FX Market Commentary

Andy Harrison

Andy Harrison

Good Morning,

LMAX Close

USDJPY 113.624 | EURUSD 1.13318 | AUDUSD 0.72771 | NZDUSD 68215 | USDCAD 1.31774 | USDCHF 1.00645 | GBPUSD 1.27757 |

LMAX Highs and Lows 06.00 GMT

High | Low

EURUSD 1.13431 | 1.13219

USDJPY 113.646 | 113.328

GBPUSD 1.27979 | 1.27556

USDCHF 1.00738 | 1.00584

AUDUSD 0.72874 | 0.72618

USDCAD 1.31828 | 1.31519

NZDUSD 0.68412 | 0.68187

EURCHF 1.14165 | 1.14005

EURGBP 0.88750 | 0.88567

EURJPY 128.786 | 128.464

For Today

  • GBP: Testing the 1.2765 areas in early trading the market eventually lifted a little on the move into the Tokyo session pushing slowly into the 1.2790 level and holding quietly through to the grey hours, downside congestion through to the stronger bids into the 1.2700 levels however, a push through the level will likely see weak stops and stronger break out stops appearing and opening a test through to the Jun 17 ranges with limited support into the sentimental values before stronger bids into 1.2630 however, given the situation there are not guarantees that any move to those areas could hold and the possibility of a second rout can not be ignored with congestion around the 1.2500 levels possibly a stronger area. Topside offers light through to the 1.3000 with limited potential for a short squeeze if only because a rally would need everyone to hug and say sorry and all is forgiven, its not likely to happen but who really knows. Possible sellers into the sentimental values but it is limited at best.
  • JPY: Opening around the 113.60 level the market saw very little movement until Tokyo opened and the market started to trade slowly lower through the session to base around the 113.30 for a good portion of the session and into the grey hours on limited volumes. Topside congestion continues to build on any test through the 113.70 areas and into the 114.20 area before weak stops begin to appear and the market opens a little however, the amount of space above the level is small and congestion leads to larger offers on a move through the 114.50 areas with the 114.60 likely to find particular resistance to any upside move, it is a possible that a break here could see a minor short squeeze from shorts and the market quickly testing to the stronger 115.00 levels. Downside bids congested to the 113.20-00 level with the market seemingly caught in this 112-114 range and yield plays distinctly possible on any dips, with very little in the way of stops with what weak stops there are running into congestion limiting there impact the market sees stronger bids on any move below the 112.40 areas and even if those areas are cleared and the market can break into the 111 handle stronger buyers are likely to appear.
  • AUD: Very quiet day for the Oz with early Tokyo taking the market up through towards the 0.7290 areas before running into the offers again and the short term players seem to be having all the fun as the market dropped back reasonably quickly to test to the 0.7260 area before finding limited buying, the run to the grey hours was reasonably quiet with a slow rise back to the 0.7270 level and eventually running to the grey hours rising through to the opening levels. Topside offers through to the 73 cents level is likely to be very strong with weak stops quickly following on a move through the level and opening up a quick move to the 0.7350 level with stronger congestion likely to appear and continue through to 0.7380-0.7400 levels. Downside bids light back through to the 0..7170 area with possibly some light stops reappearing on a dip through the level and into the more congested and supportive 0.7150 areas downwards.
  • EUR: Early steady buying from the opening around the 1.1325 level taking the market towards the 1.1345 area before running out of steam but keeping in contact with the area through to the grey hours, Topside offers into the 1.1380-1.1400 level likely to be limited with weak stops on a move through will see very little resistance to a strong move with better offerings around the 1.1450 area and likely to increase the closer the market moves to the 1.1500 areas, strong stops on a push through the 1.1520 areas will likely limit any further push however, this is dependent on Brexit news. Downside bids light through to the 1.1260 level with some limited congestion and likely to increase on any dips towards the 1.1220-00 level with strong stops through the level opening limited downside potential for the moment.

Overnight News
USD/CNY:
US-China breakthrough at G20 meeting is unlikely since tensions go beyond trade, analysts say – SCMP
China trade proposal unlikely to be game changer – US official
Ross: Trump and Xi likely to get only framework trade deal – RTRS
GBP:
Tory deal with DUP over unless May replaced – Telegraph
May’s Brexit plan concedes our sovereignty in a way even worse than if we stayed in the EU – Telegraph
Michael Gove confirms he has rejected Brexit secretary job (poison chalice)
The day of Brexit turmoil which could cost May her premiership
MXN:
Mexico hikes interest rate, citing Peso pressure from AMLO
NZD:
New Zealand manufacturing grew at faster pace in October – PMI
KRW:
N. Korea orders testing of high-tech weapon – Yonhap/state media
EUR:
Italy’s populists say Europe wants a blood and tears budget – BBG

Today’s Data
Actual – A | Consensus – C | Previous – P | Revised R | all timings GMT/UTC

NZD BusinessNZ Manufacturing PMI Oct A 53.5 | P 51.7 | R 51.9
10:00 EUR Eurozone CPI M/M Oct C 0.20% | P 0.50%
10:00 EUR Eurozone CPI Y/Y Oct (F) C 2.20% | P 2.10%
10:00 EUR Eurozone CPI Core Y/Y Oct (F) C 1.10% | P 1.10%
13:30 CAD International Securities Transactions (CAD) Sep P 2.82B
13:30 CAD Manufacturing Sales M/M Sep P -0.40%
14:15 USD Industrial Production M/M Oct C 0.20% | P 0.30%
14:15 USD Capacity Utilization Oct C 78.30% | P 78.10%
21:00 USD Net Long-term TIC Flows Sep P 131.8B

Harry Hindsight

  • GBP: Opening around the 1.3000 level the market drifted through the early part of Asia moving to the 1.2980 level before running slowly higher to push through to the grey hours pressing through the 1.3020 level and the end of yesterday’s daily rambles, of course once I stepped out of the door the resignations started with Brexit secretary Raab, pensions secretary McVey 30 minutes later with secretary for Northern Ireland next those being the 3 top posts, the market dipped on the Raab announcement falling back to the London opening and testing the 1.2950 level the other two in close succession saw the market drop instantly through to the 1.2890 level and while the fall slowed another hour later saw the market pushing through 1.2800 and testing eventually to the 1.2750 level and what bid they were slowed the decline and the market based along the 1.2865 areas for several hours and unable to push much beyond the 1.2840 levels on the limited recovery, with PM May refusing to bow to pressure and basically telling Parliament its my way or no way Cable was unable to recover and the move through into the Tokyo session saw the 1.2750 level cleared on minor dips to the 1.2725 areas before holding and again and failing to recover beyond the 1.2800 level the market petered out to a close around the 1.2780 area.
  • JPY: Given the amount of movement elsewhere, opening around the 113.60 levels the market dropped a little into the Tokyo session opening testing the 113.50 levels and then ranged around the level, the move through to the grey hours saw a limited push towards the opening levels however, the move into the London session saw the market trading lower and a slow push through to the 113.30 levels, rallying only slightly before NYK moved in and the lows were set on a move through to the 113.10 level and eventually rising back to the 113.50- level for the close in London, again a brief pause and the market made the highs for the day to the 113.70 on a stretch before finishing the day unchanged.
  • AUD: Moving quietly from the opening to the release of the employment numbers around the 0.7235 levels the market jumped quickly through to the 0.7280 areas and then ranging for several hours through to the grey hours around the 0.7275 level, a slow rise into the London session saw the market testing towards the 0.7300 level and failing the level into the London opening dropped back fairly smartly to hold the 0.7250 level basing along the level and ranging to 0.7275 for much of the NYK session and only rising once the Sydney market re-joined the session, taking another stab at the 73 cents level the market again failed and fell back to finish the day around the 0.7280 level.
  • EUR: Steady buying in EURGBP drove the early part of the session and the Euro rose from the 1.1310 levels to test into the grey hours pushing the 1.1350 level after a tight channelled rise, The drag of the GBP drop saw the Euro fall quickly back to the 1.1275 level before bouncing from the level back to the 1.1310 levels and a steady range through to the NYK session holding around the 1.1300 levels, with the Europeans particularly quiet on the subject of May’s Brexit the market started to see stronger EURGBP buying moving through the market and the Euro again pushing to the 1.1350 levels late into the session testing as high as the 1.1360 areas before drifting back to finish the day just above the opening levels.

Yesterday’s Premiership results
AUD Consumer Inflation Expectation Nov A 3.60% | P 4.00%
AUD Employment Change Oct A 32.8K | C 20.3K | P 5.6K | R 7.8K
AUD Unemployment Rate Oct A 5.00% | C 5.10% | P 5.00%
GBP Retail Sales Inc Auto Fuel M/M Oct A -0.50% | C 0.20% | P -0.80% | R -0.40%
GBP Retail Sales Inc Auto Fuel Y/Y Oct A 2.70% | C 2.80% | P 3.00% | R 3.30%
GBP Retail Sales Ex Auto Fuel M/M Oct A -0.40% | C 0.20% | P -0.80% | R -0.30%
GBP Retail Sales Ex Auto Fuel Y/Y Oct A 2.70% | C 3.30% | P 3.20% | R 3.60%
EUR Eurozone Trade Balance (EUR) Sep A 13.4B | C 16.7B | P 16.6B | R 16.8B
CAD ADP Non-Farm Employment Change Oct A -23.0K | P 28.8K
USD Empire State Manufacturing Nov A 0.80% | C 19.3 | P 21.1
USD Retail Sales Advance M/M Oct A 0.80% | C 0.50% | P 0.10%
USD Retail Sales Ex Auto M/M Oct A 0.70% | C 0.50% | P -0.10%
USD Philadelphia Fed Business Outlook Nov A 12.9 | C 20.7 | P 22.2
USD Import Price Index M/M Oct A 0.50% | C 0.10% | P 0.50% | 0.20%
USD Initial Jobless Claims (NOV 13) A 216K | C 213K | P 214K
USD Business Inventories Sep A 0.30% | C 0.30% | P 0.50%
USD Natural Gas Storage A 39B | C 35B | P 65B
USD Crude Oil Inventories A 10.3M | C 2.9M | P 5.8M

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