Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 117.851 | EURUSD 1.03873 | AUDUSD 0.72595 | NZDUSD 0.69246 | USDCAD 1.33677 | USDCHF 1.02875 | GBPUSD 1.23685 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.04198 | 1.03824

USDJPY                 118.067 | 117.417

GBPUSD               1.23841 | 1.23500

USDCHF               1.02963 | 1.02670

AUDUSD              0.72735 | 0.72510

USDCAD               1.33823 | 1.33951

NZDUSD               0.69468 | 0.69195

EURCHF                1.07000 | 1.06889

EURGBP               0.84159 | 0.83975

EURJPY                 122.636 | 122.326

For Today

• EUR: Opening around the 1.0390 levels the market traded to the 1.0400 into the Tokyo session before dipping on light selling towards the 1.0380 levels before moving into the mid-session and again tempting the topside the move through the 1.0400 levels saw weak stops taken out and the market heading towards the 1.0420 level before holding around the 1.0410-15 levels through to the grey hours. Light offers through the 1.04 handle with particular attention around the 1.0450 areas however, the market is likely to see stronger offers into the 1.0500-20 areas before leading into the bottom of the range we’ve seen for several weeks and possible offers through the 1.0550 areas to slow the market and congestive through to the 1.0650 before the market shapes for another attempt higher, Downside bids into the 1.0350 levels more sentimental than anything with some calling 1.0320 as a stronger support level however, through the level sees the 1.0240-20 areas as stronger support protecting the 1.00-1.01 handles.
• GBP: Cable dipped from the opening dropping from the opening around the 1.2370 areas to the 1.2350 with light support holding the early selling, the drift of the USD saw the Cable push steadily higher and through to the 1.2380 areas for a few hours before dipping back to hold the 1.2370 opening level into the grey hours. Topside offers light through the 1.2400-20 areas with congestive offers through the level is likely to slow advances to the 1.2500 areas where the market is likely to see stronger offers through the level. Downside bids light through to the 1.2320 areas and then becoming stronger with light stops likely on a move through the 1.2300 and limited movement possibly through to the 1.2200 areas and again stronger bids appearing.
• JPY: Early buyers saw the market drifting from the opening and then picking up to test the 118.00 levels in early Tokyo, the market failed the level before dropping quickly back from the level and to the 117.60 over a short period, the market held the level for a short period and dipped towards the 117.40 areas before the limited selling saw the market moving back towards the 117.60-70 areas to the grey hours, Topside offers remain through the 118.20 with weak stops likely to be absorbed by congestive offers through to the stronger 118.50 areas which has seen the level tested a few times over the past few weeks, a push through the 118.70 areas is likely to see stronger stops appearing however, the market then is likely to run into congestive offers relating to the ranges from last year. Downside bids limited through the 117.00 areas with possible weak stops on a push through the 116.80 areas and opening up a quick test to the 116.00 levels however, limited bids are likely though and the market does not really thicken until the market moves to the 115.30-00 areas.
• AUD: Opening around the 0.7260 levels the market moved to the 0.7270 areas and held the level through into the Tokyo session the market struggled to penetrate the levels fully and eventually drifted back to test the 0.7250 areas in a lacklustre attempt and holding into the grey hours. Topside offers light through the 73 cent levels with likely stronger offers through the 0.7340-60 areas and limited offers through to the 0.7400 areas, possible weak stops appearing on a move through and the market seeing only light congestive offers through to the 0.7450 areas. Downside bids light through to the 0.7220 areas and then possibly stronger bids appearing on moves below the 72 cent levels, with particularly strong levels around the sentimental levels as with the last attempts to break lower this year.

Overnight News

CNY:

China Vice Premier Ma Denies Yuan Devalued for Exports: Standard

China to Prevent State-owned Financial Asset Losses, MOF Says

CNY/HKD:

Net Inflow to China Via H.K. Fund Program 97.5m Yuan End-Nov.

JPY:

Japan to Book 2t Yen in Forex Reserve Account as Revenue: Nikkei

Japan Govt. Raises Eco Assessment for First Time Since March 2015

NZD:

New Zealand Posts Trade Deficit as Meat Exports Decline

New Zealand Annual Immigration Rose to Fresh Record in November

New Zealand Nov. New Mortgage Lending Rises to NZ$6.35b: RBNZ

Today’s data

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

NZD       Trade Balance (NZD) Nov A -705M | C -500M | P -846M | R -815M

AUD       Westpac Leading Index M/M Nov A 0.00% | P 0.06%

JPY         All Industry Activity Index M/M Oct A 0.20% | C 0.10% | P 0.20%

09:30     GBP       Public Sector Net Borrowing (GBP) Nov C 11.5B | P 4.3B

15:00     EUR        Eurozone Consumer Confidence Dec (A) C -6 | P -6.1

15:00     USD       Existing Home Sales Nov C 5.52M | P 5.60M

15:30     USD       Crude Oil Inventories P -2.6M

Harry Hindsight              

• EUR: Opening around the 1.0400 levels the market made limited headway through the Asian session to push towards the 1.0420 levels holding the levels deep into the session before starting a steady decline as the market moved towards the grey hours, early Europeans and Middle Eastern traders sold quickly in a test of the 1.0380 areas and the London session remained close to the lows through into the NYK session before a repeat as the market moved into NYK testing to the 1.0355 area and the sentimental support held through to the official opening before climbing steadily back to the opening levels through to the end of London and then holding quietly on limited volume around the closing 1.0390 areas. A slightly inflated current account did little to stimulate the market and German numbers were discarded as only a fraction of the equation leaving the market weak and heading towards ever declining volumes.
• GBP: End of year profit taking saw the market drifting lower through the day, Asia pushed off the 1.2390 levels to test above the 1.2400 levels not quiet reaching the 1.2410 however, once the market moved towards the grey hours the market started to drift through to the 1.2380 levels, the move through into the London session saw the market slow its decent for a period with early losses in the EURGBP cross quickly recovered eventually saw weak stops on the cross triggered on the move back through the 0.8400 levels and the GBP leg was the one to suffer dropping quickly to the 1.2350 areas and then drifting steadily from that point to the 1.2320 holding steady through into the NYK opening and recovering to the 1.2350 levels for a gradual push to the 1.2370 levels. For the moment end of the year selling is dominating the market especially as the volumes start to thin.
• JPY: USDJPY rose from the opening in Tokyo having drifted around the 117.20 levels testing the 117.00 levels several times before the rise started pushing quietly through to the grey hours testing the 117.80 areas, London were quick buyers and the market moved through to the 118.20 areas, from there the market didn’t back away from the highs however, the move into the NYK session saw several tests of the level and only once the London market closed did the market back away a little and dip back to hold to the close around the 117.80 levels, with the BoJ on hold across the board with a 7-2 majority the view seems to be one of hope and a stronger USD is the answer to their woes.
• AUD: The Oz opened around the 0.7245 levels and ranged through the Asian session around the 0.7250 levels, the RBA minutes did little for the market with a very placid view of the Economics and possibly motivated by the current levels and increasing prices in commodities over the past few weeks, the market pushed into the 0.7260 areas in the grey hours and saw steady selling once the London session opened, the market bottomed into the 0.7220 areas and held those levels through into the NYK session, NYK saw the market recover and a return to the opening levels however, one has to say the Oz in particular has been reasonably quiet overall for several days and lacks any clear conviction for a trend.

Yesterday’s premiership results

JPY         BOJ Monetary Policy Statement

AUD       RBA Meeting Minutes

CHF        Trade Balance (CHF) Nov A 3.64B | C 3.57B | P 2.68B | R 2.66B

EUR        German PPI M/M Nov A 0.30% | C 0.10% | P 0.70%

EUR        German PPI Y/Y Nov A 0.10% | C -0.20% | P -0.40%

EUR        Eurozone Current Account (EUR) Oct A 28.4B | C 24.2B | P 25.3B

GBP       CBI Realized Sales Dec A 35 | C 20 | P 26

CAD       Wholesale Sales M/M Oct A 1.10% | C 0.30% | P -1.20% | R -1.50%

Good Luck,

Andy

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