Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 113.51 | EURUSD 1.06675 | AUDUSD 0.74557 | NZDUSD 0.71414 | USDCAD 1.32902 | USDCHF 1.0105 | GBPUSD 1.27322 |

 

LMAX Ranges 6am London time

Highs    Lows

EURUSD               1.06180 | 1.05053

USDJPY                 113.853 | 112.823

GBPUSD               1.27387 | 1.26265

USDCHF               1.01830 | 1.01212

AUDUSD              0.74625 | 0.74118

USDCAD               1.33567 | 1.32973

NZDUSD               0.71420 | 0.70690

EURCHF                1.07505 | 1.06957

EURGBP               0.83868 | 0.83124

EURJPY                 120.488 | 118.697

For today

• EUR: Pre-market trading was little changed until just before the official opening with the news that PM Renzi was going to submit his resignation in the morning, the opening saw the Euro dropping quickly through the 1.0600 levels and the trading was steady and strong from that point to test towards the 1.0510 levels before finding some support and bouncing reversing steadily higher with the voting over and the result to be announced, exit polls suggested a large win for the No vote or populist vote depending how you read what the vote was about. The result for the most part had already been factored into to the market and once the low was made it made its way back towards the 1.0600 levels before moving into Tokyo and drifting around the 1.0560-80 levels and then heading to the 1.0540 and basing off the level through until pushing back to the 1.0560 levels and holding through to the grey hours. Downside bids into the 1.0500 levels with bids likely to extend a short way through the level however, a break through the 1.0480 area is likely to see weak stops being joined by technical stops appearing and the downside opening to a larger drop with historical levels suggesting 1.0220 areas would possibly be the next strong level with sentimental levels providing the bids along the way. Topside offers light through to the 1.0600 areas
• GBP: Opening a lower from Fridays close, with the market opening around the 1.2680 areas the market struggled through the early session with the market dipping towards the 1.2630 areas before holding and then quickly moving higher triggering weak stops on a thin market to spike to the 1.2740 areas before returning a little slower to the 1.2680 levels for the move into grey hours narrowing to hold above the 1.2690 levels. Topside offers into the 1.2750 levels possibly weak with the market seeing better offers through the level and any move towards the 1.2770-1.2800 levels, a push through could see weak stops and the market then struggling against only sentimental levels 1.2850, 1.2900 and so on with possibly decent offers beginning on the test to the bottom of the range post 24 Jun Brexit vote. Downside bids light through to the 1.2500 levels where better supportive bids are likely to be seen with weak stops through the level from medium term types, but congestive through that level.
• JPY: Safe haven Yen buying saw the USDJPY officially opening around the 113.00 levels and dipping through to the 112.90 areas with a spike to the 113.50 areas to fill the gap on the charts in between the test of the lows. Once the EURJPY selling was satisfied the market recovered quickly into the Tokyo session pushing quickly to the 113.80 areas and then holding for the first few hours around the level, the market eventually started to sag a little as we moved through the day and the 113.50 areas became the level and we traded through to the London session around the sentimental level, Topside offers through the 114.00 likely to be light with very little stops appearing, a move through to the 114.50 areas is likely to start to see stronger offers beginning to appear and the test through the 114.80 likely to be difficult to push through cleanly with the market possibly seeing offers through 115.00 with stops likely to appear, a move to 115.50 areas is likely to see weak offers. Downside bids through to the 113.00 level light and a move through the 112.80 possibly seeing stops appearing with the market opening to a drop back to the stronger 112.20-00 level and the bids possibly continuing through the level however, a strong possibility at this point of stronger stops moving through the market and the 111.80 level quickly becoming 111.00.
• AUD: The drag of the Euro, the strength of the JPY saw the Oz dropping quickly back from the opening, with Renzi to resign announced the market possibly bypassed the fact that John Key is too step down also and so Oz was caught by several different factors pulling at it, the move from an opening little changed from the start dropped through the first hour to test towards the 0.7410 areas however, given none of the news had a direct impact for the Oz the move back was steady but continual through the session eventually pushing back to the opening 0.7455 opening levels. Topside offers into the 0.7470-0.7500 levels a push through this level will likely see weak stops appearing however, stronger offers are likely into the 0.7540-60 areas with congestive offers from there to the 76 cent levels, Downside bids light through the 74 cent areas however, the market is starting to look a little congestive through to the 0.7350 areas with strong bids into the 73 cent levels, a move through here opens up the downside however, every sentimental level is likely to be strong from that point.

Overnight News                                                                  

EUR:

Renzi Resigns After Populists Defeat Italy Reforms in Referendum

Villeroy: Will Closely Look at Consequences of Italian Vote

USD/CNY:

Trump, on Twitter, Poses Questions on China Currency Devaluation

NZD:

New Zealand’s John Key to Step Down as Prime Minister

N.Z. Finance Minister Bill English Considering Leadership Bid

Moody’s Says Key Resignation Has No Implications for NZ Ratings

JPY:

Japan’s Asakawa: Brexit Vote Created New European Context

Japan Life Insurance Industry on Negative Outlook at Moody’s

Kuroda: Financial Innovation Will Boost Market Developments

EUR/JPY:

EU ‘Very Close’ to Finalizing Free-Trade Deal with Japan: FT

CNY:

Caixin China Nov. Services PMI 53.1 vs 52.4 in Oct.

HKD/CNY:

HKEx Considers Bond Connect With China Next Year: Sec. News

AUD:

Australia Nov. Melbourne Inst. Inflation Gauge Rises 0.1% M/m

Australian 3Q Inventories Rise 0.8% Q/Q; Est. 0.3% Gain

GBP:

U.K. Nov. BRC Shop Price Index -1.7% Y/y vs Oct. -1.7% Y/y

Today’s data

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

AUD       TD Securities Inflation M/M Nov A 0.10% | P 0.20%

1:45        CNY        Caixin PMI Services Nov A 53.1 | C 52.7 | P 52.4

5:00        JPY         Consumer Confidence Nov A 40.9 | C 43.8 | P 42.3

8:45        EUR        Italy Services PMI Nov C 51.4 | P 51

8:50        EUR        France Services PMI Nov (F) C 52.6 | P 52.6

8:55        EUR        Germany Services PMI Nov (F) C 55 | P 55

9:00        EUR        Eurozone Services PMI Nov (F) C 54.1 | P 54.1

9:30        GBP       Services PMI Nov C 54.2 | P 54.5

9:30        EUR        Eurozone Sentix Investor Confidence Dec C 14.7 | P 13.1

10:00     EUR        Eurozone Retail Sales M/M Oct C 0.90% | P -0.20%

15:00     USD       Labour Market Conditions Index Change Nov  P 0.7

15:00     USD       ISM Non-Manufacturing Composite Nov C 55.2 | P 54.8

Weekend News

EUR:

Europe’s Populists Target Landmark Victories in Italy, Austria
Greece Needs Economic Reforms to Keep Euro, Schaeuble Tells BamS
CNY:

PBOC Official Urges China to Prevent Panic FX Purchases: Caixin
China ‘Steadfast’ on Yuan Internationalization: China News
China President Calls for Smaller But More Capable Army: Xinhua
PBOC Deputy Governor Fan Says China Must Control High Leverage
CNY/USD/TWD:

China Protests to U.S. on Trump’s Call with Taiwan President
CNY/TWD:

Pro-Independent Taiwan Cos. Unwelcome in China: Minister

TWD/USD:

Taiwan President Talked About Defence, Economy With Trump
HKD:

Tsang Warns H.K. May Lose Eco Advantages If Society Is Unstable
USD:

Mnuchin’s Silence on Dollar Policy Signals Rubin Mantra Lives On
Fed’s Dudley Says Financial Regulation Job Remains Unfinished
Trump May Pick Longest Serving U.S. Governor as China Ambassador
JPY/RUB:

Japan, Russia to Create 100b Yen Fund for Economic Ties: Kyodo
Russia, Japan Seek to Resolve WW2 Peace Treaty Issue: Lavrov
AUD:

Hewson Says Australia’s Loss of AAA Credit Rating Is Inevitable
IMF Calls for Tougher Australia Home-Lending Rules, AFR Reports
NOK:

Norway Government Crisis Averted as Budget Deal Is Secured
TRY:

Erdogan Says Turkey Faces ‘Economic Sabotage’ as Lira Plunges
Turkey PM to Announce Economy Board Measures on Thursday: Kaynak
CHF:

Swiss Minister Sees Companies Leaving If Tax Plan Rejected: T-A
GBP:

U.K. Private-Sector Companies Unperturbed as Brexit Talks Loom
SGD:

Foreign Investment in Singapore Property Surges: Straits Times
ZAR:

South Africa Avoids Junk Status as S&P Affirms Credit Rating
PLN:

S&P Polish Outlook Raise Important Amid Europe Problems: Minister

Harry Hindsight

• EUR: A very quiet session through the day for the Euro with the market rising through the Asian session to trade above the 1.0680 levels into the grey hours having opened around the 1.0660 levels, London reversed the move with the market drifting lower through the early part of the session and holding the 106.40 through to the NYK session with NFP coming in slightly better however, this was offset by the revision to last month’s numbers, and while there was a little movement increasing the low to the 1.0620’s the high move was only to the 1.0670 areas and the market then steadily rise to the 1.0670 areas for the close.
• GBP: Not a giant range through the day, but a consistent rise through to the close once the market had moved into the London session, opening around the 1.2615-20 areas and heading into the Tokyo session to test through the 1.2600 levels into the Tokyo session and then starting a slow climb from the lows to push to the 1.2620 levels into the grey hours, trading into the opening in London saw a slow drift until the release of the PMI numbers reversed the retreat and Cable started to move steadily through the day to the close just short of the 1.2740 level with concerns over the Italian and Austrian votes.
• JPY: Choppy day for USDJPY with USD pretty stable and JPY seeing safe have flows through the day, dipping from the early 114.20 highs and the move into the Tokyo session saw the flows out of Euro into the JPY and the market testing down to the 113.60 levels early in Tokyo, the market moved off that low as the market settled from the early selling, pushing slowly through to trade around the 114.00 levels into the London session, London sold slowly in early trading with the EURJPY having the most movement through the session and then USDJPY rose back to the figure for the NFP numbers, as mentioned a little better on the months numbers offset by a revisionary number for last month, the market tested to the high just above the 114.20 levels having touched through 113.50, the market slipped off the highs to test the downside again and extended the lows into the 113.30’s before finishing the day around the 114.00 level.
• AUD: Opening around the 0.7415 areas the market squeezed a little higher into the Tokyo session to the 0.7415 as the USDJPY dipped back, through to the Grey hours testing the 74 cent level with volumes for the Oz a little weak, Grey hours saw early European and late Asian buying taking the market back to the opening levels and then the London session holding steady around the 0.7420 area into the NFP and after the early dip to the 0.7410 level with the headline number the revision saw the Oz moving higher and testing to the 0.7470 area before running out of steam and drifting to trade around the 0.7450 area to the close.

Friday’s premiership results

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

JPY         Monetary Base Y/Y Nov A 21.50% | C 23.20% | P 22.10%

AUD       Retail Sales M/M Oct A 0.50% | C 0.30% | P 0.60%

CHF        GDP Q/Q Q3 A 0.00% | C 0.30% | P 0.60%

GBP       Construction PMI Nov A 52.8 | C 52.3 | P 52.6

EUR        Eurozone PPI M/M Oct A 0.80% | C 0.30% | P 0.10%

EUR        Eurozone PPI Y/Y Oct A -0.40% | C -1.00% | P -1.50%

USD       Change in Non-farm Payrolls Nov A 178K | C 170K | P 161K | R 142K

USD       Unemployment Rate Nov A 4.60% | C 4.90% | P 4.90%

USD       Average Hourly Earnings M/M Nov A -0.10% | C 0.20% | P 0.40%

CAD       Net Change in Employment Nov A 10.7K | C 0.1K | P 43.9k

CAD       Unemployment Rate Nov A 6.80% | C 7.00% | P 7.00%

CAD       Labour Productivity Q/Q Q3 A 1.20% | C 1.10% | P -0.30% | R -0.20%

Stay lucky

Andy

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