Daily FX Market Commentary

Good morning,

 

LMAX Close

USDJPY 113.917 | EURUSD 1.1514 | AUDUSD 0.70765 | NZDUSD 0.64786 | USDCAD 1.29336 | USDCHF 0.99171 | GBPUSD 1.30216 |

 

LMAX Highs and Lows 5.00am GMT

                                High | Low

EURUSD               1.15198 | 1.15052

USDJPY                 114.102 | 113.846

GBPUSD               1.30293 | 1.30047

USDCHF               0.99362 | 0.99142

AUDUSD              0.70843 | 0.70621

USDCAD               1.29320 | 1.29169

NZDUSD               0.64856 | 0.64639

EURCHF                1.14354 | 1.14189

EURGBP               0.88471 | 0.88365

EURJPY                 131.366 | 131.042

 

For today

• GBP: A steady move through the Asian session holding around the opening 1.3025 area before drifting off through to the 1.3010 areas for the move into the grey hour, light congestion through the topside 1.3050 areas however, it is light and the market is free to move to the slightly stronger 1.3100 areas, weak stops on a move through the levels, downside bids light through to the 1.2920 area, limited congestion through to the 1.2850 areas before with stronger bids likely on a move through to the 1.2800 level.
• JPY: A quiet day with the USDJPY moving around the 113.90 level through to the Tokyo session some light buying saw the market push through to the 114.10 areas before drifting back to that opening area and trading the level through to the grey hour, Topside offers into the 114.50-60 areas with limited weakness through the level and then likely to increase on any push for the 1.1500 level however, very little other than sentiment in the area the market is likely to see stronger offers on any push beyond the level and more towards the 1.1550 level and the highs from Mar 2017 defining the topside, downside bids light through the 114.00 level with weak stops on a move through will see limited buying until closer to the 113.20 areas where better bids are possible.
• AUD: Opening around the 0.7078 testing lightly through the 0.7080 areas the market dipped through to test the lows of yesterday extending it a pip or two only before trading through to the grey hour holding the level. Topside offers light through to the 0.7110-20 areas with weak stops likely on a push through the level and very little to halt a move back to the 0.7150 areas with a possibility of light stops opening up to a run to the 72 cents level where stronger offers are likely, downside bids into the 0.7050 level and congestion likely to continue and be fixed around the sentimental levels down through to the 0.6950 level where the market is likely to be a little in danger.
• EUR: A quiet session overall for the Euro with the market drifting a little into mid-Tokyo from the range to 1.1520 and back through to the 1.1505 areas, topside offers light through 1.1550 only once the market pushes back towards the 1.1580-1.1600 level do the offers start to increase, a push through 1.1600 area is likely to be difficult with plenty of congestion possible and any stops likely to be matched against the congestion, downside bids light through to the 1.1440 level however, through that level will see some congestion around the 1.1420-00 areas and possibly extending through and increasing into the 1.1360 level.

 

Overnight News

EUR:

Chinks in Merkel’s power becoming visible Spiegel

Italy sees GDP growing 1.2% in 2018 with current legislation

Italy targets gross debt to GDP of 130.9% this year, 130% 2019

Italy targets deficit to GDP at 1.8% this year

Italy targets unemployment rate at 10.6% in 2018 and 9.8% in 2019

Italy targets debt to GDP at 126.7% in 2021

Italy Govt. sees GDP up 0.9% in 2019 with current legislation

Italy budget details published on treasuries website

Italy pivots to China in blow to EU efforts to keep its distance

Italy hangs its budget plan on an unrealistic view of economy BBG

FITCH:

Fitch braces for global bond storm as FED breathes fire UKT

AUD:

RBA: Economic analysis Heath says unemployment rate still main measure of spare capacity

Heath: Labour market more complex than textbooks suggest

Heath: More work to do on how to measure spare capacity

Heath: Need to improve our ability to forecast wages growth

Heath: Increased availability of flexible work arrangements has affected spare capacity

Heath: Underemployed, marginally attached workers add to spare capacity

USD:

Pentagon led report cites nearly 300 risks to materials and components critical to US military, including due to dependence on foreign suppliers like China

Report calls China a significant and growing risk to US supply of critical materials and technologies

Pence to US companies- “Pledge allegiance”

Pence: What Russians doing pales in comparison to China

Pence: US will assert American interests across indo-Pacific

Pence: Trump has made relationship with China a priority

Pence: China policy has used currency manipulation, IP theft

Pence: China uses debt diplomacy to expand its influence

Pence: China extended lifeline to corrupt Maduro regime

GBP:

Theresa May struggles to convince with Brexit strategy ABC

OIL:

Crude tumbles most in seven weeks as American stockpiles swell

NZD:

RBNZ made renewed bid to block treasury from rates, emails show

 

Today’s data

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

JPY         Overall Household Spending Y/Y Aug A 2.80% | C 0.20% | P 0.10%

JPY         Labour Cash Earnings Y/Y Aug A 0.90% | C 1.30% | P 1.50% | R 1.60%

AUD       Retail Sales M/M Aug A 0.30% | C 0.30% | P 0.00%

JPY         Leading Index CI Aug (P) A 104.40 | C 104.30% | P 103.90%

06:00     EUR        German Factory Orders M/M Aug C 0.70% | P -0.90%

06:00     EUR        German PPI M/M Aug C 0.20% | P 0.20%

06:00     EUR        German PPI Y/Y Aug C 2.90% | P 3.00%

07:00     CHF        Foreign Currency Reserves Sep P 731B

07:15     CHF        CPI M/M Sep C 0.00% | P 0.00%

07:15     CHF        CPI Y/Y Sep C 1.20% | P 1.20%

12:30     CAD       Net Change in Employment Sep C 32.5K | P -51.6k

12:30     CAD       Unemployment Rate Sep C 5.90% | P 6.00%

12:30     CAD       International Merchandise Trade (CAD) Aug C -1.4B | P -0.1B

12:30     USD       Trade Balance Aug C -52.3B | P -50.1B

12:30     USD       Change in Non-farm Payrolls Sep C 188K | P 201K

12:30     USD       Unemployment Rate Sep C 3.80% | P 3.90%

12:30     USD       Average Hourly Earnings M/M Sep C 0.30% | P 0.40%

 

Harry Hindsight

• GBP: A weak start to the day after the drop into the close saw the market drifting from a higher opening to test to the 1.2925 levels and base along that level through into the London session before rising steadily through the day pushing deep into NYK before topping out just above the 1.3040 level and drifting a little into the close in London and finishing quietly, most of the day was focused on the US rather than Italy’s forecasts and a limited retracement for the USD.
• JPY: USDJPY dipped a little from the early highs above the 114.50 level testing through to late in the session to the 114.25 area before holding steady around the 114.30 levels through the London session and deep into the NYK session before dropping off, concerns about the US-China trade war and more disturbingly an increase in military incidents, the market dipped through to the 114.00 level and weak stops saw the market dipping through to the 113.65 areas before starting a slow rise through to finish the day around the 113.90 level.
• AUD: A slow steady decline for the Oz as a fallout of the US-China trade war reaching new worryingly highs with naval vessels buzzing around the S. China disputed areas, the market ran through Asia slowly slipping through from the early 0.7110 high too test into the grey hour around the 0.7080 and slipping further into the early London morning testing to the 0.7065 before holding up for the first time, a push through to NYK saw the market recovering slowly through to the 0.7090 areas and into the NYK session holding the levels, the move through to the London close saw the market again testing to the previous lows and struggling from there to the close to regain the 0.7075 areas.
• EUR: Early highs to the 1.1485 area saw the market then move into the 1.1465 level for the London session, a long steady rise through to deep into the NYK session saw the market spike to the 1.1540 levels on a break through the 1.1520 level before dropping back and holding just above the 1.1500 level to the close.

 

Yesterday’s premiership results

AUD       Trade Balance Aug A 1.60B | C 1.45B | P 1.55B

USD       Challenger Job Cuts Y/Y Sep A 70.9% | P 13.70%

USD       Initial Jobless Claims (SEP 29) A 207K | C 206K | P 214K | R 215K

CAD       Ivey PMI Sep A 50.4 | C 61.4 | P 61.9

USD       Factory Orders Aug A 2.30% | C 0.90% | P -0.80% | R -0.50%

USD       Natural Gas Storage A 98B | 47B | P 46B

 

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