Daily FX Market Commentary

Andy Harrison

Andy Harrison

Good Morning,

LMAX Close
USDJPY 108.40 | EURUSD 1.1036 | AUDUSD 0.67942 | NZDUSD 0.63394 | USDCAD 1.31999 | USDCHF 0.99684 | GBPUSD 1.26492 |

LMAX highs and Lows 05.00 GMT
Highs | Lows
EURUSD 1.10380 | 1.10242
USDJPY 108.518 | 108.199
GBPUSD 1.26460 | 1.25906
USDCHF 0.99835 | 0.99577
AUDUSD 0.67996 | 0.67726
USDCAD 1.32176 | 1.31918
NZDUSD 0.63363 | 0.62985
EURCHF 1.10104 | 1.09819
EURGBP 0.87570 | 0.87258
EURJPY 119.696 | 119.308
For Today
• GBP: Premarket saw Cable dip to the 1.2610-20 areas before opening unchanged for the day and slowly testing through to the 1.2600 level in midsession and although testing through the level remained in the area despite the weekend comments from the EU as they try to squeeze more water from the stone, the move through to the grey hour saw the market rising slightly from the figure level, Topside offer around the 1.2700 level and congestive offers in the area from the lows in July, a push through to the 1.2750 area will likely see the same congestion and only a break above the 1.2765 area will free the market to test the limited 1.2800 area with possibly strong stops involved, downside bids likely to be close to the 1.2500 level however, if unfavourable news appears they are likely to disappear quickly and the market will then be open to a very deep and sudden move through to the 1.2300 area before some bids start to appear to slow the descent however, one does have to be cautious with anything said.
• JPY: Opening a little lower just below the 108.40 level and the market filled the gap and tested quietly through to the Tokyo session to test above the 108.50 level and make the high for the session before dropping quickly off to the opening level and slowly testing through to the 108.20 area, the midsession saw a slow rise through to the grey hour to just above the 108.35 level. Topside offers appear through the 108.80 level and likely to increase into the 109.00 level with limited resistance to a slight move through the level with increased offers likely to appear in the 109.20-40 areas before weak stops appear and opens the market to increasing congestion on any push through the 109.50 levels and increasing further on any push to the 110.00 level. Downside bids light back through the 108.00 areas with weak stops likely on a dip through the 107.80 area and congestion likely through the 107.50 level and continuing into growing bids in the 107.00 areas.
• AUD: Opening a little lower the market pushed from the 0.6790 area into the Tokyo session pushing through to just short of the 0.68 cents area before dipping back to the opening and then came Tokyo tix seeing the figure broken for the high of the session before dipping sharply from the level and testing through to the low 0.6770’s before halting and slowly rising through to the grey hour pushing the opening levels. 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: A slow drift from the slightly weaker opening, moving from the 1.1035 level the market drifted through to the mid 1.1025 areas before holding the level for the bulk of the session before slowly rising through to the opening levels for the move into the grey hour, Topside offers likely to continue 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 to be stronger, some weak patches but increasing resistance into the 1.1080-1.1100 levels. Downside bids through the 1.0940-60 area with likely weak stops on any dip possibly sweeping those aside and then increasing as the market moves towards the 1.0900-1.0870 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
EUR/GBP:
Fury as EU demands more Brexit Concessions – TEL
Brexit deal hangs in balance as deadline looms – DJ
Weekend negotiations between UK and EU continue Monday says EU – DJ
EU says Johnson’s plan not yet good enough – BBG
IRA plotting to lure and ambush police at Customs posts in No deal Brexit scenario – TEL
New Brexit Index reveal UK-EU economic relationship decline – PAN
USD/CNY:
Trump’s China handshake lifts spirits but not the sober outlook – BBG
Beijing warns of more uncertainty in trade war negotiations despite constructive talks in Washington – SMP
China is cool on Trump trade deal its economy still needs – BBG
Trump touts US-China phase one trade deal, delays Tariffs – BBG
Trump: He does not think deal, will fall apart over next few weeks, though there is a possibility – BBG
Moody’s: US-China potential deal represents temporary de-escalation in tensions – RTRS
Moody’s: A limited US China agreement won’t resolve underlying areas of disagreement between the two sides – RTRS
Moody’s: Expect further rounds of US-China talks to remain challenging with further potential for Financial markets volatility – RTRS
USD/CHF:
US mulling tariffs on Swiss Pharmaceutical products – BBG
Huawei not part of Saturday’s China US agreement, US says – BBG
EUR:
ECB’s Holzmann says Draghi’s QE policy is counterproductive – BBG
Holzmann: Some ECB members think policy is also counterproductive – BBG
Holzmann: Dragi didn’t consider diverging views in ECB – BBG
CNY:
Historic slump in China car market continues as sales drop 6.6% – BBG
China’s Xi warns attempts to divide China will end in shattered bones – RTRS
China Sep. imports -8.5% YoY in USD terms vs. est. -6.0%
China Sep. Exports -3.2% YoY in USD terms vs. est. -2.8%
China customs spokesman Li: Stable economy contributed to trade resilience -Trade the news
Li: Domestic growth provided strong cushion to counter external challenges -Trade the news
Li; Full year trade will maintain trend of being overall stable -Trade the news
Li: Trade frictions with US did bring pressure to China trade, progress in trade talks are positive for US-China trade -Trade the news
USD:
US house poised to vote on bill supporting Hong Kong protests – BBG
Hunter Biden disputes Trump attacks of his work, wades into impeachment fight – RTRS
US set to pull remaining troops from north Syria after Turkish incursion – RTRS
Trump agrees with need for crippling Turkey sanctions – BBG

Today’s Data
Actual – A | Consensus – C | Previous – P | Revised R | all timings GMT/UTC
NZD Performance Services index (SEP) A 54.4 | P 54.6
CNY Trade Balance A $39.65b | C $34.75b | P $34.83b
CNY New Yuan Loans CNY (SEP) C 1360.0b | P 1210.0b
CNY Foreign Direct Investment P 3.6%
CNY Trade Balance CNY (SEP) C 253.8b | P 239.6b
NZD Reinz House Sales YoY (SEP) P -6.1%
1000 EUR Eurozone Industrial Production wda YoY (AUG) C -2.5% | P -2.0%

Harry Hindsight

• GBP: A little drift from the opening with the market testing back to the 1.2430 area before steadily rising through to deep into London before moving significantly, while talks between the two sides continued the market saw more into what was being reported than was actually going on, dipping back towards the 1.2400 level initially the market pushed from those lows through the 1.2500 area before dipping a little however, the pattern continued rising from the 1.2500 level and this time pushing to just short of the 1.2580 level before running again to the 1.2680 level and finally pushing lightly through the 1.2700 level before holding quietly for an hour or so just below the figure level and then drifting off into the close.
• JPY: USDJPY ran quietly through the Asian session rising from the lows in Tokyo around the 107.85 level before testing through the 108.10 level to set the high for the session before running into the London session holding around the 108.00 areas, as GBP moved so did the USDJPY and the market rose steadily through London early morning to push into the NYK session testing the 108.50 level, the market struggled with the level with several pushes to the 108.60 area and after a few hours dipped back to hold around the 108.50 level into the close.
• AUD: A steady rise through the day for the Oz initially making the lows into the Tokyo session before recovering and slowly pushing through the Tokyo session to test above the 0.6780 level before holding quietly just below for the move into London, steady buying saw a gradual rise through the 68 cents level however, the market struggled with the level and fresh buying from the NYK session saw the market high just through the 0.6810 area before drifting through the session and testing back to the 0.6790 for the close.
• EUR: Not so strong as the Cable although mirroring the general timber of the market, rising slightly through into the Tokyo session from the opening lows just above the 1.1000 levels and then pushing through midsession in Tokyo to just below the 1.1020 area, the move through into the grey hour testing through the 1.1020 area and then dipping back with flat data from Germany, the move in Cable say the Euro push through the level with conviction and run through to just before NYK to test above the 1.1060 levels and the high for the day, the market dipped back in NYK initially to the 1.1040 level before repeating the move to the same high again failing the second time the market dipped deeper through the 1.1030 level before bouncing and chopping around through to late into the session before settling into a quiet drift to the close.

Yesterday’s Premiership results
NZD BusinessNZ Manufacturing PMI (SEP) A 48.4 | P 48.4
EUR Germany Sovereign debt to be rated by S&P
EUR German Consumer Price Index YoY (SEP F) A 1.2% | C 1.2% | P 1.2%
EUR German Consumer Price Index EU Harmonized YoY (SEP F) A 0.9% | C 0.9% | P 0.9%
MXN Industrial Production NSA YoY (AUG) A 1.3% | C -1.9% | P -1.7%
CAD Net Change in Employment (SEP) A 53.7k | C 7.5K | P 81.1k
CAD Unemployment Rate (SEP) A 5.5% | C 5.7%B | P 5.7%
CAD Full Time Employment Change (SEP) A 70k | C 20.8k | 23.8k
CAD Hourly Wage Rate Permanent Employees YoY (SEP) A 4.3% | C 3.8% | P 3.8%
USD Export Price Index YoY (SEP) A -1.6% | P -1.4%
USD Import Price Index ex Petroleum MoM (SEP) A -0.1% | C -0.1% | P 0.0%
USD U. of Michigan Sentiment (OCT P) A 96 | C 92 | P 93.2
USD Baker Hughes US Rig Count (OCT11) A 856 | C 847 | P 855

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