Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 111.48 | EURUSD 1.18406 | AUDUSD 0.75952 | NZDUSD 0.69226 | USDCAD 1.28152 | USDCHF 0.98407 | GBPUSD 1.33408 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.18565 | 1.18399

USDJPY                 111.670 | 111.341

GBPUSD               1.33817 | 1.33375

USDCHF               0.98500 | 0.98337

AUDUSD              0.76078 | 0.75826

USDCAD               1.28231 | 1.2811

NZDUSD               0.69041 | 0.68839

EURCHF                1.16723 | 1.1642

EURGBP               0.88812 | 0.88566

EURJPY                 132.302 | 131.894

For today

• EUR: A very quiet day for the Euro with the market moving slowly around the 1.1850 areas with the lows close to the 1.1840 areas early in Tokyo before returning to trade above the 1.1850 levels testing to the 1.1855 areas and trading in a narrow range through to the grey hours, Topside light offers through the 1.1900 area with light stops on a move through the level with stronger offers appearing on a move through the 1.1940 levels and likely to continue through to the 1.1960 area, some possibility of stops however, possibly stronger offers into the 1.1980 level and through to the 1.2000 areas, with some congestion through the level continuing. Downside bids light through to the 1.1820 level with stronger bids likely in that areas with weak stops on a move through the 1.1780 level with congestion likely to soak up most of the move with the congestion extending to the 1.1750 level.
• GBP: Opening around the 1.3350 areas the market saw steady early buying in a push to the 1.3380 level before dipping back into the Tokyo session to hold the 1.3360 level ranging to the 1.3370 area to the grey hour, a bit of a whippy day yesterday sees the market fairly open from the 1.3220 level through to the 1.3380 areas, topside offers into the 1.3380-1.3400 level with some congestion through the level however, possible weak stops are likely to now be a bit larger and a push through the 1.3410 area is likely to see a quick move through to the 1.3440 area and stronger stops on a move through the level and the market opening to the 1.3500 level with plenty of congestion around that area. Downside bids light to the 1.3220 areas is likely to be stronger than it was yesterday and the market pushing through to the 1.3200 level is likely to be difficult with congestion on a move through that level likely to cover the stops on the dip through however, the 1.32-1.31 levels are likely to see strong congestive bids.
• JPY: Small movement from the opening saw the GBPJPY rising and the USDJPY testing through to the 111.65 levels again before dropping back after a few hours of attempting to push through however, the move eventually failed and the market drifted off to make the lows just through the 111.40 and the grey hours, Downside bids through the 111.00 areas and while there may be some weak stops the congestive bids are likely to continue through to a stronger 110.50 areas with a break here likely to open up a quick test of the 110.00 level and weakness through to the 109.60 level. Topside offers light through to the 112.00 areas with strong offers likely, weak stops through the level and li9ght congestion on a move through the 112.50 areas increasing as the market approaches the 113.00 level.
• AUD: The market moved off the 0.7595 levels and tested through into the Tokyo session pushing above the 0.7605 level to make the highs for the Asian session, the market dropped from the Tokyo fix testing down through the 0.7595 opening levels and then drifting into the low 0.7590’s before dipping through 0.7585 level. Downside bids into the 0.7560-40 areas possibly increasing the deeper you move into that range a push through the 0.7530 level will likely see weak stops appearing and the market opening quickly to push through the 75 cent level, congestion through the level however, it does open the potential for a deeper move with the new range opening to the 73 cent level for the medium term however, there is congestion through the 74 cent handle with the market likely to struggle rather than drop precipitously, Topside offers light through to the 0.7640 areas with offers likely to be mixed with a few stops around that level before opening a little through the 0.7660 areas, the move to the 0.7680-0.7700 areas is likely to be congested and any move through will likely see offers appearing around the 0.7710 and 0.7730 levels and that congestion could probably slow any ascent.

 

Overnight News                                                                  

NZD:

RBNZ: Says financial system remains sound and risks to the system reduced over past 6mths

RBNZ to ease LVR restrictions

RBNZ is undertaking a modest easing of the LVR restriction from Jan 18

RNBZ Spencer: First home buyers to benefit from LVR easing

Spencer: expect tighter credit standards to continue

Spencer: Don’t know when lending limits will be fully removed

Spencer: To review lending limits on quarterly basis

Spencer: Credit growth, house prices key criteria in review

Spencer: Considered LVR loosening in interest rate decision

Spencer: Incremental change has negligible impact on OCR track

Spencer: Don’t see collapse of house prices as a high risk

Spencer: Still think DTI or similar instrument would be good

AUD:

Sydney office rents grow most in the world at 30.1% in the past 12months

GBP/EUR:

Both sides agree on the divorce bill and speculation puts this between 45-55B EUR

Even with the agreement the rest remains in the air with Dublin the one wanting the cake to eat

CAD:

Poloz: says economy, policies working to reduce vulnerabilities

Poloz: Strong wage growth should help adjustment to rate hikes

Poloz: A little too soon to have a reading on rate hike impact

Poloz: Most important is vulnerabilities remain elevated

KRW:

1. Korea Kim Jong Un ordered launch of new ICBM
2. Korea says new type of ICBM named Hwasong 15

New ICBM can reach all of US mainland

Fired in a lofted trajectory and flew for 53min before hitting target

Will not threaten any country as long as they do not infringe on N. Korea’s sovereign gains

USD:

Budget committee votes 12-11 to advance measure to the floor to overhaul the US tax code

Today’s data

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

JPY         Retail Trade Y/Y Oct A 0.80% | C 0.00% | P 2.20%

GBP       BRC Shop Price Index Y/Y Nov A -0.10% | P -0.10%

07:00     CHF        UBS Consumption Indicator Oct P 1.56

07:45     EUR        French GDP Q/Q Q3 (P) C 0.50% | P 0.50%

09:30     GBP       Mortgage Approvals Oct C 65K | P 66K

09:30     GBP       M4 Money Supply M/M Oct C 0.30% | P -0.20%

10:00     EUR        Eurozone Business Climate Indicator Nov C 1.51 | P 1.44

10:00     EUR        Eurozone Economic Confidence Nov C 114.6 | P 114

10:00     EUR        Eurozone Industrial Confidence Nov C 8.6 | P 7.9

10:00     EUR        Eurozone Services Confidence Nov C16.7 | P 16.2

10:00     EUR        Eurozone Consumer Confidence Nov (F) C 0.1 | P 0.1

13:00     EUR        German CPI M/M Nov (P) C 0.30% | P 0.00%

13:00     EUR        German CPI Y/Y Nov (P) C 1.70% | P 1.60%

13:30     USD       GDP Annualized Q/Q Q3 (S) C 3.20% | P 3.00%

13:30     USD       GDP Price Index Q3 (S) C 2.20% | P 2.20%

15:00     USD       Pending Home Sales M/M Oct C 1.20% | P 0.00%

15:30     USD       Crude Oil Inventories P -1.9M

19:00     USD       Federal Reserve Beige Book

21:45     NZD       Building Permits M/M Oct P -2.30%

23:50     JPY         Industrial Production M/M Oct (P) C 1.80% | P -1.00%

 

Harry Hindsight

• EUR: Opening around the 1.1900 levels the market struggled through the Asian session unable to push beyond the 1.1910 areas and barely testing the opening level just below the figure, the move into the grey hours saw a little more movement with the market testing through the 1.1890 areas before quickly returning higher as the Euro numbers started to come in to make the high of the day around the 1.1920 level before dropping back lower again into the early morning in London, the market held through to the NYK session holding the 1.1880 areas but even into the NYK session it was unable to push back through the figure, with the London market closed the release of a tentative agreement between the UK and Europe on the Brexit divorce bill saw the Euro start to fall back steadily as EURGBP selling moved through the market with the Euro testing back to the 1.1830 level before finding some support and rising to range around the 1.1845 area.
• GBP: No data and nothing actually expected for the day, the market moved through the Asian session rising a little from the opening around the 1.3320 areas and testing to the 1.3340 level into the grey hours, a quick spike seemed strange testing through the 1.3350 level however, the market was just as quickly back to the 1.3340 level and moving through into the full London session started a slow drift lower through the day with more speculation and commentary on the UK/Eire situation and the coming arguments, the move through into the NYK session saw the market touch through to the 1.3270 levels, NYK was little different and the break through the 1.3270 level saw weak stops appear, or strong selling to test towards the 1.3220 areas, holding through to the close in London the agreement reached between EU/UK saw the market quickly rise through to the opening levels and some choppy periods testing initially to the 1.3370 levels dropping back 100 pips and then pushing again back to the 1.3350 level and continuing to test to the 1.3390 level before drifting back through the 1.3350 level into the close.
• JPY: Reasonable day for the USDJPY with the market opening around the 111.10 level, the move into the Tokyo session saw the market drop quickly through the 111.00 level to touch through the 110.95 level before starting a rally pushing through to the 111.30 levels before drifting through the session and into the grey hours holding the 111.15 areas, London were slow buyers pushing the market only barely higher through the 111.35 areas before NYK sold the market back a little, with the events in Europe and stronger US consumer confidence with the market bouncing around between the 111.10 areas and 111.45 levels before eventually pushing through to the 111.60 levels and slowly drifting to a close just below the areas.
• AUD: A range bound Oz saw the market opening around the 0.7605 areas and generally trade around the level throughout the day, with the market making some gains in Asia to the 0.7615 levels before dropping lower on the move into the grey hours to test to the lows just beyond the 0.7590 areas and slowly move back towards the 76 cent level, the push through saw some weak stops triggered and the market continuing the fashion through the day, the end of the London session saw a renewed the push higher testing to the 0.7620 level but the market eventually ran out of buying power and dropped back to hold the 0.7595 level through to the close.

Yesterday’s premiership results

EUR        German Import Price Index M/M Oct A 0.60% | C 0.40% | P 0.90%

EUR        Eurozone M3 Money Supply Y/Y Oct A 5.00% | C 5.10% | P 5.10% | R 5.20%

EUR        German GfK Consumer Confidence Dec A 10.7 | C 10.7 | P 10.7

USD       Advance Goods Trade Balance Oct A -68.3B | C -65.0B | P -64.1B

USD       Wholesale Inventories M/M Oct (P) A -0.40% | C 0.40% | P 0.30% | R 0.10%

CAD       Industrial Product Price M/M Oct A 1.00% | C 0.50% | P -0.30%

CAD       Raw Materials Price Index M/M Oct A 3.80% | C 2.00% | P -0.10% | R -0.20%

USD       House Price Index M/M Sep A 0.30% | C 0.50% | P 0.70% | R 0.80%

USD       S&P/Case-Shiller Composite-20 Y/Y Sep A 6.20% | C 6.00% | P 5.92% | R 5.80%

USD       Consumer Confidence Index Nov A 129.5 | C 124 | P 125.9

               

Good Luck,

Andy

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