Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 112.413 | EURUSD 1.18653 | AUDUSD 0.75983 | NZDUSD 0.68429 | USDCAD 1.26735 | USDCHF 0.98495 | GBPUSD 1.34793 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.18768 | 1.18617

USDJPY                 112.630 | 112.383

GBPUSD               1.34802 | 1.34618

USDCHF               0.98531 | 0.98401

AUDUSD              0.76540 | 0.75964

USDCAD               1.26837 | 1.26609

NZDUSD               0.69078 | 0.68511

EURCHF                1.16953 | 1.16823

EURGBP               0.88193 | 0.88039

EURJPY                 133.712 | 133.359

For today

• EUR: Opening quietly around the 1.1865 levels the market slowly moved higher through into the Tokyo session pushing to just above the 1.1875 areas holding around that level for several hours before slipping back to the 1.1870 level in very quiet trading, Topside offers light through to the 1.1900 areas with weakness likely to appear on a push through the 1.1920 areas with some light stops appearing before stronger offers into the 1.1940-60 areas, likely stops just beyond are likely to run into stronger offers again with possible option barriers around the 1.2000 levels while there is likely to be stops on a move through the level congestion is possibly strong above the 1.2020 areas and possibly running through the 1.2040-60 areas. Downside bids light through the 1.1850 areas with some better bids into the 1.1840 levels giving way to limited bids through to the 1.1820-00 areas were the market is likely to be particularly strong for the moment; a push through the level will see limited stops appearing on a push through the 1.1780 areas with congestion into the 1.1750 areas.
• GBP: A very quiet session throughout for the Cable with the market opening just short of the 1.3480 area and drifting down testing into the low 1.3460’s but generally holding around the 1.3470 level to the grey hours, Topside offers light through the 1.3500 areas with the stronger offers appearing on the approaches to the 1.3550 levels a push through this level will likely see some particularly strong stops appearing and the market opening for a test through the 1.3600 level with the topside then opening to the 1.3800 areas technically, Downside bids into the 1.3400 areas with some light congestive bids, those bids are likely to continue through to the 1.3350 areas with stronger bids likely to appear into that area with limited congestion to the 1.3300 level.
• JPY: A steady rise into the Tokyo session moving from the opening around the 112.40 areas to test through to the 112.55 level and drifting back to the opening levels again on limited news and action, the second run saw the market move much more slowly and testing this time through the 112.60 levels before holding through to the grey hours around that level, Topside offers light through to the 113.00 areas with the possibility of weak stops on a move through the 113.20 level likely to see weak stops in size appearing in the market and while the offers continue through the 113.50 level beyond will likely see stronger offers moving into the market on a move beyond that level and into the 114.00 areas. Downside bids light through to the 112.00 areas with congestive bids likely to increase on a move through and into the 111.50 areas and increasing as the market moves down towards the 111.00 areas and slightly through.
• AUD: Opening just below the 76 cent level the market, weaker current account balance was balanced by better retail sales numbers and the Oz moved quickly through the 76 cent level and pushed hard through the old trend lines to hold in the 0.7645 areas and then slowly pushing towards the 0.7655 areas through to hold just below into the grey hours, Topside offers continue through to the 0.7660 levels before some minor weakness appears with stronger congestive offers then taking over into the 77 cent areas while there maybe some weak stops on a move through the figure level the market is still fairly congestive through the 0.7710-30 areas with further offerings into 0.7750 areas. Downside bids light through the 76 cent level with light bids continuing through to the 0.7580 level before weak stops are likely to appear in the market and congestive bids into the 0.7550 likely to be stubborn.

 

Overnight News                                                                  

NZD:

Farmer confidence declines on Government policies

Auckland average house price falls 2.1% from year ago- Barfoot

RBNZ Gov. Grant Spencer: Persistently low inflation has propted the Reserve bank to think about whether it needs to tweak its approach to monetary policy

Spencer: may be appropriate for monetary policy to put relatively more weight on output, employment and financial stability relative to inflation

Spencer: Long term inflation expectations anchored at 2% there remains broad confidence in the effectiveness of the current framework

Spencer: should be cautious about making any recommendations for change in current framework

Spencer: More recently we have been assuming greater persistence in low global inflation and this is contributing to our current flat track for future OCR levels

Spencer: Has assumed weak global inflation will persist in November policy statement, this now puts some risk on the upside for inflation and interest rates

Spencer: Non traded inflation is forecast to pick up from late 2018 in response to increasing capacity pressures in context of Nov MPS, if this does not eventuate bank would have to consider further easing policy

USD:

US tax shake up risks a USD shortage and a global funding shock

GBP/EUR:

Confidential text of document leaked started the failure of Brexit agreement (not the first time)

1. Ireland’s Arlene Foster spoke on TV to break the deal on the table after finding leaked document

CNY:

20 of China’s 31 province level divisions reported a decline in YoY GDP

AUD:

Unchanged policy consistent with sustainable economic growth

Outlook for non-mining business invest, improved further

Low rates continuing to support Australian economy

Inflation likely to pick up as economy strengthens

A rise in A$ may see slower pickup in inflation, economy

Today’s data

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

GBP       BRC Retail Sales Monitor Y/Y Nov A 0.6% | P -1.00%

AUD       Current Account Balance (AUD) Q3 A -9.18B | C -8.8B | P -9.6B | R -9.7B

AUD       Retail Sales M/M Oct A 0.50% | C 0.30% | P 0.00% | R 0.10%

CNY        Caixin PMI Services Nov A 51.9 | C 51.5 | P 51.2

AUD       RBA Rate Decision A 1.50% | C 1.50% | P 1.50%

08:45     EUR        Italy Services PMI Nov C 53.2 | P 52.1

08:50     EUR        France Services PMI Nov (F) C 60.2 | P 60.2

08:55     EUR        Germany Services PMI Nov (F) C 54.9 | P 54.9

09:00     EUR        Eurozone Services PMI Nov (F) C 56.2 | P 56.2

09:30     GBP       Services PMI Nov C 55 | P 55.6

10:00     EUR        Eurozone GDP Q/Q Q3 (F) C 0.60% | P 0.60%

10:00     EUR        Eurozone Retail Sales M/M Oct C -0.70% | P 0.70%

13:30     CAD       International Merchandise Trade (CAD) Oct C -2.3B | P -3.2B

13:30     USD       Trade Balance Oct C -46.2B | P -43.5B

14:45     USD       Services PMI Nov (F) C 55.3 | P 54.7

15:00     USD       ISM Non-Manufacturing/Services Composite Nov C 59 | P 60.1

 

Harry Hindsight

• EUR: A stronger USD from the opening left the Euro opening around the 1.1860-80 areas and slipping a little lower towards the 1.1850 level into the Tokyo session, before bouncing back a little and holding through to the grey hours around the 1.1870 areas, the move into the early part of London saw the market dropping back quickly to test the 1.1835 level before rebounding into the official opening testing back through to the highs of the day, a weaker confidence number saw the market tracking back to the 1.1850 levels for the move into the NYK session with the PPI numbers broadly holding, NYK sold the market back to the 1.1830 levels with slightly stronger than expected factory orders but overall the market was very limited and the run to the close saw the market moving slowly back to the opening areas.
• GBP: Speculation through the day or may be a false dawn meant to lead us up the garden path whichever, a stronger USD on the open as the tax reforms passed through both houses in the US had the market opening around the 1.3450 areas, news that a European official had stated that 90% of the Brexit deal was covered saw the Cable rising quickly through to the Tokyo session testing above the 1.3500 levels, the market failed just above the 1.3510 levels and drifted through the Asian session testing back to the 1.3460 levels as concerns appeared on the deal being signed off on between the UK and EU, the market tested to the 1.3420 level before moving closer to the said arrangement however, as with all good confidential deals with the EU it isn’t and soon found itself in the public domain, N. Irelands first minister wasn’t amused and while the EU was arranging the celebratory parties with its defeat of the UK Arlene Foster ended the arrangement before it began to the chagrin of the EU and in particularly the Eire government who thought they were going to eat the cake. Initially as the market moved towards the event Cable rose quickly through to the 1.3540 levels and even when the back patting was going on the market held above the 1.3500 level into NYK and then dropped quickly as the reaction from NI put paid to the deal and Cable dropped quickly through the low to the 1.3415 areas before returning to the opening levels for a long drawn out move to the close holding around the 1.3470 level and everyone talking of how close the deal was.
• JPY: Opening around the 112.70 areas the market traded slowly through into the Tokyo session testing the 112.90 levels before drifting back to the opening level and holding through into the grey hours, a slow rise into the London session saw the highs extended through the 113.00 level before limping all the way through too deep into the NYK session holding around the 112.90-113.00 areas, the end of the London session saw the market drifting in the balance of the session and falling back to make the lows of the day and holding the 112.40 area to the close.
• AUD: A quiet range for the Oz with the market opening below the 76 cent level and then trading around the level all the way through to the close with only one minor move into the London session to set the low around the 0.7580 areas and then rising into the opening in NYK to set the high just below the 0.7615 levels.

Yesterday’s premiership results

JPY         Monetary Base Y/Y Nov A 13.20% | C 13.20% | P 14.50%

AUD       TD Securities Inflation M/M Nov A 0.20% | P 0.30%

JPY         Consumer Confidence Index Nov A 44.9 | C 44.9 | P 44.5

GBP       Construction PMI Nov A 53.1 | C 51 | P 50.8

EUR        Eurozone Sentix Investor Confidence Dec A 31.1 | C 32.7 | P 34

EUR        Eurozone PPI M/M Oct A 0.40% | C 0.30% | P 0.60% | R 0.50%

EUR        Eurozone PPI Y/Y Oct A 2.50% | C 2.60% | P 2.90%

USD       Factory Orders Oct A -0.10% | C -0.40% | P 1.40%

               

Good Luck,

Andy

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