Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 111.851 | EURUSD 1.18207 | AUDUSD 0.78896 | NZDUSD 0.71752 | USDCAD 1.24673 | USDCHF 0.97461 | GBPUSD 1.32859 |

 

LMAX Ranges 6am London time

Highs    Lows

EURUSD               1.18799 | 1.18585

USDJPY                 112.506 | 112.262

GBPUSD               1.32657 | 1.32235

AUDUSD              0.78240 | 0.77905

USDCHF               0.97360 | 0.97146

USDCAD               1.24608 | 1.24401

NZDUSD               0.71193 | 0.70885

EURGBP               0.89710 | 0.89491

EURCHF                1.15491 | 1.15378

EURJPY                 133.488 | 133.24

For today

• EUR: A rather quiet day as the market reassess the softer US CPI numbers and the Euro slipped slowly lower through to the 1.1805 levels before early Tokyo took the market back towards the 1.1820 area, with the Tokyo opening over with the market again returned to the slow slide lower testing through the 1.1800 but generally holding through to the grey hour around the 1.1805 areas. Downside bids light through the 1.1800 areas with congestion likely to increase on a move to the 1.1750 areas with some light stops mixed in on the move there, a break below the 1.1740 level could see some light stops appearing and the market quickly testing to the stronger 1.1720-1.1680 areas with stronger stops on a move through the level, Topside offers light through to the 1.1860 areas with possibly stronger offers in the area and likely to increase on a move through to the 1.1900 areas with stronger offers through the level and congestive offers continuing through to the 1.1950 level.
• GBP: Opening a touch higher the market quickly drifted to fill the gap testing through to the 1.3275 areas before again pushing through to hold around the 1.3290 areas through to the grey hours in limited action, light offers through the 1.3300 areas with those offers running through to the 1.3350 areas possibly limited with possible light stops until the 1.3380 areas and stronger offers likely through the level and increasing into the 1.3440 area. Downside bids into the 1.3200 area likely to be light however, a push through the level will likely see weak stops appearing and the market open to a quick move back to the 1.3100 level and slightly better bids beginning in the areas with those bids possibly increasing through to the 1.3050 level were weak stops and congestion appear.
• JPY: Opening more or less around the closing level the market quickly pushed off the 111.80 areas and tested through into the Tokyo session just below the 112.00 areas, the move into the Tokyo session saw a tight range early through the fix however, the market moved through the 112.00 levels testing to above the 112.05 areas and although the market attempted again to push higher before drifting off through the balance of the session to test the 111.90 level. Topside offers likely to be congestive on a move through the 112.00 areas stronger offers likely to be through the 112.50 areas with stronger offers likely to increase on a move to the 113.00 areas again, and stronger offers again then on a move towards the 113.50 levels. Downside bids into the 111.80 areas remain and further bids likely on a move towards the 111.50 areas with weak stops possibly through the level and the 111.00 likely to be very vulnerable to a test, stronger bids into the 110.50 areas with weak stops if that were to break.
• AUD: The Oz was unchanged from the close Friday and then drifted only slightly through into the Tokyo session ranging between the 0.7880-90 levels before dropping slowly lower through the bulk of the Tokyo session to base along the 0.7870 areas to the grey hour, strong offers into the 79 cent level with congestion through the level and the market likely to struggle through the level with limited stops and the market likely to see stronger offers the closer it moves to the 80 cent areas. Downside bids congestive through the 0.7850 levels however, the sudden move higher will need time for the market to fill and better bids into the 78 cent with weak stops likely through the level.

Overnight News

NZD:

New Zealand services industry eased back ahead of election

NZ sales activity falls 1.2 point in Sep BNZ Survey

GBP:

Cable could slide to 1.10 on no deal Brexit scenario BBG

USD:

FED’s Rosengren sees Taylor as Flexible in applying rules

Trump campaign subpoenaed for documents on assault allegation

Hillary Clinton blames election loss on sexism during UK book tour

USD/KRW:

US and S. Korea conduct joint Navy drill to counter N. Korea threat

SGD:

Inflation expectations fall to 2.93% in Set SMU poll

Today’s data

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

GBP       Rightmove House Prices M/M Oct A 1.10% | P -1.20%

CNY        CPI Y/Y Sep A 1.60% | C 1.60% | P 1.80%

CNY        PPI Y/Y Sep A 6.90% | C 6.40% | P 6.30%

JPY         Industrial Production M/M Aug (F) A 2.00% | C 2.10% | P 2.10%

06:00     EUR        German WPI M/M Sep C 0.40% | P 0.30%

09:00     EUR        Eurozone Trade Balance (EUR) Aug C 20.2B | P 18.6B

12:30     CAD       International Securities Transactions (CAD) Aug P 23.95B

12:30     USD       Empire State Manufacturing Index Oct C 20.7 | P 24.4

14:30     CAD       BOC Business Outlook Survey

Weekend News

USD:

Tillerson pledges diplomacy with N. Korea “until the first bomb drops” BBG

Yellen says gradual rate increases should help sustain economy’s growth WSJ

Haley says US to stay in Iran Nuclear deal right now Reuters

Maurer says US treasury assured Swiss not on FX watch list

Maurer: Swiss in contact with US on trade

Maurer: Large optimism among G-20, IMF on global growth

CHF:

Jordan says Reiterates SNB’s two pillar strategy

Jordan: SNB Policy still has to put downward pressure on FX

Jordan: CHF continues to be highly valued

Jordan: SNB will continue with its current policies

Jordan: Swiss exports benefits from global recovery

Jordan: he hopes Basel III will be finalized soon

EUR:

Austrian far right posts strongest result since 1999

Weidmann says Fiscal stimulus would overheat German economy

Weidmann: more balanced current accounts may prevent new crisis

Weidmann: Euro area growth is more balanced, inclusive

Visco says Prefers not to set QE end date, stresses flexibility

Visco: ECB can’t maintain negative rates forever

Visco: Exchange rate is important transmission channel

Visco: ECB policy to remain accommodative for very long time

Visco: inflation remains far from ECB objective

Visco economic recovery is finally reaching Italy

Some ECB Members are said to identify 2.5T Euro QE limit

GBP:

Labour party in talks with Tories to block no deal Brexit, says McDonnell FT

PM May to meet EU bosses in Brussels amid Brexit deadlock

Britain’s missing billions: Revised figures reveal UK is £490B poorer than thought – UKT

KRW:

1. Korea not ready to meet S. Korea in Russia Reuters

JPY:

Kuroda says BoJ will keep pursuing aggressive monetary easing WSJ

Kuroda: sustained, stable wage gains are crucial for Japan

Kuroda: Japans economic fundamentals are solid

Kuroda: Wage growth has been subdued in advanced countries

Kuroda: global investment, trade, employment are expanding

Kuroda: Welcomes moderate recovery in global economy

Japan government releases statement by BoJ Governor Kuroda

AUD:

Australian interest rates and Oz about right, Treasurer says BBG

RBA sounds warning for commercial property owners

CNY:

China’s Zhou warns corporate debt is too high, urges fiscal reform -BBG

Harry Hindsight

• EUR: Opening around the 1.1830 levels the market moved into the Tokyo session and gradually pushed to the 1.1850 areas before holding through to the grey hour, another weak German CPI number saw the market slipped quickly back to the 1.1815 before finding sufficient bids to hold the level and rise slowly through to the 1.1835 levels before dipping for the move into the NYK session, the market tested to the lows of the day around the 1.1805 areas and rebounded as the US CPI numbers came in slightly weaker and offsetting the retail sales numbers, the market quickly touched through to the 1.1875 area before the next set of numbers hit and with Michigan numbers much better than expected the market immediately returned to the 1.1835 levels and once London was out of the way returning to the 1.1810 areas for the run to the close and only a slow rise to the 1.1820 areas.
• GBP: Cable was quiet from the opening and the move into the Tokyo session, the market based for a few hours on the 1.3260 level the market stepped up to the 1.3280 levels for the long run to the grey hours and the German numbers saw the Cable rally sharply to above the 1.3300 areas testing eventually to the 1.3320 levels before stopping a steady slip lower and the move through the 1.3280 level saw weak stops triggered and the market dropping back to the 1.3250 level before holding and bouncing back to test the 1.3300 areas, the choppiness continued through into the NYK session cully with the Cable rallying very quickly once the early US numbers were released testing towards the 1.3340 areas before running out of steam and a steady drift through to the close below the 1.3300 areas.
• JPY: The USDJPY slipped lower from the 112.25 areas holding into early Tokyo around the 112.25 areas with the market slipping quickly to the 112.00 areas before steadily recovering into mid-session, the move into the grey hour saw the USD suffering again with the market dropping back quickly into the 111.85 support level and held through the London session rising back to the opening levels through London and into the NYK session, NYK were quick USD sellers on the first set of numbers and the USDJPY dropped down to the 111.70 area before bouncing a little and then testing the downside again with the same result, the market pushed up a little in a long run to the close with the market basing for the most part along the 111.85 areas.
• AUD: The Oz saw a slow climb from the opening around the 0.7820 areas pushing gradually through the 0.7840 level and struggling, moving through the London session saw the market testing through to the 0.7850 areas before moving into the NYK session testing towards the lows, US figures saw the commodity currencies benefitting the most and the Oz pushed quickly through to the 0.7885 levels and spending the rest of the session ranging around that level with the market testing lightly above the 0.7895 level.

Yesterday’s premiership results

NZD       Business Performance of Manufacturing Index Sep A 57.5 | P 57.9

JPY         Japan Money Stock M2+CD Y/Y Sep A 4.10% | C 4.00% | P 4.00%

AUD       RBA Financial Stability Review

CNY        Trade Balance (USD) Sep A 28.5B | C 38.1B | P 42.0B

CNY        Trade Balance (CNY) Sep A 193B | C 266B | P 287B

EUR        German CPI M/M Sep (F) A 0.10% | C 0.10% | P 0.10%

EUR        German CPI Y/Y Sep (F) A 1.80% | C 1.80% | P 1.80%

CHF        Producer & Import Prices M/M Sep A 0.50% | C 0.30% | P 0.30%

CHF        Producer & Import Prices Y/Y Sep A 0.80% | C 0.60% | P 0.60%

USD       CPI M/M Sep A 0.50% | C 0.60% | P 0.40%

USD       CPI Y/Y Sep A 2.20% | C 2.30% | P 1.90%

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

USD       CPI Core Y/Y Sep A 1.70% | C 1.80% | P 1.70%

USD       Advance Retail Sales Sep A 1.60% | C 1.50% | P -0.20% | R -0.10%

USD       Retail Sales Less Autos Sep A 1.00% | C 0.90% | P 0.20% | R 0.50%

USD       U. of Michigan Confidence Oct (P) A 101.1 | C 95.1 | P 95.1

USD       Business Inventories Aug A 0.70% | C 0.50% | P 0.20%

Stay lucky

Andy

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