Daily FX Market Commentary

Andy Harrison

Good Morning,

LMAX Close

USDJPY 108.399 | EURUSD 1.10278 | AUDUSD 0.67763 | NZDUSD 0.62983 | USDCAD 1.32347 | USDCHF 0.99727 | GBPUSD 1.26059 |

LMAX highs and Lows 05.00 GMT

                                Highs | Lows

EURUSD               1.10334 | 1.10218

USDJPY                108.453 | 108.280

GBPUSD              1.26400 | 1.26032

USDCHF               0.99777 | 0.99643

AUDUSD             0.67885 | 0.67664

USDCAD              1.32349 | 1.32222

NZDUSD              0.63139 | 0.62941

EURCHF               1.10025 | 1.09891

EURGBP              0.87500 | 0.87239

EURJPY                119.614 | 119.420

For Today

• GBP: Dropping from the opening around the 1.2630 levels the market slipped through to the 1.2605 area and that became the base for the session with the market making only one push back to the opening level and then dipping back and holding quietly through to the London session, Topside offers increasing the closer the market moves to the 1.2700 level with congestion likely through to the 1.2765 area however, with increased selling comes the risk of increased weak stops on a push through the 1.2710-30 areas with congestion likely to meet those stops and a possibility of the market continuing through to stronger stops above the old trend line and opening the market to a test to the 1.2800 and a stronger line in the sand with the potential of a longer move through to the 1.30 area where strong offers remain, downside bids increasing however, 1.2550 is likely to start seeing stronger congestion through to the 1.2500 level before the market sees stronger stops on a move through and the potential for the market to collapse back to the 1.2300 level before stronger bids start to appear.
• JPY: A very limited day for the JPY with the market opening around the 108.40 level and testing through to the 108.45 areas a couple of times but unable to capitalize on the move and dipping back to the 108.30 level on each occasion and running through to the grey hours holding just above the 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 just below the 0.6780 areas the market slipped through to the 0.6765 area to make the low in early Tokyo before rising through towards the 0.6790 level as the RBA minutes were released, the run to the grey hours saw the market drifting through the session and held around the opening levels into the grey hour, 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: Limited range but a steady rise through the session overall, opening around the 1.1025 areas the market moved quietly through to the Tokyo session before dipping a little around the Tokyo fix to test to the 1.1020 area before starting a slow push back through to the 1.1035 level there was some minor gyration however, after a little dip the market ran into the grey hour holding the highs, Topside congestion through the 1.1040-60 area is likely to be rebuilding however, a push through those levels will likely see stronger offers increasing on any run to or through the 1.1080 level and continuing into the 1.1100 and strong stops likely through the 1.1120 areas, 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

USD:

US election risks shine light on implied FX vols BBG

AUD:

ANZ weekly consumer confidence falls 1.2% to 110.9 BBG

RBA: rate cut to strengthen starting point for economy

RBA: Case for cut outweighed risks of dwindling ammunition

RBA: Recent run of data, on balance, had been on softer side

RBA: Various factors didn’t outweigh case for Oct1 rate cut

RBA: Only a limited risk of excessive household borrowing

RBA: Positive effect of lower rates likely to support spending

RBA: Reiterated its prepared to ease policy further if needed

RBA: Employment growth forecast to slow over the period ahead

RBA: Discussed if stimulus may be less effective than in past

RBA: Board discussed if some stimulus should be kept in reserve

RBA: Transmission of rate cuts to AUD likely to be working

Australian economy to limp along as consumers struggle RTRS

Reuters poll: Oz CPI inflation seen averaging 1.6% in 2019, 2.0% in 2020 and 2021

Reuters poll: Oz median economic growth forecast 1.9% for 2019, 2.5% in 2020 and 2021

EUR/GBP:

3 EU nations say Brexit talks likely to go beyond summit APW

EU Mulls new emergency summit to get Brexit deal done BBC (vague report no accreditation)

GBP/EUR:

No time for Brexit deal before extension deadline Finnish PM SKY

Brexit deal could go down to Halloween wire after No 10 admitted that one may not be done by this week’s EU summit Sun

Brexit deal hopes rise as last minute compromises are made TEL

Backstop compromise is still on, but trade issue could still derail Brexit agreement – TEL

CNY:

Chinese investment in Western countries drop on tech leak fears – TWT

USD/TRY:

Trump orders Turkey sanctions, US scrambles for Syria exit APW

Mnuchin: Will remove sanctions based on what Turkey does

Mnuchin: US will issue license to continue to let Turkey buy fuel

CNY/USD:

China wants more talks before signing Trump’s phase one deal BBG

ASIA:

Asia’s worst aging fears begin to come true Nikkei

AUD/NZD:

APRA Urges more capital to held against NZ Banks

IMF:

Global banks may grow more vulnerable to USD disruption

JPY:

Japan LDP approves bill limiting Foreign Investment BBG

Old headline from last week Kiyota TSE Head, Japan Foreign investment rule “Idiotic” – FT

Today’s Data

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

AUD       RBA Oct. rate meeting minutes (OCT)

CNY        Consumer Price Index YoY (SEP) A 3.0% | C 2.9% | P 2.8%

CNY        Producer Price Index YoY (SEP) A -1.2% | C -1.2% | P -0.8%

JPY         Industrial Production YoY YoY (AUG F) A -4.7% | P -4.7%

JPY         Tertiary Industry Index MoM (AUG) A 0.4% | C 0.6% | P 0.1%

0930       GBP       BoE Governor Carney speaks in Parliamentary Testimony

0930       GBP       Average weekly Earnings (3M/YoY) (AUG) C 4.0% | P 4.0%

0930       GBP       Claimant Count Rate (SEP) P 3.3%

0930       GBP       Employment Change 3m/3m (AUG) C 26k | P 31k

0930       GBP       ILO Unemployment Rate 3mths (AUG) C 3.8% | P 3.8%

0930       GBP       Jobless Claims Change (SEP) P 28.2k

0930       GBP       Weekly Earnings ex bonus (3M/YoY) (AUG) C 3.7% | P 3.8%

1000       EUR        Eurozone ZEW Survey (Economic Sentiment) (OCT) P -22.4

1000       EUR        German ZEW Survey Expectations (OCT) C -26.8 | P -22.5

1000       EUR        German ZEW Survey Current Situation (OCT) C -23.0 | P -19.9

USD       Monthly Budget Statement (SEP)

1400       CAD       Existing Home Sales MoM (SEP) C 2.0% | P 1.4%

2245       NZD       Consumer Price Index YoY (3Q) C 1.4% | P 1.7%

2245       NZD       Consumer Price Index QoQ (3Q) C 0.6% | P 0.6%

Harry Hindsight

 

• GBP: Opening in line with Friday after a premarket dip lower saw the market holding just below the 1.2650 areas through into Tokyo before dipping through steadily to the 1.2600 areas and holding for a few hours just below the 1.2600 area, the market recovered a little leading into the grey hour before dipping away from the figure level to push through to the 1.2555 area and a quiet drift through into the NYK area where optimism for a deal returned and the market moved in a steady rise through to the opening levels again however, the run to the London close saw a similar pessimistic view reappear and the market drifting back to the 1.2555 level but at least not testing back to the early NYK lows around the 1.2515 level and holding the 1.2550 level until the final 30 mins and a new news clip about extending meetings to try and facilitate the deal and the GBP pushed back to towards the opening just above the 1.2600 level.
• JPY: Opening a little lower the early part of the session quickly filled the gap and then continued through into the early part of Tokyo pushing through to the highs around the 108.50 level before fixing supply sent the market lower through to the 108.30 level and then slowing and slipping slowly through to the 108.20 level and the low for Asia, grey hour sellers managed to nudge it a little lower before moving through into the Brexit rumoured session, a quick dip in early morning in London saw the market test towards the 108.00 area before starting a slow steady rise through to deep into London pushing the 108.45 level and holding around the 108.40 areas in a long run to the close.
• AUD: A limited day for the most part with the market holding the opening around the 0.6790 level for several hours with one brief spike through the 68 cents level to make the highs early in Tokyo before dropping away from the level to test back to the 0.6770 area with limited news, the move to the London session saw the market climbing back to that opening 0.6790 area however, London became a consistent seller of the Oz and the market slowly testing back to the 0.6755 areas and holding for several hours into the NYK session before starting a slow rise through to the end of London and holding in the 0.6775 areas through to the close.
• EUR: Some testing to both sides of the opening levels through the day saw the market centred around the 1.1030 areas, dipping slowly from the opening around the 1.1035 area through to base along the 1.1025 area through into late Tokyo before again pushing to the opening levels and the move into the grey hour saw the rally quickly reversed and the market pushing through to just above the 1.1010 level with Eurozone IP numbers disappointing however, Brexit dominated the market in both GBP and Euro and Euro pushed off those lows and tested steadily through to trade to just above the 1.1040 level to make the high before as with the previous move dropping back this time to the opening level, NYK did less with the Euro and the market slowly descended to sub 1.1020 before recovering a little to run to the close holding just below the 1.1030 levels.

 

Yesterday’s Premiership results

NZD       Performance Services index (SEP) A 54.4 | P 54.6

CNY        Trade Balance A $39.65b | C $34.75b | P $34.83b

EUR        Eurozone Industrial Production wda YoY (AUG) A -2.8% | C -2.5% | P -2.0%

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