Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 114.02 | EURUSD 1.07169 | AUDUSD 0.74604 | NZDUSD 0.71134 | USDCAD 1.3278 | USDCHF 1.01029 | GBPUSD 1.2678 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.07273 | 1.07126

USDJPY                 114.311 | 113.940

GBPUSD               1.26840 | 1.26503

USDCHF               1.01043 | 1.00931

AUDUSD              0.74734 | 0.74163

USDCAD               1.32935 | 1.32736

NZDUSD               0.71283 | 0.71032

EURCHF                1.08292 | 1.08211

EURGBP               0.84716 | 0.8450

EURJPY                 122.533 | 122.140

For Today

• EUR: Another quiet session for Asia with the market holding around the 1.0720 areas for the most part, dipping from the opening to the 1.0710 levels before rising through the opening levels and running around the 1.0720 areas, Topside offers light through the 1.0750 areas however, a push towards the 1.0780 level will likely see stronger offers appearing possibly through to the 1.0810 areas before weak stops appear beyond 1.0820 with further offers likely to limit the upside into the 1.0860 areas. Downside bids light through the 1.0700 levels with weak stops on a push back through the 1.0680 areas and then congestive bids from there onwards and into and through the 1.0600 levels with very little in the way of stops until a push under that 1.0500 level that has held over the past couple of weeks.
• GBP: Limited EURGBP buying through the session with the market slowly pushing from the 0.8450 areas to the 0.8470 area into the grey hours, this caused the Cable to slip a little lower from the opening around the 1.2680 areas to trade around the 1.2660 level touching to the 1.2650 level and above the 1.2670 area to the grey hours, Topside offers light through the 1.2700 areas and possible weak stops above the level however, a push through the 1.2750 levels will likely see stronger offers moving in protecting the 1.2800 areas with a push through the 1.2830 area likely to trigger a stronger test higher with limited offers through to the 1.2900 area. Downside bids light through to the 1.2600 areas and even there the bids are likely to be a little suspect with a push through the level seeing better bids from the 1.2520-1.2400 areas likely with limited stops in the mix until a break of that downside.
• JPY: Basically 30 pips saw the range for the day so far, with the market basing on the 114.00 levels trading into the Tokyo session pushing slightly through the 114.30 level and then returning to move off the lows again into the grey hours testing the 114.30 level for the second time, Topside offers through the 114.80 level with weak stops likely on the push through the 115.10 areas and a quick move to the 115.50 levels and possibly weak offers showing to slow the market a little as the market looks for the 116.00 levels and stronger offers. Downside bids limited through the 114.00 levels possibly weak stops absorbed by clutter with congestion likely through to the 113.00 levels.
• AUD: The Oz moved quietly to the Tokyo session pushing from the opening 0.7460 levels to test above the 0.7470 before the release of the GDP numbers, the market dropped quickly through to the 0.7420 levels and some support to hold the market through the balance of the session with the market bouncing like a soggy cat unable to push through the 0.7440 levels the market hung around the 0.7430 areas through to the grey hours. Topside offers above the 0.7490-0.7500 levels, which have been resistant to moves over the past few weeks has limited stops through the level and the market likely to run into further stubborn resistance into the 0.7550 levels with sentimental offers then through to the 0.7650 areas. Downside bids into the 0.7400 areas likely to see weak stops however, light congestion through to the 0.7360 areas will possibly soak that up and then better bids then running from the 0.7300 levels, likely larger stops appearing on a dip below the level and the market then mixed on a run into the range from earlier in the year where decent bids appear from the 72 cent levels.

Overnight News

AUD:

Australia 3Q GDP Falls 0.5% Q/Q; Est. 0.1% Drop

Morrison Says Australia Must ‘Fight for Every Inch of Growth’

JPY:

Iwata: Wrong to Say BOJ Shifting From Expanding Monetary Base

Japan Plans New Tax Break for Long-Term Stock Investors: Draft

JPY/USD:

Softbank of Japan Agrees to Invest $50b in the U.S., Trump Says

Japan Says January Abe-Trump Meeting Report Not True (Dec.6)

CNY:

State Researcher Sees China 2017 Economic Growth ‘Stable:’ News

CNY/EUR:

Chinese Forex Controls Barred Some EU Companies’ Remittances: FT

CNY/KRW:

Yoo: China-Korea Economic Relations May Worsen on Politics

NZD:

Wheeler Says RBNZ Still in Talks with Government About New Tool

New Zealand to Change Rules for Investor Immigration

GBP:

Letwin: U.K. to Leave Single Market, Customs Union After Brexit

Today’s data

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

GBP       BRC Shop Price Index Y/Y Nov A -1.70% | P -1.70%

AUD       GDP Q/Q Q3 A -0.50% | C 0.20% | P 0.50% | R 0.60%

07:00     EUR        German Industrial Production M/M Oct C 0.90% | P -1.80%

08:00     CHF        Foreign Currency Reserves Nov P 630B

09:30     GBP       Industrial Production M/M Oct C 0.20% | P -0.40%

09:30     GBP       Industrial Production Y/Y Oct P 0.30%

09:30     GBP       Manufacturing Production M/M Oct C 0.20% | P 0.60%

09:30     GBP       Manufacturing Production Y/Y Oct P 0.20%

15:00     CAD       BoC Rate Decision C 0.50% | P 0.50%

15:00     GBP       NIESR GDP Estimate Nov P 0.40%

15:30     USD       Crude Oil Inventories P -0.9M

Harry Hindsight              

• EUR: A quieter day overall, with the Euro opening around the 1.0760 and limited movement to the topside through the Asian session pushing into the Tokyo session off the 1.0750 levels to the 1.0770 into mid-session with limited cross movement causing most of the movement, the move to the London session saw the Euro drifting through the 1.0750 areas and holding the 1.0740 level, early buyers took the market to the 1.0780 areas into the official opening, testing through the level the market struggled with unchanged Eurozone figures allowing the Euro to slip back a little to test the 1.0760 levels and a quick move to the 1.0730 areas as early buyers covered, the move into the NYK session was drab at best holding a narrow range between the 1.0730-50 levels until the close in London, and the market dropping quickly through to test the 1.0700 levels before stabilizing over the balance of the NYK session to finish the 1.0720 areas.
• GBP: Cable moved through the early part of the session trading in a narrow 1.2730-20 range before starting a slow steady rise through to the 1.2750 levels in Tokyo and then pushing through to the 1.2770 areas in London early morning and holding through to the NYK session around the 1.2750 areas, comments on Brexit by EU negotiator Barnier calling for a quick exit giving it 18months to finalize, which is a little strange given that it’s a mandatory 2yr exit period however, if that means the UK doesn’t pay 6months worth of fees for the sky castles of Europe then I could think of a few places for the few billion to go, however, the marginally reacted with the Cable slipping back through the 1.2700 areas and triggering weak stops to test through to the 1.2660 areas before finding some support and finishing around the 1.2680 areas.
• JPY: A quieter day for the USDJPY with the market opening around the 113.80 levels and finding early buyers of the JPY with weak AUDJPY selling before the RBA announcement moving the JPY too the 113.50 before starting a reversal through to the grey hours, early European buyers and those returning from lunch saw the USDJPY push up through the 114.00 levels and the move towards the London session struggled around the 114.10 areas, London bought on the opening from a slight dip and again tested the topside, the move through top the close saw the market narrowing through the session but generally a tight range with the market centring and finishing around the 114.00 into the close.
• AUD: The market opened around the 0.7475 areas and traded quietly into the Tokyo session initially testing above the 0.7480 levels before dropping quickly back on a better than expected but still leaving the market a little cool and dropping back to the 0.7450 areas as we waited for the RBA holding the lows, No change saw limited movement and the market running into the grey hours holding the 0.7460 areas, the market then moved through the day pushing back above the 0.7450 levels and holding in a tight range through to the close.

Yesterday’s premiership results

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%

EUR        German Factory Orders M/M Oct A 4.90% | C 0.60% | P -0.60% | R -0.30%

CHF        CPI M/M Nov A -0.20% | C -0.10% | P 0.10%

CHF        CPI Y/Y Nov A -0.20% | P -0.20%

EUR        Eurozone Retail PMI Nov A 48.6 | P 48.6

EUR        Eurozone GDP Q/Q Q3 (F) A 0.30% | C 0.30% | P 0.30%

USD       Trade Balance Oct A -42.6B | C -41.5B | P -36.4B | R -36.2B

USD       Non-Farm Productivity Q3 (F) A 3.10% | C 3.20% | P 3.10%

USD       Unit Labour Costs Q3 (F) A 0.70% | C 0.30% | P 0.30%

CAD       International Merchandise Trade (CAD) Oct A -1.13B | C -2.1B | P -4.1B | R -4.38B

CAD       Ivey PMI Nov A 56.8 | C 59.9 | P 59.7

USD       Factory Orders Oct A 2.70% | C 1.90% | P 0.30% | R 0.60%

Good Luck,

Andy

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