Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 113.857 | EURUSD 1.07641 | AUDUSD 0.74719 | NZDUSD 0.71498 | USDCAD 1.32733 | USDCHF 1.00656 | GBPUSD 1.27296 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.07703 | 1.0750

USDJPY                 113.948 | 113.502

GBPUSD               1.27515 | 1.27106

USDCHF               1.00781 | 1.00602

AUDUSD              0.74784 | 0.7454

USDCAD               1.32840 | 1.32667

NZDUSD               0.71609 | 0.70942

EURCHF                1.08455 | 1.08261

EURGBP               0.84618 | 0.8437

EURJPY                 122.563 | 122.112

For Today

• EUR: A very quiet session today after the previous day’s action with the market trading around the 1.0760 levels for the day, with volumes much reduced. Topside offers into the 1.0800 levels with weak stops likely through the 1.0810 areas and the market then seeing stronger offers into the 1.0860 areas and congestion through to the 1.0900 area. Downside bids light through the 1.0700 levels with weak stops through the 1.0680 and then bids into the 1.0660-40 areas with plenty of congestion now built through to the 1.0600 areas.
• GBP: Cable lagged the recovery of the Euro yesterday however, even though the market has been quiet through the day the Cable moved quietly to the 1.2750 levels into the later part of the session and holding the areas into the grey hours, a push through the 1.2760 areas will probably see stops appearing and weak offers through the sentimental 1.2800 and stronger around the 1.2850 area. Downside bids light through the 1.2700 levels with weak stops light through the level with better bids into the 1.2630 level through to 1.2600.
• JPY: Rising a little from the opening levels the market slipped lower once the Tokyo session moved in to take the market through to the 113.5-0 levels before recovering later in the session once the RBA announcement was out of the way. Topside offers light through the 114.00 levels and increasing only as the market moves towards the 114.80-115.00 areas, weak stops are likely on a move through the 115.20 levels with strong offers from the 115.50 areas onwards with limited offers through the 116.00 and the ranges from the beginning of the year opening up. Downside bids light through to the 113.00 levels with stops likely to appear through the level and stronger bids then on the 112.00 handle with limited congestion in the area.
• AUD: The Oz moved quietly into the Tokyo session testing above the 0.7480 levels before AUDJPY cross selling moved in before the RBA announcement, dropping all the way back to the 0.7450 levels before the no change release hit the wires, the market ranged from that point mostly in the 0.7450-60 areas with brief moves below and above the range but it was marginal. Topside offers into the 0.7500 levels remain and even through the level finds plenty of congestion on any push through to the 76 cent level. Downside bids are a little weaker until the market moves down towards the 0.7300 area and stronger bids appear.

Overnight News

JPY:

Japan Considers 1.9t Yen in Additional Deficit Bonds, NHK Says

Japan’s Aso: FX Is a Big Reason for the Drop in Tax Revenue

Japan’s Lower House Passes Bill to Legalize Casinos

EUR/JPY:

BOJ to Survey Corporate Expectations on Euro-Yen Rate in Tankan

CNY:

China Should Increase QFII, RQFII, QDII Quotas: Financial News

AUD:

RBA Leaves Key Rate at 1.5% as Seen by All Economists Surveyed

Australia 3Q Net Exports Cut 0.2 Percentage Point From GDP

Foreign Ownership of Australian Govt. Bonds Falls to 7-Year Low

NZD:

N.Z.’s English Says He Will Stand for National Party Leadership

NZD:

N.Z. Minister Coleman to Stand for National Leadership: Newshub

GBP:

U.K. LFL Nov. Retail Sales Up 0.6% Y/y, BRC Says

Today’s data

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

JPY         Labour Cash Earnings Y/Y Oct A 0.10% | C 0.20% | P 0.20% | R 0.00%

GBP       BRC Retail Sales Monitor Y/Y Nov A 0.60% | P 1.70%

AUD       Current Account Balance (AUD) Q3 A -11.4B | C -13.6B | P -15.5B | R -15.9B

AUD       RBA Rate Decision A 1.50% | C 1.50% | P 1.50%

7:00        EUR        German Factory Orders M/M Oct C 0.60% | P -0.60%

8:15        CHF        CPI M/M Nov C -0.10% | P 0.10%

8:15        CHF        CPI Y/Y Nov P -0.20%

9:10        EUR        Eurozone Retail PMI Nov P 48.6

10:00     EUR        Eurozone GDP Q/Q Q3 (F) C 0.30% | P 0.30%

13:30     USD       Trade Balance Oct C -41.5B | P -36.4B

13:30     USD       Non-Farm Productivity Q3 (F) C 3.20% | P 3.10%

13:30     USD       Unit Labour Costs Q3 (F) C 0.30% | P 0.30%

13:30     CAD       International Merchandise Trade (CAD) Oct C -2.1B | P -4.1B

15:00     CAD       Ivey PMI Nov C 59.9 | P 59.7

15:00     USD       Factory Orders Oct C 1.90% | P 0.30%

Harry Hindsight              

• EUR: With the Austrian vote quickly out of the way the market turned to the Italian vote, pre market saw the market unchanged however, on the opening the news that exit polls showed strong indications of a landslide victory for the No vote and the motion by the government defeated, the opening saw the market dropping quickly and once through the 1.0600 levels quickly pushing to below the 1.0520 levels as the numbers started to filter through, the result more or less stated saw the market return to the 1.0560 levels and holding through to the London session with just a brief move towards the 1.0600 level, London were strong buyers as the market perceived the vote of less consequence for the moment, the move into the Euro numbers saw the market mixed and the market holding the 1.0640 after triggering weak stops on the move higher however, as with the London session NYK reacted in the same way pushing through the 1.0660 and again catching weak stops and a quick move to above the 1.0700 level and holding through the bulk of the US numbers and holding the 1.0720 into the London close, the move through the close saw weakness continuing to the topside and the market pushing steadily through to just below the 1.0800 levels and a solid recovery from the early lows ending the day drifting a little.
• GBP: Cable opened lower with the drag of the Euro dipping from the opening 1.2670 areas before dipping through to the 1.2630 levels, the move into the Tokyo opening saw the market quickly spike higher with weak offers only and filling in the gap on the charts as the market moved to the 1.2730 levels before settling into a tighter range around the 1.2690 levels through to the London session, London bought steadily to test the 1.2740 areas and although the market saw better PMI numbers after the highs were made the market was unable to press ahead trading around the 1.2720 areas with a 40 pip range to the close with the highs being tested late in the session.
• JPY: Safe haven flows in the pre-market period saw the USDJPY open around the 113.00 levels testing into the 112.80’s, filling the gap quickly before again testing the downside before the move into the Tokyo session, Tokyo were quick buyers pushing the market up towards the 113.90 levels in the run to the opening and holding below the 113.90 level for the duration of the Asian session, the move into the London session saw solid buyers coming out as the safe haven flows reversed and the market steadily pushed through to the 114.40 levels into the early London morning, quiet trading around the 114.20-40 levels through to the NYK session saw a quick push higher before the safe haven flows reappeared as the Trump/TWD story began to take hold and the USDJPY quickly found itself falling back from the early 114.80 highs to trigger weak stops on a drop back through the 114.00 area and testing to the 113.20 levels before slowly rising to the close.
• AUD: Dragged lower from the opening 0.7460 levels the market started a steady recovery into the Tokyo session having touched through the 0.7420 levels to test back to the opening levels into the London session with little in the market, the move into the London session eventually saw the market testing those lows again and it wasn’t until the NYK session that the market recovered and started a steady climb for the rest of the day to test towards the 75 cent level before slipping back to the close.

Yesterday’s premiership results

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

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

JPY         Consumer Confidence Nov A 40.9 | C 43.8 | P 42.3

EUR        Italy Services PMI Nov A 53.3 | C 51.4 | P 51

EUR        France Services PMI Nov (F) A 51.6 | C 52.6 | P 52.6

EUR        Germany Services PMI Nov (F) A 55.1 | C 55 | P 55

EUR        Eurozone Services PMI Nov (F) A 53.8 | C 54.1 | P 54.1

GBP       Services PMI Nov A 55.2 | C 54.2 | P 54.5

EUR        Eurozone Sentix Investor Confidence Dec A 10 | C 14.7 | P 13.1

EUR        Eurozone Retail Sales M/M Oct A 1.10% | C 0.90% | P -0.20% | R -0.40%

USD       Labour Market Conditions Index Change Nov A 1.5 | P 0.7

USD       ISM Non-Manufacturing Composite Nov A 57.2 | C 55.2 | P 54.8

Good Luck,

Andy

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