Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 117.552 | EURUSD 1.04237 | AUDUSD 0.72376 | NZDUSD 0.6908 | USDCAD 1.34128 | USDCHF 1.02682 | GBPUSD 1.23526 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.04483 | 1.04224

USDJPY                 117.725 | 117.400

GBPUSD               1.23795 | 1.23484

USDCHF               1.02710 | 1.02475

AUDUSD              0.72568 | 0.72255

USDCAD               1.34487 | 1.34137

NZDUSD               0.69249 | 0.68906

EURCHF                1.07079 | 1.06960

EURGBP               0.84457 | 0.84338

EURJPY                 1.22834 | 122.471

For Today

• EUR: Opening around the 1.0425 level the market moved quietly into the Tokyo session before moving steadily to the 1.0445 areas and holding the 1.0435/45 levels through to the grey hours, the ECB Economic Bulletin is likely to be uninspiring with very little of substance expected again, however, the US has a few data releases late in the day not least the initial claims number and leading indicators, light offers into the 1.0480 areas with the offers reaching back through the 1.0500 level before weak stops appear and the market likely to see light congestive offers through the 1.0550 areas, and stronger offers closer to the 1.0600 levels. Downside bids light through the 1.0400 levels however once through the market is likely to see bids appear all along the way towards the 1.0350-20 level with a deeper move open through the 1.0300 levels.
• GBP: A dull day for the Cable with the US numbers to come, the market opened around the 1.2355 levels and drifted into the Tokyo session holding the 1.2350 level before Tokyo buy9ing moved to the 1.2375 areas but unable to push the 1.2380 area and having failed slipped back to the 1.2365 areas and holding the 1.2365 levels to the grey hours, Weak offers through the 1.2400 levels with congestive offers possibly in the mix with weak stops and the market then struggling to the 1.2450 levels with limited volume anticipated, and stronger offers into the 1.2500 areas. Downside bids light in the current levels and likely to increase on a test through the 1.2300 levels, however a break below will likely find a quick test into the 1.2250 areas and stronger bids likely to continue to the 1.2200 areas.
• JPY: Very quiet for the USDJPY opening around the 117.55 levels and then moving slowly to test through the 117.60 levels into the Tokyo session, quick sellers saw the market dip to the 114.40 area however, the lows saw fix demand for the day pushing the market back through to make the lows of the session around the 117.70 and the range set, the market then held roughly in the middle of that range around the 117.60-55 areas for much of the session with another markedly lower volume day so far, no real change from yesterday limited bids into the 117.00 levels and a solid test of the area could see the market quickly testing the 116.00 areas if it has the impetus to push, even through the 116.00 level bids are not so strong but the move to the 115.50 areas are likely to increase into stronger areas around the 115.00 level. Topside offers through the 118.00 remain and have reset from the tests above the level last week and the past few days, with short term sellers likely to join in with the waning profit taking, a push through to the 118.70-80 areas will possibly see weak stops appearing and although the market may struggle with the 119.00 levels the ranges from last year open.
• AUD: Limited day for the Oz with that particular day seeing very little news and no data, and one can assume by the emails I receive from around the market that a goodly proportion already sat at home enjoying the festive season, opening around the 0.7240 levels the market dipped with some light AUD/NZD selling after a better NZ GDP figure for the Q3 before rebounding from the dip below 0.7230 levels and heading through to the Tokyo session testing towards the 0.7260 areas before slowly returning to the opening areas for the move into the grey hours. As the market moves to the grey hours the downside is again being tested with possible weak stops on a move through the 0.7200 areas however, the early part of the year saw the ranges below the 72 cent level tested repeatedly as the market moved from the lows so one suspects that the sentimental levels are likely to be strong. Topside offers light through the 73 cent levels and for the moment they don’t seem to be anyone’s target, a test through will likely see light stops but as the year runs to the end the market is likely to get quieter.

Overnight News

JPY:

Abe Government 2017 Budget Rewards Companies That Play Ball

Aso Says Past Four Years Swayed a Lot by Yen Gains and Declines

Japanese Sold Net 216.7 Billion Yen Overseas Debt Last Week

Japan to Cut Bond Sales in 2017 after Negative Yields Sap Demand

Japan Approves Record Defence Spending Amid China Tensions

Japan Needs to Pay Attention to Trump Trade Policies, JAMA Says

CNY:

Xi Again Pledges to Curb Speculation in China Property Market

NZD:

New Zealand Annual GDP Growth Misses Estimates After Revisions

N.Z. Current Account Deficit 2.9% of GDP in 12 Mths to September

New Zealand Household Lending Growth Slows For a Second Month

N.Z. Finance Minister Says Focus on Fundamentals Boosts Growth

GBP:

U.K. Dec. GfK Consumer Confidence -7 vs Est. -8

Today’s data

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

NZD       GDP Q/Q Q3 A 1.10% | C 0.80% | P 0.90%

NZD       Current Account Balance Q3 A -4.89% | C -4.89B | P -0.95B

GBP       GfK Consumer Confidence Dec A -7 | C -8 | P -8

09:00     EUR        ECB Economic Bulletin

13:30     USD       GDP (Annualized) Q3 (T) C 3.30% | P 3.20%

13:30     USD       GDP Price Index Q3 (T) C 1.40% | P 1.40%

13:30     CAD       Retail Sales M/M Oct C 0.20% | P 0.60%

13:30     CAD       Retail Sales Less Autos M/M Oct C 0.70% | P 0.00%

13:30     CAD       CPI M/M Nov C -0.10% | P 0.20%

13:30     CAD       CPI Y/Y Nov C 1.40% | P 1.50%

13:30     CAD       BoC CPI Core M/M Nov C -0.20% | P 0.20%

13:30     CAD       BoC CPI Core Y/Y Nov C 1.80% | P 1.70%

13:30     USD       Initial Jobless Claims (DEC 17) C 255K | P 254K

14:00     USD       House Price Index M/M Oct C 0.40% | P 0.60%

15:00     USD       Leading Indicators Nov C 0.20% | P 0.10%

15:00     USD       Personal Income Nov C 0.30% | P 0.60%

15:00     USD       Personal Spending Nov C 0.30% | P 0.30%

15:00     USD       PCE Deflator M/M Nov P 0.20%

15:00     USD       PCE Deflator Y/Y Nov P 1.40%

15:00     USD       PCE Core M/M Nov C 0.10% | P 0.10%

15:00     USD       PCE Core Y/Y Nov P 1.70%

15:30     USD       Natural Gas Storage P -147B

Harry Hindsight              

• EUR: Opening around the 1.0390 and the festive period upon us the volumes dropped off a little through the session however, the Euro did start a limited recovery through the day as the market took on board the bail out of the worst bank and oldest bank in Italy Monte dei Paschi di Siena with €20bio, the market moved a little higher trading from the low in the 1.0385 area to test quickly through to the 1.0420 areas before trading quietly into the grey hours holding the 1.0410 area, the market dipped a little lower into the London session before the full import of the new sent the market to the 1.0450 levels into the NYK session, the market held to the London close before drifting a little with light profit taking from day traders leaving the market around the 1.0425 areas into the close.
• GBP: Mixed day with the EURGBP making steady gains through the day as the Euro news beat the UK news, Cable initially dipped into the Tokyo session to test the 1.2350 levels briefly before heading quickly through to the 1.2380 levels and holding in the area through to the grey hours, the market then drifted lower into the London session increasing in speed on the dip through the 1.2350 levels as the PSBR number failed to impress however, overall the number for the year remains below last year’s so something, the low was in the 1.2325 levels and eventually the market started to turn as the Euro started its run higher dragging the GBP with it, the Cable moved into the NYK session testing the 1.2390 areas and spent a decent amount of time pushing for the 1.2400 levels only to run out of time and the London session closing leaving the market to drop back and range in the 1.2340-60 to the close.
• JPY: USDJPY made an early move to test above the 118.00 levels with the market failing to break the 118.10 level and then dropping back once the fix in Tokyo was over and light end of year sellers sold the market back to the 117.60 areas, the move to the grey hours saw the lows extended but a the market was unable to push to far through the 117.50 level through the early London session, the move towards NYK saw the market testing the lows and the 117.10 areas and as with the other markets as the London session moved to close recovered much of the losses on the day before drifting through the evening session to a close to the 117.50 area.
• AUD: A tight range for the Oz over the day with the market struggling in early moves to the 0.7270 areas and then drifting back through the opening levels testing the 0.7250 areas through into the grey hours, the move into the NYK session saw the Oz move higher and back through the opening 0.7260 level to test too the 0.7280 on a spike before dropping back after the quick move to trade around the 0.7250 levels and finished the day struggling to hold the lows.

Yesterday’s premiership results

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%

GBP       Public Sector Net Borrowing (GBP) Nov A 12.2B | C 11.5B | P 4.3B

EUR        Eurozone Consumer Confidence Dec (A) A -5 | C -6 | P -6.1

USD       Existing Home Sales Nov A 5.61M | C 5.52M | P 5.60M

USD       Crude Oil Inventories A 2.3M | C -2.4M | P -2.6M

Good Luck,

Andy

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