Daily FX Market Commentary

Andy Harrison

Andy Harrison

Good Morning,

 

LMAX Close

USDJPY 107.481 | EURUSD 1.09712 | AUDUSD 0.67243 | NZDUSD 0.62983 | USDCAD 1.33347 | USDCHF 0.9960 | GBPUSD 1.22048 |

 

LMAX highs and Lows 05.00 GMT

                                Highs | Lows

EURUSD               1.09933 | 1.09723

USDJPY                107.775 | 107.035

GBPUSD              1.22305 | 1.22022

USDCHF               0.99615 | 0.99228

AUDUSD             0.67566 | 0.67102

USDCAD              1.33456 | 1.33125

NZDUSD              0.63165 | 0.62769

EURCHF               1.09361 | 1.09002

EURGBP              0.89970 | 0.89843

EURJPY                118.411 | 117.587

For Today

  • GBP: Stronger volume through the session with Gold leading the way after a poor start to the CNY-USD negotiations, Cable lifted off the opening lows near 1.2200 area and pushed to the 1.2215 level from that opening before drifting a little and then making steady progress back to the 1.2215 area into the Tokyo session eventually pushing through to the 1.2220 area into midsession, the rest of the session was spent on the next 10 pips as the market tested the 1.2230 level and then held for a long period through to the grey hour just below, Downside bids into the 1.2200 level with weak stops likely on a break however, congestion is suspected through the 1.21 handle and a push through to the low 1.2100 level does however, open a deeper move with a mixture of bids and stops appearing through the 1.2085 areas and the 1.2000 level vulnerable. Topside offers light through the 1.2300 areas with some congestion likely on any test of the area and those offers are likely to continue through to the 1.2360 areas before weakness appears and the market opening through to the 1.2400 level with stronger stops likely through the level.
  • JPY: The initial failure of the CNY-USD talks saw rumours that the Chinese team were about to leave the US and the market just after the opening dropped quickly from the opening around the 107.50 level to test close to the 107.00 areas, later came the news that the US had heard nothing to the contrary about the delegation leaving and the market started to recover however, as that moved out of prevue then the comments started to come quick and fast and USDJPY spiked on the break through the 107.50 level having spent a few hours recovering the early losses ant testing just above the 107.75 areas before dropping back after weak stops from early shorts were done to move into the grey hour very little changed on the day, Topside offers light through the 107.80-108.00  areas and continuing with limited congestion to the 108.50 areas with limited resistance through the level but increasing on any move towards the 108.80-109.00 area with weak stops limited above the 109.20 areas. Downside bids into the 106.50 areas with strength likely to be in that area with congestion likely on any push through towards the 106.00 areas and possible stronger stops on a push through the 105.80 areas and a concern then for the BoJ.
  • AUD: A dip back on the CNY-USD news saw the lows of the day into the Tokyo session and the market testing the 0.6710 level before recovering towards the opening levels of 0.6725, the news that the Chinese delegation were not leaving saw the market quickly move through to the 0.6755 areas before drifting back a little and then heading into the grey hours just short of the 0.6750 level, Downside bids through to the 0.6680-0.6700 level with weak stops likely on a dip through the 0.6670 level with congestive bids then likely to be patchy but centred around the sentimental 50/00 areas, topside offers light through to the 68 cents level before stronger selling is likely to appear even a push through the 0.6820 area and weak stops are likely to find sellers willing to move in on the moves.
  • EUR: Opening a touch stronger the market moved off the 1.0975 area and slowly tested through to the 1.0990 level into the Tokyo session either taking pleasure in the USD discomfort or just enjoying the flow from USD to Euro in general the market then ranged between the 1.0980-90 level for a few hours before pushing through the topside but failing to get anywhere fast testing towards the 1.0995 level before drifting off into the mid 80’s for the move into London. Topside offers likely to be weak on any move through to the 1.1000 areas with congestion around the 1.1020 level and weak stops just beyond the level and opening the market through to the 1.1040-60 areas where congestion is likely, stronger offers then appear on any push through the 1.1080-1.1100 levels. Downside bids through the yesterday’s lows and then increasing as the market moves towards the 1.0890-70 areas, with stops likely on any dip through the 1.0880 areas and opening a longer-term downside move with some congestion around the 1.0860-40 areas and then increasing on any move to the 1.0820-00 areas.

 

Overnight News

USD/CNY:

US weighing currency pact with China as part of partial deal – BBG

China reportedly lowers expectations for progress on trade talks this week after US blacklist – CNBC

Pence says US will demand China open markets in trade talks – BBG

Pence: Senior Chinese leadership will meet at White House – BBG

Pence: Will demand China deal with intellectual property, forced tech transfers – BBG

US-China make no progress in Deputy level trade talks – SCMP

Chinese delegation is planning to leave Washington on Thursday after just one day of principal level talks -SCMP

Chinese delegation refuses to talk about forced technology transfers, a core US grievance in the negotiations – SCMP

Sources say top-level talks to proceed Thursday as planned – BBG

Chinese trade sources tell Fox Business that the Chinese trade team will leave after one day of talks – TWT

White House not aware of change in Liu travel plan at this time – BBG

Trump to allow some US companies to supply Huawei – NYT

US Secretary of commerce Wilbur Ross says China’s value add to to Australian economy is shockingly limited – RTRS

Ross: If China abides by global trade rules every nation will benefit – RTRS

Ross China’s global trade practices have gotten worse -RTRS

Ross: Would prefer not to use tariffs, but tariffs are forcing China to pay attention to our concerns – RTRS

Ross: China causes massive market dislocations due to overcapacity and dumping excess production

US tariffs on China are working, US Secretary of commerce – HAA

USD:

US official sees Kurdish civilians mobilizing for battle

US Forces have halted anti-Islamic state operations

US forces in Syria hunkering down as Turkish attack proceeds

Pence: Never discussed issue of Bidens with Ukraine President – BBG

AUD:

RBA Research paper discusses emergency liquidity injections – BBG

Australia Aug. Home loan approvals rise 0.7% MoM est 2.3% gain – BBG

HKD:

Hong Kong is sinking into recession with no recovery in sight – BBG

JPY:

Japan’s latest bold and desperate experiment in monetary policy – BBG

GBP:

Labour will grant Boris Johnson a general election in November – SUN

UK’s Labour to back Nov 26 election if Brexit not delivered in Oct – SUN

No extension without new referendum or an election, EU insists – TEL

Boris Johnson’s Conservatives hire Kiwi gurus who worked on Morrison’s shock win – BTI

EUR:

Draghi ignored in house advice on decision to restart QE – FT

 

Today’s Data

Actual – A | Consensus – C | Previous – P | Revised R | all timings GMT/UTC

GBP       Rics House Price balance (SEP) A -2.0% | C -7.0% | P -4.0%

JPY         Bank Lending Ex-Trusts YoY (SEP) A 2.2% | P 2.2%

JPY         Bank Lending incl Trusts YoY A 2.0% | P 2.1%

JPY         Machine Orders YoY (AUG) A -14.5% | C -8.4% | P 0.3%

AUD       Home Loans MoM (AUG) A 0.7% | C 2.3% | P 4.2%

AUD       Consumer Inflation Expectation (OCT) A 3.6% | P 3.1%

0700       EUR        German Trade Balance (AUG) C 18.6b | P 21.4b

0930       GBP       Construction Output YoY (AUG) C -0.2% | P 0.3%

0930       GBP       Industrial Production YoY (AUG) C -0.8% | P -0.9%

0930       GBP       Manufacturing Production YoY (AUG) C -0.4% | P -0.6%

0930       GBP       Monthly GDP 3m/3m (AUG) C 0.1% | P 0.0%

0930       GBP       Monthly GDP MoM (AUG) C 0.0% | P 0.3%

0930       GBP       Trade Balance (AUG) C -£1050m | P -£219m

0930       GBP       Trade Balance Non-EU GBP/Mn (AUG) C -2800m | P -1932m

0930       GBP       Visible Trade Balance (AUG) C -£10000m | P -£9144m

1230       EUR        ECB Accounts of September Policy Meeting (SEP)

1330       CAD       New Housing Price Index MoM (AUG) C -0.4% | P -0.4%

1330       USD       Consumer Price Index YoY (SEP) C 1.8% | P 1.7%

1330       USD       Consumer Price Index ex food and energy YoY (SEP) C 2.4% | P 2.4%

1330       USD       Consumer Price Index MoM (SEP) C 0.1% | P 0.1%

1330       USD       Continuing Claims (SEP28) C 1651k | P 1651k

1330      USD       Initial Jobless Claims (OCT5) C 218k | P 219k

1330       USD       Real Avg. Hourly Earning YoY (SEP) P 1.5%

1330       USD       Real Avg. Weekly Earnings YoY (SEP) P 1.2%

2230       NZD       BusinessNZ Manufacturing PMI (SEP) P 48.4

 

Harry Hindsight

 

  • GBP: A slow drift through the Asian session having tested just above the 1.2225 areas before moving through to the 1.2110 areas and holding through to the grey hour in that area. The move into the grey hour saw the market dipping steadily through to the 1.2200 and a couple of attempts to break through, with comments from EU officials one minute using hopeful sound bites and then the next one coming in to contradict the political football seems centred on Northern Ireland for the moment, this lead to a quick stab higher from the London opening testing quickly through to the 1.2235 level pausing and running quickly towards the 1.2300 area before collapsing back almost as quick to hold in a wide range around the opening level, the move through to the NYK session was limited, the move through to the London close saw the market again testing the 1.2200 level and all though it failed the market was unable to push away from the level with any conviction before gravitating back to the level for the close.
  • JPY: Opening around the 107.05 areas the market slipped slowly through into the Tokyo session testing the 106.95 levels before steadily recovering after a short hour of little movement, the market slowly pushed through to the 107.20 areas before holding steady just below the level for the move into the London session, after a short period through London the market again resumed its upward movement if what very slowly pushing through into the NYK session around the 107.40 level before holding the level through to the end of London before pushing through to the high’s testing lightly through the 107.60 level before ranging to the close.
    AUD:
    A reasonably tight range through into the Tokyo session holding around the opening 0.6730 areas before dipping quickly towards the 0.6720 area before eventually starting a steady rise through to the 0.6740 areas and then holding through to the grey hour before dipping towards the opening levels again on the move into London, a limited run to the 0.6745 areas from the opening in London saw the market then holding quietly in the 0.6745-50 area and the high for the day and trading into the first hour of NYK before dropping steadily through to finish the day in London around the opening levels, the run to the close saw a steady drift.
  • EUR: Opening on its lows the market pushed off the 1.0955 area and lightly probed the 1.0960 level before dipping back again, the second attempt saw limited success and taking the market through to the 1.0965 areas before drifting for an extended period through into the grey hour to again test the opening low, however, early London were strong and consistent buyers through the first couple of hours and took the market through to the 1.0980 level before slowing its ascent and quietly testing to the 1.0990 level and ranging close to the level through into the NYK session before slipping back a little and drifting in a long run to the close.

 

Yesterday’s Premiership results

AUD:     Westpac Consumer Confidence (OCT) A -5.5% | P -1.7%

JPY         Machine tool orders YoY (SEP P) A -35.5% | P -37.0%

MXN      CPI YoY (SEP) A 3.00% | C 2.99% | P 3.16%

MXN      CPI MoM (SEP) A 0.26% | C 0.25% | P 0.0%

MXN      CPI Core MoM (SEP) A 0.30% | C 0.29% | P 0.2%

USD       MBA Mortgage Applications (OCT 4) A 5.4% | P 8.1%

USD       Powell takes part in Fed listens event in Kansas City

USD       DOE US Crude Oil Inventories (OCT 4) A 2927k | C 1717k | P 3104k

USD       FOMC Meeting Minutes (SEP 18)

 

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