Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 117.948 | EURUSD 1.04506 | AUDUSD 0.73021 | NZDUSD 0.69599 | USDCAD 1.33389 | USDCHF 1.02660 | GBPUSD 1.24859 |

 

LMAX Ranges 6am London time

Highs    Lows

EURUSD               1.04696 | 1.04353

USDJPY                 117.980 | 117.162

GBPUSD               1.25030 | 1.24667

USDCHF               1.02781 | 1.02505

AUDUSD              0.73128 | 0.72737

USDCAD               1.33458 | 1.33173

NZDUSD               0.69897 | 0.69572

EURCHF                1.07339 | 1.07242

EURGBP               0.83871 | 0.83658

EURJPY                 123.253 | 122.590

For today

• EUR: Opening a touch lower the market started to fill the small gap on a steady move higher pushing through the 1.0450 into the Tokyo session and quickly testing to the 1.0465 areas to hold through to the grey hours around that level, Topside offers through the 1.0480 areas and into the 1.0500 level are likely to be light with some light stops through the level and stronger offers likely on a move to the 1.0540-60 areas, with congestion likely thereafter into the stronger 1.0600-50 areas. Downside bids light through to the 1.0420 however, a push towards the 1.0400 areas will likely see stronger bids appearing and likely to continue through the level before a push through to the 1.0350 and possibly stops below.
• GBP: A steady rise in the EUR/GBP cross saw the Euro rising and of course the GBP moving lower through the session, early buyers saw a steady rise to the 1.2500 areas testing through the level a couple of times before the cross buying pushed the GBP lower to test back to the 1.2470 areas late in the session and holding quietly into the grey hours around the 1.2480 level. Topside offers through the 1.2500 levels and weak stops possibly on a push through the 1.2510-20 areas with some limited offers into the 1.2550 area, a push here will likely see some stronger offers into the 1.2600 levels. Downside bids into the 1.2400-1.2370 areas more congestive than strong but likely to protect the stronger 1.2300-50 area with stops likely below those levels.
• JPY: A slow drift for the USDJPY with the market opening just below the 118.00 levels and drifting to the 117.80 areas for the move into the Tokyo session, the decline continued but it was slow and the market took another couple of hours to push below the 117.50 areas and not until the Lunch period did the market drop through properly and test the 117.20 areas before holding quietly in the 117.30 areas for the grey hours. Topside offers light through the 118.00 areas with offers possibly not as strong above the 118.50 as it was last week, a move above the level could see weak stops quickly opening the 119.00 for a test however, the market is likely to be very congested above with strong offers over the next big figure at least. Downside bids likely to be light through the 117.00 level however, this is possibly the strongest point in the market for the moment with the 116.00 likely to be the start of light congestion through to the 115.50 areas.
• AUD: Opening a little lower around the 0.7290 areas the market saw some light selling from the opening to test below the 0.7280 areas however, it was quickly over in a quiet market and the market tested through to the 0.7310 areas on the move through into the Tokyo session before drifting back to the opening levels, Topside offers light into the 0.7350 areas with light stops likely on a push through the 0.7370 areas with limited offers into the 74 cent level, congestive offers likely around the 0.7450 areas and one has to pay attention to fiscal situation in Australia. Downside bids possible a little thinner to the downside until the market starts to test the 0.7250-0.7200 areas with some congestive bids however, its really below these levels that we saw support moving in during the first half of the year with 71 cents level holding after the break higher in February, if the market can push below the level then momentum could be on its side and the market could see the bids melt away until the next cent and into the 70 cents level where strength could return.

Overnight News                                                                  

JPY:

Foreign Funds Boost Japan Govt. Bond Holdings to Eight-Year High

Japan Nov. Exports Fall 0.4% Y/y; Est. -2.3%

Japan’s Household Assets Rose to 1,752t Yen at End-Sept.: BOJ

JPY/RUB:

Japanese Favour Russia Business Ties on Disputed Isles: Mainichi

CNY:

Yuan to Weaken 3%-5% Against U.S. Dollar in 2017: Researcher

China to Study Steps to Help Cross-Border Transfers: News

China 2016 Return on Manufacturing ODI Likely Rose 19.8%: Daily

China Nov. New Home Prices Rise in 55 Cities M/m Vs 62 in Oct.

No Significant Recovery in China Real Economy in Short Time: CASS

PBOC Adviser Sees China 2016 Fiscal Deficit 3.5% of GDP: News

AUD:

Australia Sees Slightly Narrower Deficit, Surplus Still by 2021

Moody’s Sees Australia Credit Metrics Consistent With Aaa Rating

NZD:

N.Z. Home-Building Approvals Increase Led by Retirement Units

N.Z. Consumer Confidence Gains Most Since 2013, Westpac Says

N.Z. Firms Eye Investment, Hiring as Business Confidence Rises

Today’s data

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

NZD       Westpac NZ Consumer Confidence Q4 A 113.1 | P 108

NZD       Building Permits M/M Oct A 2.60% | P 0.20% | R -0.20%

JPY         Trade Balance (JPY) Nov A 0.54T | C 0.59T | P 0.47T

NZD       NBNZ Business Confidence Dec A 21.7 | P 20.5

09:00     EUR        German IFO – Business Climate Dec C 110.7 | P 110.4

09:00     EUR        German IFO – Current Assessment Dec C 115.9 | P 115.6

09:00     EUR        German IFO – Expectations Dec C 105.5 | P 105.5

Weekend News

CNY:

China Must Rein in Credit Flowing to Property Speculation: Yang
China Plans to Boost Communication With Markets, Official Says
China Invested 744b Yuan in West Region Infrastructure in 2016
China Should Cut Overcapacity in More Industries: Xinhua
USD/CNY:

Pentagon Says China Will Return Seized Drone as Trump Joins Row
USD:

Fed’s Bullard Ups His Interest-Rate Forecast by a Quarter Point
Fed Hawk Lacker Says May Need More Than Three Hikes in 2017
Trump Picks as Budget Chief GOP Lawmaker Who Battled Boehner
Obama Says Trump Must Consider Consequences of Any Taiwan Change
EUR:

EU Says Trade Pact With Japan ‘Very Close’, Urges More Ambition
Greece Willing to Compromise With Creditors on Review, ANA Says
JPY:

Japan’s Abe Said to Consider Trump Meeting on Jan. 27: Nikkei
Japan Cabinet’s Approval Rating Falls to 54.8%: Kyodo Poll
Japan Extra Budget May Include 1.7T Yen Additional Bonds: Asahi
Japan May Approve Draft Budget on Dec. 22 Every Year: Nikkei
JPY/RUB:

Japan, Russia Still Differ in Opinions on Disputed Islets: Abe
TRY:

Car Bomb Targets Bus Carrying Off-Duty Soldiers in Turkey: AA
AUD:

Australia’s Morrison Says AAA Fate ‘Out of Our Hands’: AFR
AUD: Australia’s Cormann Says Commodity Gains Won’t Offset Weak Wages
PLN: Polish Lower House Approves 2017 Budget amid Opposition Blockade

Harry Hindsight

• EUR: Opening around the 1.0415areas the market made steady headway through the Asian session to push into the grey hours around the 1.0440 level in a quiet session overall, the move into the grey hours saw the market continue its slow rise and touch through the 1.0450 levels in the opening in London before dropping back quickly to the 1.0430 levels, a weaker trade balance , German exports rose 3% offsetting some of the decline and putting a limited shine on poor numbers with the French seeing a 4.9% drop, the Euro did manage to push to the 1.0470 levels before the release and although it didn’t back off quickly after the numbers the drift lower was choppy for a quiet day and the market bounced around before setting new lows into the NYK session testing towards the 1.0400 levels before the end of the London session saw quick buying and the market moving to test the highs a lot quicker than it did the downside, the day finished with the market trading around the 1.0450 areas to the close.
• GBP: Cable opened around the 1.2420 areas and struggling into the Tokyo session testing down through the 1.2400 areas and into the 1.2380 areas before recovering steadily through the Tokyo session to move into London pushing the 1.2450 areas, the market struggled through the London session against the 1.2450 levels into the NYK session with an early attempt struggling to the 1.2460 level before dipping back to the 1.2410 areas and having a second run at the level pushing through to the 1.2500 area at the end of the London session and slipping back to drift around the 1.2480 areas. EURGBP saw the market drifting through the session having made early gains to the 0.8425 areas before the market drifting through the session to test the 0.8350 area in the later part of the session.
• JPY: USDJPY ranged above the 118.00 levels for the bulk of the day however, it struggled on every attempt above the 118.40 levels trying on three separate occasions in early trading into each new session, the Tokyo session took the market from the 118.20 levels for the first run before collapsing back to push lightly through 118.00, the market then traded in the 118.00-30 areas through to the London session, London opening saw a quick stab higher and as with the first attempt dropped back quickly from the level to push below 118.00 and recover to trade through into the NYK session around the 118.10-30 levels and another brief flurry to the 118.40 areas before failing again this coincided with option expiry in NYK and the expiry saw the USDJPY quickly drop back to the 117.50 level as the buyers having failed to push to the 118.50 areas sold quickly and the market bouncing off the level for an hour or so before starting a quiet rise into the 118.00 levels and the close.
• AUD: News that the AAA rating for Australia is under threat has been weighing on the Oz and the rumours continued through the day, with the market opening around the 0.7360 levels the market held above the 0.7350 for the most part through the Asian session and drifted finally below the level on the move into London, the move saw the market pushing into the 0.7330 areas, the move into the NYK session saw the market drifting steadily through to make new lows the push through the 0.7320 areas and dropped quickly as weak stops saw the market drop through to the 0.7270 areas before bouncing off the lows to hold the 73 cent levels through to the close.

Friday’s premiership results

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

EUR        Eurozone Trade Balance (EUR) Oct A 19.7B | C 25.2B | P 24.9B | R 24.4B

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

EUR        Eurozone CPI Y/Y Nov (F) A 0.60% | C 0.60% | P 0.60%

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

GBP       CBI Trends Total Orders Dec A 0 | C -2 | P -3

CAD       International Securities Transactions (CAD) Oct A 15.75B | C 12.35B | P 11.77B | R 11.79B

USD       Housing Starts Nov A 1.09M | C 1.23M | P 1.32M | R 1.34M

USD       Building Permits Nov A 1.20M | C 1.24M | P 1.23M | R 1.26M

Stay lucky

Andy

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