Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 115.026 | EURUSD 1.06357 | AUDUSD 0.74955 | NZDUSD 0.7205 | USDCAD 1.31309 | USDCHF 1.01341 | GBPUSD 1.26756 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.06505 | 1.06286

USDJPY                 115.364 | 114.718

GBPUSD               1.26864 | 1.26627

USDCHF               1.01412 | 1.01282

AUDUSD              0.75147 | 0.74861

USDCAD               1.31373 | 1.31193

NZDUSD               0.72053 | 0.71873

EURCHF                1.07858 | 1.07736

EURGBP               0.83995 | 0.83841

EURJPY                 122.668 | 122.08

For Today

• EUR: Again another quiet session with the Euro trading up to the 1.0650 levels into Tokyo before drifting back to hold along the 1.0630 areas through into the grey hours, Offers into the 1.0650 areas with possible weak stops through the 1.0660 levels and the market opening to a stronger 1.0700-10 areas with plenty of data for the day, a push through this level exposes some congestion around the 1.0740-60 areas but the 1.0800 which is becoming a key reversal level opening up the 110-111 levels. Downside bids light through to the 1.0550 areas with strong bids likely to appear and those bids running to the 1.0500 areas, a push through the level is likely to see stops appearing through the 1.0480 areas and a long way to a decent support line on the charts however, the sentimental levels will attract attention until then.
• GBP: A repeat of yesterday albeit a big figure higher with the market holding around the 1.2670-80 levels through into the grey hours, Topside offers into the 1.2700 are likely to be weak with stronger offers likely to see the offers increasing through to the 1.2750 areas with weak stops likely to be through the level and the market open to the 1.2900 with only sentimental levels to slow the market, Downside bids light into the 1.2600 areas and the market then likely to see congestion on any move through to the 1.2500 levels with sentimental bids likely to slow the downside a little.
• JPY: The USDJPY saw limited selling from the opening drifting to the 114.80 levels and finding some support to hold through into the Tokyo session, with early Tokyo buying steadily through to the 115.20 levels in weak trading, the move through to the grey hours saw a little push to above the 115.30 areas, Topside offers light until the 116.00 levels with offers opens up the ranges of the 2015 ranges and likely to be fairly strong with stops a possibility on a push through the 116.30 areas and opening the market for a slow but steady grind through to the 120 eventually however, the 117.00 areas is likely to be a strong level to push through and from there congested. Downside bids light through the 114.50 levels with the better stronger bids not likely into the 113.00-20 areas with stops likely on a break through the level with Margins possibly squeezed.
• AUD: Opening around the 75 cent levels the market held through the day for the most part testing that level with one spike taking the market towards the 0.7515 areas bur returning to sub 75 cents just as quick, the market drifted off from late in the session testing into the 0.7480’s and that was the range on a very quiet day for the Oz considering CNY numbers and news. Topside offers continuing through the 0.7520 with a mixture of weak stops appearing however, possibly better offers likely into the 0.7540-60 areas are likely to temper any rush higher with those offers likely to lead to congestive offers on any move towards the 76 cent levels where strong offers are likely. Downside bids are spread down through the 0.7450 areas and are not likely to be particularly strong with interest likely to continue weakly through the 74 cent level before stronger bids start to appear on a run towards the 0.7350 areas, and break there will likely see some loose stops but stronger bids and bottom pickers appearing into the 73 cent levels, with the market opening a little to weakness on the move through however, once into the 71-73 cent range the market is likely to pick up stronger bids.

Overnight News

USD:

Trump Said to Postpone Announcement on Future of His Businesses

CNY:

China Nov. Industrial Output Rises 6.2%; Est. 6.1%

China Jan.-Nov. Property Development Investment Rises 6.5% Y/y

Weaker Yuan vs Dollar Mainly in Light of Fed Rate Hikes: China

China’s Economy Stays in Reasonable Range in Nov., NBS Says

China Inflation Pressure Not High Next Year, NBS Says

China Should Closely Watch Rising Local Fiscal Risks: Daily

Chinese Banks Face Increasing Risks in Asset Quality: Moody’s

CNY/CHF:

China, Switzerland Will Oppose Trade Protectionism: China Daily

JPY:

Japan Should Close Gap on Initial, Revised GDP Data: Study Group

AUD:

Australia Nov. Business Confidence Rises 1 Pt M/m to 5

Australia 3Q House Prices Rise 1.5% Q/Q; Est. 2.5% Gain

SGD:

Singapore Says Job Cuts in Jan-Sept. Was Highest Since 2009

NZD:

New Zealand Export Volumes Fell in Third Quarter, Imports Rose

NZ’s Joyce Says Fiscal Priorities Include Considering Tax Burden

N.Z. Ministry Now Forecasts Lower 2016-17 Primary Export Revenue

Asia:

ADB Cuts 2016 Growth Est. for Developing Asia to 5.6% From 5.7%

Today’s data

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

NZD       Manufacturing Activity Q3 A 0.40% | P 2.20% | R 1.80%

AUD       NAB Business Confidence Nov A 5 | P 4

AUD       House Price Index Q/Q Q3 A 1.50% | C 2.60% | P 2.00%

CNY        Industrial Production Y/Y Nov A 6.20% | C 6.10% | P 6.10%

CNY        Retail Sales Y/Y Nov A 10.80% | C 10.20% | P 10.00%

CNY        Fixed Assets Ex Rural YTD Y/Y Nov A 8.30% | C 8.30% | R 8.30%

07:00     EUR        German CPI M/M Nov (F) C 0.10% | P 0.10%

07:00     EUR        German CPI Y/Y Nov (F) C 0.80% | P 0.80%

09:30     GBP       CPI M/M Nov C 0.20% | P 0.10%

09:30     GBP       CPI Y/Y Nov C 1.10% | P 0.90%

09:30     GBP       Core CPI Y/Y Nov C 1.30% | P 1.20%

09:30     GBP       RPI M/M Nov C 0.20% | P 0.00%

09:30     GBP       RPI Y/Y Nov C 2.10% | P 2.00%

09:30     GBP       PPI Input M/M Nov C -1.90% | P 4.60%

09:30     GBP       PPI Input Y/Y Nov C 13.50% | P 12.20%

09:30     GBP       PPI Output M/M Nov C 0.20% | P 0.60%

09:30     GBP       PPI Output Y/Y Nov C 2.50% | P 2.10%

09:30     GBP       PPI Output Core M/M Nov C 0.20% | P 0.40%

09:30     GBP       PPI Output Core Y/Y Nov C 2.30% | P 1.90%

09:30     GBP       House Price Index Y/Y Oct P 7.70%

10:00     EUR        Eurozone Employment Q/Q Q3 C 0.30% | P 0.40%

10:00     EUR        German ZEW (Economic Sentiment) Dec C 14.2 | P 13.8

10:00     EUR        German ZEW (Current Situation) Dec C 59.2 | P 58.8

10:00     EUR        Eurozone ZEW (Economic Sentiment) Dec C 16.5 | P 15.8

13:30     USD       Import Price Index M/M Nov C -0.40% | P 0.50%

Harry Hindsight              

• EUR: Opening a little lower than Fridays close and initially testing to below the 1.0530 areas before bouncing back and pushing through into the 1.0570 areas before holding steadily through into the grey hours, with little data the market saw the market steadily pushing higher in a similar fashion through the London session testing to the 1.0600 areas before ranging through into the NYK session unable to really push through the offers around the 1.0620 area, the close in London was sufficient to take the brakes off a little and once the early longs cut out the market ran quickly to the 1.0650 levels and hovered around the areas into the close.
• GBP: Cable started the day slowly with a very tight range around the 1.2590 areas and moving into the London session pushing a little higher to test above the 1.2600 for the first time before drifting a little lower to extend the lows beyond the 1.2570 areas and then starting a steady climb higher as the USD weakened with agreement on OPEC numbers, and on a quiet data day the market moved on this, Cable lifted up from the early range and tested to push through the 1.2650 areas easily and testing steadily to the 1.2700 levels before drifting a little lower into the close.
• JPY: Asia were steady buyers with the market opening around the 115.40 levels to push slightly above the 115.60 areas before drifting back to the 115.20 levels into the mid session, the move towards the grey hours saw fresh buying pushing the market higher and a test through the 116.00 levels into early London however, with the rest of the market the news about oil saw the USD start to drift and the move into the NYK session saw the market back to the opening levels and the markets move to the London close as with the other markets was the marker for the last move with the market testing below the 115.00 levels holding around the 114.90 areas and then closing just off those lows.
• AUD: A slow start for the Oz with the market dipping to the 0.7430 areas in early trading and then moving back to trade around the 0.7450 opening areas through into the London session, the move into the London session saw the market starting a steady rise and the market pushed through into the NYK topping just through the 75 cent levels and holding through to the close with no real push through the levels but not backing away.

Yesterday’s premiership results

JPY         Machine Orders M/M Oct A 4.10% | C 1.30% | P -3.30%

JPY         Domestic CGPI Y/Y Nov A -2.20% | C -2.20% | P -2.70%

JPY         Tertiary Industry Index M/M Oct A 0.20% | C 0.30% | P -0.10% | R -0.30%

JPY         Machine Tool Orders Y/Y Nov (P) A -5.60% | P -8.90%

USD        Monthly Budget Statement Nov A -137B | C -115.0B | P -44.2B

Good Luck,

Andy

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