Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 112.39 | EURUSD 1.06495 | AUDUSD 0.74835 | NZDUSD 0.71235 | USDCAD 1.34314 | USDCHF 1.01171 | GBPUSD 1.24942 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.06608 | 1.06275

USDJPY                 112.960 | 112.059

GBPUSD               1.24973 | 1.24684

USDCHF               1.01349 | 1.01065

AUDUSD              0.74972 | 0.74626

USDCAD               1.34516 | 1.34222

NZDUSD               0.71589 | 0.71283

EURCHF                1.07826 | 1.07702

EURGBP               0.85330 | 0.85149

EURJPY                 120.050 | 119.492

For Today

• EUR: Reasonable volumes for the day again with the Euro making early attempts to the topside and running out of steam as the offers into the 1.0660 levels held and the market fell back through the 1.0650 levels and held into the mid-session before dipping to the 1.0630 old news helping the USD a little higher, chatter within the market on the upcoming Italian vote, now while this vote is on the Upper house having its roll reduced to its original control feature much as the UK’s House of Lords unable to make policy but effecting policy, the fact that Italian PM Renzi has pinned his future on a Yes vote much the same as Cameron did has turned the vote into a Yes and No to the European Union and while Brexit caused major fluctuations another vote against the EU would shake it too its foundations and given that there is still the French elections and the vote in the Netherlands to go the EU is now looking a little concerned that the populist voters will turn away from its ideals. This given the Euro continues to consolidate around the 1.0600 for the moment and seems unable to move away from the trouble zone and worryingly close to the parity level, Topside offers into the 1.0700 levels are now likely to be a little stronger with weak stops likely on a break through the level however, until Monday the vote will dominate the market, in the meantime CPI and German employment numbers will dictate the day until the release of the US numbers and possibly decision time for the Fed for the last meeting this year. A push through the 1.0700 levels could see the market triggering weak stops on a move through 1.0710-20 areas with some congestion into the 1.0750 levels, downside bids through the 1.0550 levels for the moment are reasonably strong with a dip to the 1.0500 levels likely to see some stronger bids and weak stops on a move through the 1.0480 areas and the market opening for a test through to the 1.02 handle.
• GBP: A quiet session through Asia for the Cable with the market drifting from the opening 1.2490 levels to the 1.2470 level before ranging around the 1.2480 to the London session, Topside offers into the 1.2530 areas likely to see weak stops in a run to the 1.2550 areas, if the market can break through here then the 1.2600 is likely to be lightly offered with stronger offers into the 1.2650 areas. Downside bids congestive through to the 1.2400 levels with stronger bids through the area however, the 1.2350 level is likely to see better bids with stops unlikely in size until a move through the 1.2300 areas.
• JPY: USDJPY dipped on the opening of the Tokyo session dropping to the 112.10 areas before spending the session working its way back through to the 112.40 opening levels and a squeeze through 112.50 albeit limited to the 112.80 areas extending eventually through towards the 113.00 before drifting into the grey hours holding the 112.80 areas. Weaker IP number being mostly to blame for the weakness in the JPY. Topside offers light through the 113.00 areas with stronger offers likely through into the 113.40-60 areas with stronger offers likely into the 113.80-114.00 levels with exporters possibly beginning to appear in earnest. Downside bids likely to be light through to the 111.00 areas where the market is likely to start to see limited bids with weak stops on a break through the 110.50 levels.
• AUD: The Oz drifted having te4sted again to the 75 cent levels with the JPY IP number helping early AUDJPY buying and seeing the test however, as the USDJPY pushed higher the AUDJPY seemed to run into stronger offers in the 84.40 areas and was unable to push through and the market saw the Oz forced steadily lower to test the 0.7460’s before drifting in a tight range. Topside offers into the 75 cent levels likely to see some weak stops on a move through however once through the market is likely to run into some congestive offers through the 0.7530 levels which will likely continue to the 0.7560 areas before opening up the topside. Downside bids light through to the 74 cent levels with limited bids appearing however the move through is likely to see some congestive bids and bottom picking in the market with no real stops likely unless the 73 cent level is tested.

Overnight News

USD:

Mnuchin Said to Be Trump’s Pick for Treasury Secretary

CNY:

PBOC Adviser Sees Long-Term Rise of Yuan Against Dollar: News

Westpac-MNI China Nov. Consumer Sentiment -1.9% M/m to 114.9

NZD:

RBNZ Says Financial Stability Risks Posed by Housing Have Risen

New Zealand Business Confidence Gauge Declined in November: ANZ

JPY:

Japan Oct. Industrial Production Rises 0.1% M/m; Est. 0%

GBP:

U.K. Nov. GfK Consumer Confidence -8 vs Est. -4

AUD:

RBA Reduces CNY Weighting, Boosts USD in Trade-Weighted FX Index

Australia Oct. Building Approvals Fall 12.6% M/M; Est. 2% Gain

Australia Oct. Credit to Business, Consumers Rose 0.5% M/M

Australia AAA Rating Still Pressured Even as Coal Climbs: S&P

Today’s data

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

JPY         Industrial Production M/M Oct (P) A 0.10% | C 0.20% | P 0.60%

NZD       NBNZ Business Confidence Nov A 20.5 | P 24.5

GBP       GfK Consumer Confidence Nov A -8 | C -4 | P -3

AUD       Building Approvals M/M Oct A -12.60% | C 2.20% | P -8.70% | R -9.30%

JPY         Housing Starts Y/Y Oct A 13.7% | C 11.50% | P 10.00%

07:00     CHF        UBS Consumption Indicator Oct P 1.59

08:00     CHF        KOF Leading Indicator Nov C 104.3 | P 104.7

08:55     EUR        German Unemployment Change Nov C -6K | P -13K

08:55     EUR        German Unemployment Rate Nov C 6.00% | P 6.00%

10:00     EUR        Eurozone CPI Estimate Y/Y Nov C 0.60% | P 0.50%

10:00     EUR        Eurozone CPI – Core Y/Y Nov (A) P 0.80%

13:15     USD       ADP Employment Change Nov C 160K | P 147K

13:30     USD       Personal Income Oct C 0.40% | P 0.30%

13:30     USD       Personal Spending Oct C 0.50% | P 0.50%

13:30     USD       PCE Deflator M/M Oct C 0.30% | P 0.20%

13:30     USD       PCE Deflator Y/Y Oct P 1.20%

13:30     USD       PCE Core M/M Oct C 0.10% | P 0.10%

13:30     USD       PCE Core Y/Y Oct P 1.70%

13:30     CAD       GDP M/M Sep C 0.10% | P 0.20%

13:30     CAD       Industrial Product Price M/M Oct C 0.70% | P 0.40%

13:30     CAD       Raw Materials Price Index M/M Oct C 3.20% | P -0.10%

14:45     USD       Chicago PMI Nov C 52.3 | P 50.6

15:00     USD       Pending Home Sales M/M Oct C 0.30% | P 1.50%

15:30     USD       Crude Oil Inventories P -1.3M

19:00     USD       Federal Reserve Beige Book

Harry Hindsight              

• EUR: For the moment the Euro seems to be consolidating around the 1.0600 levels and although the market saw reasonable volumes through the day the range was limited with the opening around the 1.0610 levels seeing early sellers into the Tokyo session and dipped to the 1.0590 areas, that low lasted into the early London session dipping towards the 1.0580 levels before returning to the 1.0600 areas, the move into the NYK session saw the market trading lower and pushing on a hunt for stops, as it was the market failed the downside and lifted from the 1.0560’s to push steadily higher through the opening levels, eventually the market pushed through the 1.0630 levels with some weak stops triggered and the market pushing to the 1.0650 level into the close. The move lower was on the back of a better annualised GDP number for the US, however, for the moment the downside seemed resilient.
• GBP: Cable moved through the Asian session quietly dipping from the opening 1.2420 levels tipping down through to the 1.2390 levels before holding and moving steadily through to the Lodnon session back above the 1.2400 areas, London were quick sellers on the weaker Eurozone numbers of the EUR/GBP cross with the cross dropping from the 0.8550 levels quickly through to the 0.8500 levels before slowing and drifting through into the NYK session pushing down eventually to the 0.8470 area, with the Euro in a steady range for the most part the Cable leg saw the market rise to the 1.2480 levels then slowing until the NYK opening and pushing through to test towards the 1.2530 level on a quick stab higher and then drifting to a close just below the 1.2500 levels.
• JPY: A reverse of fortunes with the better than expected retail trade number still showing negative but still negative and the market reversing its early losses to push away from the 111.60 in a steady rise to the 112.20 levels and then a quiet range through the Asian session around the 112.20 areas, the market moved into the London session continuing the early rise and pushing through to the 112.60 levels and light offers, NYK’s releases saw the market rise to the 113.30 areas before slipping back through to the 112.80 areas and a slow drift from the London close to the 112.40 closing areas.
• AUD: The Oz saw a quiet range through the day with the market making limited headway from the opening 0.7485 areas to fail to break the 0.7500 levels and dropping back quickly through to 0.7460 on the move into the Tokyo session, the market ranged through to the London session before London pushed through to extend the lows on a move to the 0.7435 area into the NYK opening as the USD recovered a little with the US data releases however, once the market had absorbed the numbers the Oz started to recover with cross buying in AUD/JPY helping the Oz to push back to the opening levels into the close.

Yesterday’s premiership results

JPY         Unemployment Rate Oct A 3.00% | C 3.00% | P 3.00%

JPY         Household Spending Y/Y Oct A -0.40% | C -1.00% | P -2.10%

JPY         Retail Trade Y/Y Oct A -0.10% | C -1.50% | P -1.90% | R -1.70%

GBP       Mortgage Approvals Oct A 68K | C 66K | P 63K

GBP       M4 Money Supply M/M Oct A 1.10% | C 0.20% | P -0.40%

EUR        Eurozone Business Climate Indicator Nov A 0.42 | C 0.57 | P 0.55

EUR        Eurozone Economic Confidence Nov A 106.5 | C 106.6 | R 106.3 | R 106.4

EUR        Eurozone Industrial Confidence Nov A -1.1 | C -0.4 | P -0.6

EUR        Eurozone Services Confidence Nov A 12.1 | C 12.5 | P 12 | R 12.1

EUR        Eurozone Consumer Confidence Nov (F) A -6.1 | C -6.1 | P -6.1

EUR        German CPI M/M Nov (P) A 0.10% | C 0.10% | P 0.20%

EUR        German CPI Y/Y Nov (P) A 0.80% | C 0.90% | P 0.80%

CAD       Current Account (CAD) Q3 A -18.3B | C -16.4B | P -19.9B

USD       GDP (Annualized) Q3 (S) A 3.20% | C 3.00% | P 2.90%

USD       GDP Price Index Q3 (S) A 1.40% | C 1.50% | P 1.50%

USD       S&P/Case-Shiller Composite-20 Y/Y Sep A 5.10% | C 5.30% | P 5.10%

USD       Consumer Confidence Nov A 107.1 | C 100 | P 98.6 | R 100.8

Good Luck,

Andy

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