Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 112.142 | EURUSD 1.7908 | AUDUSD 0.75656 | NZDUSD 0.68156 | USDCAD 1.27694 | USDCHF 0.9887 | GBPUSD 1.32174 |

 

LMAX Ranges 6am London time

Highs    Lows

EURUSD               1.17998 | 1.17223

USDJPY                 112.203 | 111.887

GBPUSD               1.32248 | 1.31861

AUDUSD              0.75677 | 0.75505

USDCHF               0.99017 | 0.98797

USDCAD               1.28015 | 1.27657

NZDUSD               0.68280 | 0.67937

EURGBP               0.89234 | 0.88787

EURCHF                1.16691 | 1.1591

EURJPY                 132.301 | 131.170

For today

• EUR: The market opened little changed however, shortly after the opening saw the market react to the news that Merkel negotiations with the other parties had failed and the Euro dropped back quickly through the 1.1750 areas, the market continued trading lower in a slightly slower fashion bouncing off the lows of 1.1722 but unable to push back above the 1.1750 level even though it did attempt too over an hour or so before again drifting off to push below the 1.1730 level and hold around that level into the grey hour, light bids into the 1.1700 areas with weak stops on a move through the 1.1680 areas, stronger bids likely into the 1.1660 level with congestion through to the 1.1640 level, even through the level bids are more congestive than anything else into the 1.1600 levels with the 1.1550 area likely to be key to any further weakness. Topside offers into the 1.1800 level are likely to be a little stronger with weak stops through the level and some weakness into the sentimental levels around 1.1850, stronger offers into the 1.1880 areas continuing through to the 1.1900 level and possibly a little stronger.
• GBP: Opening unchanged the market tested a little beyond the 1.3220 levels before the drag of the of the Euro pulled Cable lower, talk in the market of the moderation of Merkel in the Brexit negotiations likely to directed to domestic issues saw the market test back to the 1.3185 areas before righting itself and pushing back steadily to above the 1.3200 area and holding along that line into the grey hours, light congestion around the 1.3200 levels with bids increasing into the 1.3150 areas likely to slow any dips however, stronger bids increase on a move through to the 1.3050 level with possible strong stops on a dip through the area. Topside offers into the 1.3250 level are likely to see some limited offers before weak stops appear on a push through to the stronger offers into the 1.3300 areas possibly weak stops spread around once through the 1.3320 level with a push through to the 1.3350 level seeing stronger stops appearing for a test towards the 1.3400 level again and congestive offers likely.
• JPY: The opening was in line and the fall back from the 1.1220 highs saw the market dip only to the 111.90 area as the EURJPY took the brunt of the movement away from the USDJPY, the market recovered in early Tokyo to the 112.20 levels before again dipping on a second run to the figure area to base along 112.00 to the grey hour. Downside bids into the 111.80 areas with possible stops on a move through the 111.60 area with a little bit of congestion before there, a push through the level will likely see some congestion into the 111.00 areas however, technically the market is open to the 110.55 areas and likely to be a key level for a deeper move, Topside offers light through to the 113.00 level with offers likely to be a little stronger with weak stops waiting behind and possible short squeeze on a move through the 113.25 areas and a quick move to test towards the 113.50-114.00 levels.
• AUD: Oz traded lower from the opening slipping back to the 0.7550 areas and unable to regain the opening above the 0.7565 level remaining in a tight 0.7555-60 for several hours into the grey hours, downside bids into the 0.7540 levels and likely to continue through the level with an old trend line supporting the market through the 0.7530 areas, stronger bids possible into the 75 cent level however a push through this area could see stronger stops appearing and the market open to a deeper move with only sentimental levels protecting that deeper move to 73 cent. Topside offers light through the 76 cent areas with weak stops likely above the level and the market congested around the 0.7650 areas with increasing offers into the 77 cent level.

Overnight News

EUR:

German free democrats pull out of coalition talks with Merkel’s conservatives and the greens

AUD:

RBA Says commercial property price gains risk sharp correction

SGD:

Wholesale trade growth eases again to 11.3% in Q3

GBP:

Brexit may shock UK companies into fixing productivity malaise

UK households feel the pinch as budget nears, Christmas sales seen down

JPY:

Japan’s export growth signals economic recover to continue in Q4

Today’s data

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

JPY         Trade Balance (JPY) Oct A 0.32T | C 0.21T | P 0.24T | R 0.27T

07:00     EUR        German PPI M/M Oct C 0.30% | P 0.30%

07:00     EUR        German PPI Y/Y Oct C 2.70% | P 3.10%

15:00     USD       Leading Index Oct C 0.60% | P -0.20%

Weekend News

TRY:

Turkey to restrict corporate FX borrowing

USD:

White House budget director open to removing Obamacare mandate repeal from the affordable

care act

USTR NAFTA negotiation objectives seems to soften stance on some sticking points, double down on others

Republicans breakneck negotiations yield some progress on crucial policy, but rifts remain on Tax overhaul

EUR:

Merkel bid for new coalition hangs by thread in party talks

Tusk tells UK: no trade talks without progress on money and Ireland

European council chief tells PM May that movement on financial settlement and border is needed by start of December

Asia:

Planned sales totalling $800M in USD were pulled recently – WSJ

Harry Hindsight

• EUR: A subpoena of Trumps campaign officials was sufficient to send the USD lower into the Tokyo session with the Euro rising from the opening around the 1.1770 level and leaving those lows behind through the day, the market extended to the 1.1820 areas before finding resistance and struggled for a short period around the level before dropping back to range in the 1.1800-10 areas through to the grey hour and early London taking advantage to chase back to below the 1.1800 level, the market held through to the NYK session with very little movement ranging through holding above the lows but barely able to move above the 1.1800 by much and finishing the day holding a narrow 1.1790-1.1800 areas.
• GBP: Similar story for the Cable with the market pushing from the opening just below the 1.3200 levels and rising through to the 1.3210 level before truly taking off and quickly testing to the 1.3240 area, the market then held through to the grey hours with the market rising a little through the to the London opening testing through the 1.3250 area and dipping a little and taking a second run higher, this time the market touched quickly through the 1.3260 level before dropping back quickly with usual EU/GBP commentary likely undercutting the market, Cable quickly dropped to the opening levels before steadying for the move into the NYK session and slowly pushing through to the 1.3170 level before slowly reversing and pushing back to range around the 1.3210 level through to the close.
• JPY: Early selling into the Tokyo session saw the highs around the 113.10 areas to drop steadily through the first few hours back to the 112.40 level, the market then held around the 112.50 area for a long run into the NYK session slowly rising eventually through the 112.60 level before dropping back in NYK to test the lows and after a short period continuing its move through to the 112.00 area and holding the level through to the close.
• AUD: As with the rest of the market the Oz lifted away from the opening levels around the 0.7585 to test through to the 0.7605 areas before dropping quickly as the AUDJPY selling moved through the market taking it quickly through to the 0.7570 areas and then a brief pause before continuing the selling with the market moving through to the grey hours pushing through the 0.7560 level, and continuing through the grey hours and into the London session to dip into the 0.7545 area and holding through into the NYK session extending those lows just below the 0.7540 level before the end of London saw the market rallying pashing to the 0.7560 level, the move through the close saw the market close on the 0.7570 before drifting to a close.

Yesterday’s premiership results

NZD       Business NZ Manufacturing PMI Oct A 57.2 | P 57.5 | R 57.6

NZD       PPI Input Q/Q Q3 A 1.00% | C 1.20% | P 1.40%

NZD       PPI Output Q/Q Q3 A 1.00% | C 1.40% | P 1.30%

EUR        Eurozone Current Account (EUR) Sep A 37.8B | C 30.2B | P 33.3B | R 34.5B

CAD       CPI M/M Oct A 0.10% | C 0.10% | P 0.20%

CAD       CPI Y/Y Oct A 1.40% | C 1.40% | P 1.60%

CAD       CPI Core – Common Y/Y Oct A 1.60% | P 1.50%

CAD       CPI Core – Trim Y/Y Oct A 1.50% | P 1.50%

CAD       CPI Core – Median Y/Y Oct A 1.70% | P 1.80%

USD       Housing Starts Oct A 1.29M | C 1.19M | P 1.13M

USD       Building Permits Oct A 1.30M | C 1.25M | P 1.23M

Stay lucky

Andy

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