Daily FX Market Commentary

Good morning,

 

LMAX Close

USDJPY 112.204 | EURUSD 1.14531 | AUDUSD 0.70993 | NZDUSD 0.65438 | USDCAD 1.30853 | USDCHF 0.99567 | GBPUSD 1.30182 |

 

LMAX Highs and Lows 5.00am GMT

                                High | Low

EURUSD               1.14624 | 1.14513

USDJPY                 112.436 | 112.143

GBPUSD               1.30268 | 1.30174

USDCHF               0.99725 | 0.99565

AUDUSD              0.71121 | 0.70892

USDCAD               1.30862 | 1.30619

NZDUSD               0.65662 | 0.65254

EURCHF                1.14263 | 1.14046

EURGBP               0.88018 | 0.87954

EURJPY                 128.859 | 128.487

 

For today

• GBP: Calm after the storm with the market holding onto the current lows and trading in a narrow range for the most part in the 1.3020 areas, downside congestion through the 1.3000 level is likely to see minor weak stops into the congestion and the market likely to be fairly stubborn through to the 1.2950-40 areas before weakness appears and the market opens to the 1.2900 where stronger bids are likely to appear with strong congestion through the level however, with current climate on Brexit one could surmise that there will be plenty of chatter in the UK for the media to grab hold of, topside offers light through to the 1.3100 levels with light offers possible starting to build however, a break through the level should see weak stops appearing and the market very limited through to the 1.3140-50 areas.
• JPY: USDJPY held through into the Tokyo session around the opening 112.20 level, Tokyo slowly took the market through the 112.40 areas before holding quietly in the area through to the grey hour, downside bids through the 112.00 areas and likely to continue through to the 111.60 level where possible stronger bids lie, a push through the level sees the congestion becoming lighter and a break of the 111.40 area provides the first level of weak stops appearing and stronger bids moving in through the 111.20 level through to the 110.80 areas. Topside offers light through to the 112.80 area where stronger offers are likely to continue through to the 113.20 levels and weak stops a possibility above the level and opening the market to a quick push through towards the 113.60 level and increasing offers through to the 114.00 level.
• AUD: Opening a little lower the market moved off the 0.7095 areas to fill the little gap to 71 cents and holding quietly through to the Tokyo session before again dipping through to the 0.7090 level, the market held the level and steadily recovered to push through quietly to the 0.7110 level to hold quietly into the grey hour, topside offers likely through the 0.7150 level and the sticking point of the week, a push through the 0.7160 areas could see some weak stops however, offers are likely to continue into the 72 cents level with strong congestion likely through to the 0.7220 areas. Downside bids light through to the 0.7050 level and sentimental bids likely to slow any move lower weak stops limited with strong bids into the 70 cents level, any move through this level is likely to see strong stops appearing for a move through to the next sentimental level.
• EUR: As with the Cable the Euro traded quietly through the Asian session rising only slightly through to the 1.1460 areas and quietly holding through to the grey hour, downside bids into the 1.1420-00 area with congestion through those strong bids and the market weak however, the downside while looking open is likely to see buyers appearing quickly on any dips through to the 1.1320-00 areas where bids are likely to be particularly strong. Topside offer slight through the 1.1500 level and the market possibly free to move through the level with ease and little in the way of offers until deeper into the 1.1500 level with stronger congestion likely to appear through the 1.1550 areas.

 

Overnight News

GBP:

Move to extend Brexit transition period attacked by Conservatives PA

BoE’s Cunliffe warns of big fall in pound on bad Brexit outcome

Exhaustion, frustration and anger as Brexit drags on and on BBG

EUR:

Italian banks hit basis swaps as they raise liquidity

Draghi: Said to see risks from countries challenging EU rules

Draghi: Said to tell EU leaders Brexit direct effects limited

Draghi: said to reiterate protectionism is major source of risk

Draghi: Said to tell EU leaders Euro area outlook positive

Nowotny would welcome Widmann as ECB president Ooe Nachrichten

EU says Italy’s planned budget deviation is unprecedented BBG

MXN:

Mexico’s plan to end oil exports is credit negative Moody’s

CNY:

China will support financing to non state backed firms PboC

PBoC: China economic fundamentals good macro leverage stable

PBoC: To continue to carry out prudent, neutral monetary policy

USD:

China hasn’t responded positively to any of our asks in trade talks

 

Today’s data

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

JPY         National CPI Core Y/Y Sep A 1.00% | C 1.00% | P 0.90%

CNY        GDP Y/Y Q3 A 6.50% | C 6.60% | P 6.70%

CNY        Retail Sales Y/Y Sep A9.20% | C 9.00% | P 9.00%

CNY        Industrial Production Y/Y Sep A 5.80% | C 6.00% | P 6.10%

CNY        Fixed Assets Ex Rural YTD Y/Y Sep A 5.40% | C 5.30% | P 5.30%

08:00     EUR        Eurozone Current Account (EUR) Aug C 21.4B | P 21.3B

08:30     GBP       Public Sector Net Borrowing Sep C 4.6B | P 5.9B

12:30     CAD       Retail Sales M/M Aug C 0.40% | P 0.30%

12:30     CAD       Retail Sales Ex Auto M/M Aug C -0.20% | P 0.90%

12:30     CAD       CPI M/M Sep C -0.10% | P -0.10%

12:30     CAD       CPI Y/Y Sep C 2.90% | P 2.80%

12:30     CAD       CPI Core Common Y/Y Sep P 2.00%

12:30     CAD       CPI Core Median Y/Y Sep P 2.10%

12:30     CAD       CPI Core Trim Y/Y Sep P 2.20%

14:00     USD       Existing Home Sales Sep C 5.31M | P 5.34M

                                               

Harry Hindsight

• GBP: Opening slightly lower the market ran through the Asian session holding around the 1.3100 level dipping lightly through the 1.3090 level to make the early lows, the move into the grey hour saw the market drop limitedly through to the 1.3080 areas before moving into London session and pushing back and generally ignoring the weak retail sales numbers, pushing through to the 1.3120 levels to fill in the small gap on the charts, the market held around the 1.3115 level before making a limited push through to the 1.3130 levels, PM May’s warm words to the EU were very nice and pleasant but with no substance and as soon as uttered Brexiteers were joined by remainers and everyone else it would seem pointing out the further costs of kicking the can down the road with and extension of the negotiation period in an effort to find a resolution of the Ireland question that doesn’t involve the breakup of the UK or a complete shutdown of the border area between Northern Ireland and Ireland, the Cable dropped steadily through the balance of the session moving into the NYK session pushing the 1.3100 level again and continuing through to the lows around the 1.3015 areas and holding the level through to the close in a tight range.
• JPY: A slow drift through to deep in the NYK session, early trading saw the high for the day with the market testing through to the 112.75 areas before dipping through to the 112.50 level, the market ranged around the 112.50 level through into the London session testing to the 112.65 level before returning to the 112.50 areas ranging through to the London close before dropping quickly lower holding the 112.10 level for a short period before dipping to the lows on a push through the 112.00 level, the market slowly rose through to the 112.20 area and holding around that level to the close. The USDJPY move seemed more of a flee to save haven with the Khashoggi incident making headlines in several countries close to the Saudi’s.
• AUD: A slow climb higher over the day, with unemployment dropping to 5% and the Oz rising quickly to the 0.7130 level, over the next couple of hours with the knee jerk reaction over the market drifted lower and then renewed the move higher at a more sedate pace testing towards the 0.7140 level, the move to the NYK session saw the highs made just above the 0.7150 level and then the market went into a steady decline through the NYK session finding some support only once the 71 cents level was tested with Cross AUDJPY selling being tested.
• EUR: Euros held quietly around the 1.1500 levels with barely a 10 pip range through the session, the move into the grey hour saw the market drifting a little to test towards the 1.1480 level before rallying from the London open with hope that UK’s May would have something strong to say, wishful thinking one thinks with talk of EU commissioners laughing about the speech, the move through to the NYK session saw the optimism rising and the Euro rose with it pushing through to test into the 1.1520 level before dropping on the opening of NYK and although the 1.1480 level held on this move down the end of London saw a rise as day traders took back limited shorts and then the market dropped quickly through the lows testing through to the 1.1450 level with ease and holding through to the close.

 

Yesterday’s premiership results

JPY         Trade Balance (JPY) Sep A -0.24T | C -0.34T | P -0.19T

AUD       Employment Change Sep A 5.6K | C 15.2K | P 44.0K | R 44.6K

AUD       Unemployment Rate Sep A 5.00% | C 5.30% | P 5.30%

AUD       NAB Business Confidence Q3 A 3 | P 7

CHF        Trade Balance (CHF) M/M Sep A 2.43B | C 2.45B | P 2.13B | R 2.08B

GBP       Retail Sales M/M Sep A -0.80% | C -0.30% | P 0.30%

CAD       ADP Payrolls Report A 28.8K | P 13.6K

USD       Philly Fed Manufacturing Index Oct A 22.2 | C 21 | P 22.9

USD       Initial Jobless Claims (OCT 13) A 210K | C 210K | P 214K | R 215K

USD       Leading Index Sep A 0.50% | C 0.50% | P 0.40%

USD       Natural Gas Storage A 81B | C 85B | P 90B

 

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