Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 118.166 | EURUSD 1.04138 | AUDUSD 0.73578 | NZDUSD 0.70406 | USDCAD 1.33349 | USDCHF 1.03006 | GBPUSD 1.24205 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.04387 | 1.04064

USDJPY                 118.400 | 117.960

GBPUSD               1.24316 | 1.23822

USDCHF               1.03070 | 1.02769

AUDUSD              0.73698 | 0.73496

USDCAD               1.33459 | 1.33223

NZDUSD               0.70499 | 0.7018

EURCHF                1.07324 | 1.0718

EURGBP               0.84142 | 0.83856

EURJPY                 123.393 | 122.977

For Today

• EUR: A very quiet session with the volumes much reduced and Trade balance and CPI figures the only thing likely to see the end of the weak doing much, opening around the 1.0420 areas the market has quietly moved up to the mid 1.0430 areas with little fuss and holds the levels to move into the grey hours and London, Topside offers light through to the 1.0480 areas with offers then moving in through to the 1.0520 level and weak stops likely through the area, a move through the level will again see the market free to the 1.0600 areas and possibly stronger offers. Downside bids into the 1.0360 areas possibly limited however, for the moment its all about the USD and a push through the 1.0340 will likely see weak stops and a test of the 1.0300 sentimental level and the 1.02 handle vulnerable.
• GBP: Early trading in Tokyo saw the market dip back through to test yesterday’s lows around the 1.2380 areas however, with little impetus the market moved steadily off the level to push back to the opening around the 1.2420 areas, topside offers are limited with 1.2500 offering the stronger level for the moment and a push through will likely see some weak stops appearing through the level and a push into limited congestion around the 1.2550 areas and then very little into the 1.2600 areas. Downside bids through the 1.2400 areas with congestion likely to run towards the 1.2350 levels with some limited stops on a move through the area and possibly very strong bids into the 1.2300 levels, notwithstanding scary comments from game players.
• JPY: Considering the moves over the past 48hrs the market has been reasonably quiet through the session holding around the opening areas into the grey hours, topside offers into the 118.70 area and likely to continue through to the 119.00 levels with strong offers likely to be in the area, a push through the level the market is possibly congested for a good way with plenty of opportunities for the long term longs to cover. Downside bids light through to the 117.50 areas with some limited congestion slowing a move through to the 117.00 areas however, a quick move could trigger some stronger selling if it did get moving with the bids still limited after a quick rise over the past month. However, limited bids are likely to appear through the 116.00 areas with those bids continuing through to the 115.50 areas a push through the 115.00 handle will then see stronger bids appearing.
• AUD: The Oz has spent much of the session ranging around the 0.7350-70 areas with very little in the market to excite, running into the grey hours mid-range, Topside offers through the 74 cent levels are likely to be limited however, as long as the USDJPY remains bid then offers in the AUDJPY around the 87.50/88.00 level could dominate. A push through the 74 cent level will likely see offers reappearing through the 0.7450 areas and continuing on any move higher through to the 0.7520 stronger offers. Downside bids into the 73 cent level are likely to be strong and any move lower will initially see stops appearing however, 0.7250 onwards is likely to see ever stronger bids around the sentimental levels.

Overnight News

RUB/JPY:

Putin, Abe Agree to Develop Islands Disputed Since World War II

Putin Tells Abe Russia, Japan Economies Complement Each Other

Russia, Japan to Form $1 Billion Investment Fund for 20 Projects

JPY/RUB:

Japan Loosens Visa Restrictions for Russian Visitors

JPY/USD:

Japan Overtakes China as Largest Holder of U.S. Treasuries

JPY:

JGB Yield at Highest Since BOJ Introduced Negative Rate Policy

CNY:

Fed Hike Unlikely to Cause ‘Huge’ Yuan Pressure: People’s Daily

EUR:

Draghi Said Risks Include Elections, Interest Rates: Official

EUR: Merkel Says She’ll Discuss Greek Spending Plans with Tsipras

SGD:

Singapore Nov. Non-Oil Domestic Exports +11.5% Y/y; Est. -2.7%

AUD:

RBA’s Next Board Member Says She’s a ‘Dove with a Hawk’s Wings’

RBA Paper:100bps of Rate Cuts Boosts Household Spending 0.1-0.2%

NZD:

New Zealand Consumer Confidence Retreats From 19-Month High

Today’s data

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

10:00     EUR        Eurozone Trade Balance (EUR) Oct C 25.2B | P 24.9B

10:00     EUR        Eurozone CPI M/M Nov C -0.10% | P 0.20%

10:00     EUR        Eurozone CPI Y/Y Nov (F) C 0.60% | P 0.60%

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

11:00     GBP       CBI Trends Total Orders Dec C -2 | P -3

13:30     CAD       International Securities Transactions (CAD) Oct C 12.35B | P 11.77B

13:30     USD       Housing Starts Nov C 1.23M | P 1.32M

13:30     USD       Building Permits M/M Nov C -1.20% | P 0.30%

Harry Hindsight              

• EUR: The move into the new session saw the market holding around the 1.0540 levels through to the Tokyo session, the market quickly saw a follow through from the FOMC rise and the Euro tested through the 1.0480 before holding those lows and trading slowly higher through to the 1.0520 areas, the move into the London session again saw the market testing the 1.0480 areas and eventually pushing quickly through just before the market opened in NYK to test to the 1.0400 levels with weak stops joining breakout stops, the market move through the session in NYK ranging in the 1.0400-40 levels until the move towards the London close and the market had a final test pushing through to the 1.0370 areas before moving steadily higher once the London market had retired, the move through to the close saw the market holding around the 1.0420 levels and volumes dipping from the stronger period through London. The market ignored the PMI numbers for the most part and missed some better figures with France showing through.
• GBP: A quiet move through the Asian session with the market dipping from the opening to trade through into Tokyo holding the 12520 areas and then rising to the opening 1.2560 level through into the London session, the market drifted into the UK rate decision and the no change was expected however, the market was expecting at least 1 dissenter and dropped lower to test to the 1.2460 areas as the market moved into the NYK session, weakness in the Euro dragged a little on Cable and while USD was king for the day the connection and resilience we’ve seen of the GBP disappeared and the market saw strong Cable selling taking the market to the 1.23 handle in early NYK testing to the 1.2380 areas before bouncing off the London close and pushing gradually through to the 1.2440 areas and then slipping to a quiet range around the 1.2420 to the close.
• JPY: USDJPY opened around the 117.00 levels and slowly moved into the Tokyo opening with a quick leap on the opening to push into the 117.80 areas holding the area for a brief period before slipping back around the 117.50 areas through to the London session, and a steady rise through to the 118.50 levels, sellers appeared into the NYK session and while the market did return to test the topside spent much of the day around the 118.00 areas, with retail sellers dominating the 118.00 handle as the market saw some strong sellers from the highs with a small line above the 118.65 areas providing the resistance. The market eventually steadied and quietly closed around the 118.20 areas.
• AUD: Early trading saw the Oz trading around the 74 cent levels with an early dip to the 0.7380 areas before rising to hold through to London trading around the 0.7420-30 level, I’d like to say that London were steady sellers however, given the level of the USDJPY the market was possibly dominated by selling of the AUDJPY cross with profit taking moving in. and the Oz slowly testing through into the NYK session to the 0.7370 areas, NYK followed the general selling and the market struggled around the 0.7340 areas and eventually holding steady around the 0.7360 areas.

Yesterday’s premiership results

NZD       Business NZ Manufacturing Index Nov A 54.4 | P 55.2 | R 55.1

AUD       Consumer Inflation Expectation Dec A 3.40% | P 3.20%

AUD       Employment Change Nov A 39.1K | C 17.6K | P 9.8K | R 15.2K

AUD       Unemployment Rate Nov A 5.70% | C 5.60% | P 5.60%

JPY         PMI Manufacturing Dec (P) A 51.9 | C 51.5 | P 51.3

CHF        SECO Economic Forecasts

EUR        France Manufacturing PMI Dec (P) A 53.5 | C 51.9 | P 51.7

EUR        France Services PMI Dec (P) A 52.6 | C 51.8 | P 51.6

EUR        Germany Manufacturing PMI Dec (P) A 55.5 | C 54.6 | P 54.3

EUR        Germany Services PMI Dec (P) A 53.8 | C 55 | P 55.1

CHF        SNB Sight Deposit Interest Rate A -0.75% | C -0.75% | P -0.75%

EUR        Eurozone Manufacturing PMI Dec (P) A 54.9 | C 53.9 | P 53.7

EUR        Eurozone Services PMI Dec (P) A 53.1 | C 53.9 | P 53.8

GBP       Retail Sales M/M Nov A 0.20% | C 0.20% | P 1.90% | R 1.80%

GBP       BoE Rate Decision A 0.25% | C 0.25% | P 0.25%

GBP       BoE Asset Purchase Target Dec A 435B | C 435B | P 435B

GBP       MPC Official Bank Rate Votes A 0–0—9 | C 0–0—9 | P 0–0–9

GBP       MPC Asset Purchase Facility Votes A 0–0—9 | C 0–0—9 | P 0–0–9

CAD       Manufacturing Shipments M/M Oct A -0.80% | C 0.70% | P 0.30%

USD       CPI M/M Nov A 0.20% | C 0.20% | P 0.40%

USD       CPI Y/Y Nov A 1.70% | C 1.70% | P 1.60%

USD       CPI Core M/M Nov A 0.20% | C 0.20% | P 0.10%

USD       CPI Core Y/Y Nov A 2.10% | C 2.10% | P 2.10%

USD       Current Account Balance Q3 A -113B | C -111B | P -120B | R -118B

USD       Empire State Manufacturing Index Dec A 9 | C 1.5 | P 1.5

USD       Philly Fed Manufacturing Index Dec A 21.5 | C 8.3 | P 7.6

USD       Initial Jobless Claims (DEC 10) A 254K | C 255K | P 258K

USD       NAHB Housing Market Index Dec A 70 | C 63 | P 63

USD       Natural Gas Storage A -147B | C -126B | P -42B

USD       Net Long-term TIC Flows Oct A 9.4B | C -32.3B | P -26.2B

Good Luck,

Andy

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