Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 113.536 | EURUSD 1.16648 | AUDUSD 0.76597 | NZDUSD 0.69313 | USDCAD 1.26889 | USDCHF 0.99601 | GBPUSD 1.31892 |

 

LMAX Ranges 6am London time

Highs    Lows

EURUSD               1.16652 | 1.16449

USDJPY                 113.716 | 113.478

GBPUSD               1.31897 | 1.31069

AUDUSD              0.76650 | 0.76421

USDCHF               0.99765 | 0.99538

USDCAD               1.26967 | 1.26782

NZDUSD               0.69377 | 0.69153

EURGBP               0.88900 | 0.88446

EURCHF                1.16237 | 1.1608

EURJPY                 132.591 | 132.259

For today

• EUR: Opening around the same level as Fridays close the movement of the GBP saw the Euro dragged lower into the Tokyo session testing from the 1.1665 areas to test 20 pips lower before starting a slow steady rise higher to hold around the 1.1655 for the move into the grey hours. Topside offers likely through the 1.1680 level and into the 1.1700 areas likely to be a little stronger for the start of the week, with light congestion from the 1.1720 levels possibly mixed with weak stops and then stronger offers into the 1.1750 areas, a push through the 1.1760 areas will likely see further stronger stops however, the move through to the 1.1780-1.1800 is likely to be just as strong and the congestive offers increasing through to the 1.1840-60 areas. Downside bids into the 1.1620 areas with sentimental bids likely to continue through to the 1.1580 level and then increasing as the market moves towards the 1.1550 areas and particularly strong bids, a push through the level is likely to see some weak stops however, a push through the 1.1480 level will see larger stops likely to opening up further declines.
• GBP: Opening in line with the close Friday the first view of the independent papers news saw the Cable dropping quickly with the Independent stating that there were 40 signatories ready to call for a vote of no confidence in PM May’s leadership, this for me has two points that don’t meet closer scrutiny, first they require 48 votes and making the statement before that has been achieved shows there hand, secondly a vote of no confidence could possibly bring down a weakened government and there is no guarantee that these MP’s are even selected by their own constituencies to continue as their representative however, even this pales into insignificance when you think its actually the Independent that have reported on rumours from last week, Then market dropped from the opening around the 1.3190 levels quickly pushing to the Tokyo opening trading on its lows holding the 1.3110 areas and then rising to run along the 1.3120 areas and unable for the moment to push beyond the 1.3130 level, with weaker spending reported by Visa and weaker house prices particularly in London. Downside bids into the 1.3100 areas have held so far and likely to find some bids still in the area however, the key level for the downside remains the 1.3050 areas with some bids in the area possibly not as strong as previously however, that may change depending on todays Govt. chatter with the media, a push through the level will likely see strong stops appearing and the market able to move lower quickly with some sentimental bids into the 1.3000 level but opening the way to a deeper move into the lower 1.29 handle with possible stronger bids appearing on a move towards the 1.2900 areas. Topside offers likely to be weak on a move back to the 1.3200 level and the potential to squeeze higher through the 1.3230 areas seen on Friday, however through that level the market will likely see increasing congestion into the 1.3250 areas and then on the approach to the stronger 1.3300 level with stops likely through the level.
• JPY: A stronger USD from the opening more related to the movements in Cable than anything and setting the USDJPY on a rise from the opening 113.50 areas to push to above the 113.70 areas before finding some light offers, the market then continued to hold around the 113.60 areas through to the grey hours before dropping quickly off as stronger machine orders were released, this added to GBPJPY cross selling and the USDJPY quickly dropped back to hold around the 113.40 areas. Downside bids likely into the 113.20 areas and continuing through to the 113.00 level a break through the 112.80 levels will likely see a mixture of weak stops and congestive bids with the market not opening too much until a penetration of the 112.40 areas for a possible quick test to the 112.00 level, Topside offers light back through to the 113.90 level with a slight increase of offerings into the 114.00 level and through with congestion from there to the stronger 114.40-60 levels with a break through of this level likely to open further gains albeit only to the 114.80-115.00 level and possible option barriers as well as normal sentimental offers.
• AUD: A stronger USD saw the Oz slip from the opening 0.7660 and in line with Fridays close and trading into the low 0.7640 areas before Tokyo started a steady rally back to the opening levels to run into the grey hours holding the opening levels on a reasonably quiet day for the Oz. A weaker USDJPY in the end helped the Oz to continue rising a little with the market heading into the grey hours holding around the 0.7665 high for the day, Downside bids into the 0.7640 level and possibly strong congestion from then on into the 76 cent level, Topside offers light through to the 77 cent areas with the market likely to see similar congestion through the level with weak stops appearing on a strong push through the 0.7720 areas however, stronger offers into the 0.7750 areas is likely to limit the upside for the time being.

Overnight News

AUD:

RBA deputy Gov. Debelle signhs of life in investment spending outside the resources sector

RBA Debelle: revised data show solid upward trend in non-mining investment

RBA Debelle: Investment concentrated in health information, media and telecommunications

RBA Debelle: pick up in infrastructure spending has spilled over into other investment

RBA Debelle: Signs around the world that business investment is finally recovering

GBP:

UK govt. not quite in disarray with 48 signatures needed for a vote of confidence

UK shoppers cut spending by most in more than 4yrs Visa

Theresa May’s leadership is at a critical point and our party’s integrity is in jeopardy – UKT

USD:

Fed’s Harker: Don’t need to remove a lot of accommodation before returning to neutral

Today’s data

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

JPY         Domestic CGPI Y/Y Oct A 3.40% | C 3.10% | P 3.00% | 3.10%

GBP       Rightmove House Prices M/M Nov A -0.80% | P 1.10%

JPY         Machine Tool Orders Y/Y Oct (P) A 49.9% | P 45.00%

07:00     EUR        German Wholesale Price Index M/M Oct P 0.60%

19:00     USD       Monthly Budget Statement Oct C -58.2B | P 8.0B

Weekend News

AUD:

Citizenship fiasco threatens confidence as Australian lawmaker quits

USD:

House won’t agree with senate proposal to nix property tax deduction

Trump says N. Korea’s Kim insulted him by calling him old

Trump backs US intelligence agencies when asked about Russian meddling BBG

Trump backs US intelligence agencies but keeps faith in Putin FT

Three US aircraft carriers and supporting ships sail through sea of Japan in show of power – RTR

Trump demands end to Asia’s chronic trade abuses – FT

GBP:

UK’s May pressured as times says 40 MP’s signal no confidence

SAR:

Saudi Arabia boosts oil security as Iran denies pipeline attack

EUR:

Spain poll shows Ciudadanos support surging El Pais

EU making contingency plans for no deal Brexit, Barnier warns UK independent

Mariano Rajoy issues election challenge to Catalan independence – FT

HKD:

Iron ore wars break out as Hong Kong picks fight with Singapore

Harry Hindsight

• EUR: Another quiet day for the Euro with the market opening around the 1.1640 levels and trading around the 1.1650 level through the Asian session and unable to move through the opening levels, the move into the grey hours saw the market dip with early London selling and the market making the lows for the day just above the 1.1620 rising steadily higher to testing the 1.1660 levels into midmorning in London before holding around the 1.1650 areas, the move into the NYK level saw the market rising again and testing through to the 1.1675 level before drifting back to range around the 1.1660 areas to the close.
• GBP: A quiet move through the Asian session with the market holding around the opening levels and basing along the 1.3140 area through to the grey hour with the market rising into that period to the 1.3160 area before dropping back quickly to the 1.3115 level as early sellers moved into before the release of the numbers, the market started to rise testing through to the opening levels with better numbers hitting the market, the push through the 1.3160 areas saw the market quickly rise through to the 1.3190 level with NYK then moving in and taking the market through to the 1.3230 with only minor stops triggered, the move to the highs was quickly reversed and the market then drifted around the 1.3200 areas through to the close.
• JPY: USDJPY had an even quieter day than the rest of the market with the USDJPY opening around the 113.45 areas with the market then holding through the day between the 113.25-65 areas at the widest point with the market making early highs into the London session, the move through the NYK session was little different and the lows were made into the London close trading down to the 113.20 areas before bouncing back just before the London dealers left, the market then drifted around the 113.50-55 to the close.
• AUD: Light trading from the opening with the market managing to test through to the 0.7690 areas before dipping quickly on the RBA policy statement and returning from the 0.7965 levels and a limited reaction overall, the move through to the London session saw the market test the 0.7695 level to make the day’s high before starting a steady drift through to the NYK session testing through to the 0.7660 level, the move to the end of the London session saw a blip to the 0.7680 areas before returning lower and testing to the day’s lows around the 0.7655 areas and the market holding around the 0.7660 to the close.

Yesterday’s premiership results

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

AUD       RBA Monetary Policy Statement

JPY         Tertiary Industry Index M/M Sep A -0.20% | C -0.10% | P -0.20% | R -0.10%

GBP       Industrial Production M/M Sep A 0.70% | C 0.30% | P 0.20% | R 0.30%

GBP       Industrial Production Y/Y Sep A 2.50% | C 1.90% | P 1.60% | R 1.80%

GBP       Manufacturing Production M/M Sep A 0.70% | C 0.30% | P 0.40%

GBP       Manufacturing Production Y/Y Sep A 2.70% | C 2.40% | P 2.80%

GBP       Construction Output M/M Sep A -1.60% | C -0.90% | P 0.60% | R 0.80%

GBP       Visible Trade Balance (GBP) Sep A -11.3B | C -12.9B | P -14.2B | R -12.4B

USD       U. of Mich. Sentiment Nov (P) A 97.8 | C 100.6 | P 100.7

Stay lucky

Andy

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