, there is likely to be light bids around the 103.50 where the market struggled a little on the way back higher yesterday however, for the moment the downside is likely to be weak until it refills after the past 24hrs of action.
• AUD: Opening around the 0.7640 areas the cut in the NZD saw the Oz buying move in quickly and the market pushing to the 0.7660 areas as AUDNZD buying moved through the market, it was limited and the drag of the NZD on the Oz eventually saw the market close to the opening levels for the opening in Tokyo and then a quiet and steady rise higher as the USDJPY adjusted from its opening highs leaving the Oz to steadily rise to the 0.7680 levels with inflationary news better than expected and the market reasonably buoyant. Topside offers through the 77 cent levels with the previous 3 months highs broken yesterday the market has a little more room on the topside however, one would suspect that the market is likely to see stronger offers around the 0.7740 areas forming and the old level being the one to break again. Downside bids light through the 76 cent levels and increasing on any dips towards the 0.7580 areas with congestion possibly continuing through the 0.7550 areas and bids then increasing again.

Overnight News

USD:

United States of America Affirmed by S&P

Williams Reiterates Fed’s Gradual Pace View Post-Trump Victory

Fed’s Williams Seeks Goldilocks Economy Not Too Hot or Cold

Fed’s Williams: Case for Gradual Hikes ‘Still Makes Sense to Me’

JPY:

Japanese Bought Net 604.9 Billion Yen Overseas Debt Last Week

Japan Sept. Core Machine Orders Fall 3.3% M/m; est. -1.5%

One BOJ Member: More Easing Depends on Price Momentum

Suga: Trump Appears to See U.S.-Japan Alliance as Important

USD/JPY:

Trump and Abe Set to Meet in New York Nov. 17, Aide Says

CNY/USD:

China, U.S. Economic Tie Fundamentals Won’t Change on Trump Win

KRW/USD:

S.Korea to Seek Win-Win Economic Strategies with U.S., Yoo Says

USD/KRW:

Trump Says U.S. Will Maintain Firm Defence of S. Korea: Yonhap

NZD:

RBNZ’s McDermott Says Kiwi Is Too High, No Floor Under Rates

Wheeler Says RBNZ Always Has An Open Mind on Kiwi Intervention

RBNZ’s Wheeler Says Easing Probably Over as Economy Booms

N.Z.’s Key: TPP Unlikely to Proceed in Short Term Under Trump

GBP:

U.K. Oct. RICS House Price Index at 23 vs Est. 18

AUD:

Australia Sept. Home-Loan Approvals Rise 1.6% M/M; Est 1.6% Drop

Today’s data

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

NZD       RBNZ Rate Decision A 1.75% | C 1.75% | P 2.00%

JPY         BOJ Summary of Opinions

JPY         Machine Orders M/M Sep A -3.30% | C -2.00% | P -2.20%

AUD       Consumer Inflation Expectation Nov A 3.20% | P 3.70%

GBP       RICS House Price Balance Oct A 23.00% | C 18.00% | P 17.00% | R 18.00%

AUD       Home Loans Sep A 1.60% | C -0.50% | P -3.00% | R -2.70%

13:30     CAD       New Housing Price Index M/M Sep C 0.20% | P 0.20%

13:30     USD       Initial Jobless Claims (NOV 5) C 267K | P 265K

15:30     USD       Natural Gas Storage P 54B

19:00     USD       Monthly Budget Statement Oct C -$84.4B | P $33.4B

Harry Hindsight              

• EUR: The move into Asia saw the market push initially to the 1.1050 levels as early results would seem to suggest that Trump would be taking an early lead, however, having pushed to the level results for Clinton came in and the USD surged a little to take the Euro below the 1.1000 levels, from that point on though it was all one way traffic with the USD falling quickly and over an extended period as more results favoured Trump and the market pushed to the 1.1150 levels with several results going to the Trump side and early indications increasingly in favour of Trump, the market continued to rise and while not so sharply what offers there were in the Euro were quickly taken out and the Euro pushing to the 1.1300 levels with little to slow it till that point, before the London market opened Clinton conceded and Trump was the next President of the USA, Equities were particularly effected by the election and the S&P and Nasdaq were both limit down at one stage however the move into London started to see a more level headed approach to the election started to kick in with the market starting a decline just as quick as the rise with Euro’s dropping back to the 1.1100 levels pushing through to below 1.1050 and bouncing a little and then continuing as the USD reversed all its losses, the move into the NYK session saw the market continuing and the early traders buying USD’s through into the early session testing to the 1.0950 areas and bids moving into to the market and slowing the decent through the next 40 pips and into a quiet close on a volume filled day.
• GBP: While the pattern was obviously the same the results were a little different with the market opening around the 1.2380 levels the market moved into the Tokyo session testing the 1.2420 levels before quickly dropping back on early indications that Clinton was starting to lead, Trump leading from then on saw the Cable rise quickly towards the 1.2500 levels before struggling on the move through the level and a test to the 1.2540 levels only before moving into the London session and the market dropping back just as quick, the move through the 1.2440 levels saw the market trigger weak stops and the market testing quickly to the 1.2360 levels before stabilizing around the 1.2400 levels, the market then straddled the level into the NYK session unable to break the 1.2360 levels and slowly testing higher on each move before failing the 1.2480 levels and finishing the day narrowing down to the 1.2420 levels.
• JPY: USDJPY was even more pronounced with the flows into JPY as a safe haven appearing with early trading to the 105.50 levels quickly dropping back to the 103.50 areas and pausing only for a few minutes before continuing the market slowed into the 102.00 levels however the market tested through to the 101.20 areas with before MoF/BoJ comments started to materialize as an attempt to stabilize the situation and the concession by Clinton saw the market start to turn and head into the London session pushing back to the 103.50 levels and pausing through the best part of London, NYK came in as steady buyers and the USDJPY slowly rose through the session into the late session struggling to break through the 106.00 levels having made it there several hours was spent in a very tight range too the close. With the election over apart from the shouting, Trumps speech was conciliatory and statesman like with a wish to do the job he’s been voted in for and less the rabble rouser that some would have us believe, this to some extent was possibly the reason for the calming of the markets or it could also be the fact that the next President is a businessman and not a professional politician and may have missed along the past few decades.
• AUD: Opening around the 0.7770 areas the market drifted into the Asian session and Tokyo quickly found itself selling risk and buying safe haven so while everyone was buying the JPY the Oz pushed steadily lower moving through the 77 cent levels in the first hour and then dropping through to the 76 cent level through the balance of the session bouncing off the 0.7580 levels and starting a quiet recovery as the market started to move into the London session, the market managed to recover too the 77 cent levels and held into the NYK session around that level before slowly slipping back to range around the 0.7660-40 areas through to the close.

Yesterday’s premiership results

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

GBP       Visible Trade Balance (GBP) Sep A -12.7B | C -11.3B | P -12.1B | R -11.1B

USD       Wholesale Inventories Sep (F) A 0.1% | C 0.2% | P 0.20%

USD        Crude Oil Inventories A 2.45M | C 2.0M | P 14.4M

Good Luck,

Andy

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