Daily FX Market Commentary

Andy Harrison

Andy Harrison

Good Morning,

LMAX Close
USDJPY 108.763 | EURUSD 1.10717 | AUDUSD 0.67592 | NZDUSD 0.62839 | USDCAD 1.32008 | USDCHF 0.99496 | GBPUSD 1.28293 |

LMAX highs and Lows 05.00 GMT
Highs | Lows
EURUSD 1.10845 | 1.10715
USDJPY 108.827 | 108.644
GBPUSD 1.28352 | 1.2814
USDCHF 0.99487 | 0.99296
AUDUSD 0.67915 | 0.67531
USDCAD 1.32067 | 1.31961
NZDUSD 0.63019 | 0.62842
EURCHF 1.10190 | 1.10013
EURGBP 0.86439 | 0.86254
EURJPY 120.559 | 120.342
For Today
• GBP: A very quiet move through the Asian session with the market opening around the 1.2830 level and for the most part containing any movement higher, the market dipped in early trading lightly through the 1.2815 areas before ranging between that low and the 1.2835 level to the grey hour holding around 1.2820, no commentary for the most part, likely to see congestion through to the 1.2900 level with congestion likely to increase through to the 1.3000 area where the market could see stronger resistance to the upside however, this is all subjective on what comments are made by either side, downside bids weak through to the 1.2500 level and likely to continue to be choppy on any moves, stops likely to be position behind sentimental values and could cause significant damage on a meltdown through to the 1.2500 and there is no reason to believe that the level could hold with the market possibly believing moves such as Jun and Oct 2016 could appear.
• JPY: A slow drift from the opening saw the market testing through to the 108.65 area before recovering once the fix in Tokyo was completed, the market then tested lightly above the 108.80 level only to drift back to the opening levels for the move into the grey hour unchanged on the day, 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: A quiet run through to the employment data, good numbers if a little below expectations saw the market quickly rise from the lows around the 0.6755 area and testing through the 0.6780 area quickly then struggling for the next 10 pips before dipping back to 0.6780 and holding around the 0.6785 level in a long run to 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: A slow rise through into the Tokyo session saw Euro pushing a little further to test around the 1.1085 area before returning back to the starting position for a quiet run to the grey hour holding in the mid 1.1070’s, topside 1.1080-00 offers remain and likely to be fairly strong with weak stops a possibility on a move through the 1.1120 area however, stronger congestion into the 1.1150 sentimental area slows the market to any approach to the 1.1200 area notwithstanding a Brexit deal, 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
GBP:
Jeremy Corbyn set to back second referendum on new Brexit deal – TIL
Remoaners launch legal action against Boris Brexit deal without knowing what it is – Express
Outlook does not look pretty for Boris Johnson – SKY
EUR/GBP:
EU and UK fear deal is dying as talks stall – BBG
USD/CNY:
Despite trade truce, US, China cold war edges closer – WSJ
US treasury’s Mnuchin says as of now there is no invitation from China for more trade talks in Beijing
USD:
Mnuchin: Still have work to do in documenting trade agreement with China
Mnuchin: Turkey sanctions included entire ministries of energy and defence
Mnuchin: Sanctions intent was not to shut off electricity for Turkish people
Mnuchin: Monitoring Brexit situation carefully
Mnuchin: Incorporating some of Sen. Graham’s sanctions bill provisions in Turkish sanctions
Mnuchin: Pres. Trump expects there will be a cease fire in Turkish actions in Syria
Mnuchin: Increased tariffs on Turkish goods have been successful in the past
Mnuchin: Turkish situation complicated because Turkey is a NATO ally, Kurds fought with US against ISIS
Mnuchin: Has normal discussions with central banks on currency nothing specific about Japan
Mnuchin: Lighthizer and he are prepared to travel to China
Mnuchin: Intellectual property protections in China trade deal are quite broad
Mnuchin: Some technology transfer issues will overlap with phase 2 of China trade deal
Mnuchin: Has not determined how to treat China in next treasury currency report
Mnuchin: Had some discussions with Chinese officials on currency that made treasury more comfortable
Mnuchin: Getting closer to Digital tax agreement with France
Mnuchin: Objective is for US, Chinese presidents to sign trade agreement when they meet
AUD:
RBA’s Debelle Warns of worse to come in Australia’s building slump – BBG
Debelle: Growth in housing demand to see larger price response – BBG
Debelle: Much of Australia construction downturn is still ahead – BBG
Debelle: RBA sees 7% decline in dwelling investment in next year – BBG
Debelle: Home construction turned down sooner by more than we expected – BBG
Debelle: Downturn will directly subtract around 11% point from GDP growth from peak to trough – BBG
Debelle: Downturn dragged on small business incomes, household wealth – BBG
Debelle: Downturn dragged on small business incomes, household wealth – BBG
Debelle: 2020 looks like being the low year for residential construction sector – BBG
JPY:
Japan’s idiotic investment restrictions are blow to global status – Nikkei
EUR:
Bundesbanks Weidmann pushes back on calls for German spending – BBG
OIL:
API reports US Crude stockpiles rose 10.5m BBL last week – BBG

Today’s Data
Actual – A | Consensus – C | Previous – P | Revised R | all timings GMT/UTC
GBP BoE’s Carney speaks at event at Harvard Kennedy School
AUD Employment Change (SEP) A 14.7k | C 15.0k | P 37.9k
AUD Unemployment Rate (SEP) A 5.2% | C 5.3% | P -5.3%
AUD Full Time Employment Change (SEP) A 26.2k | P -13.2k
EUR European Summit in Brussels (DAY 1)
0930 GBP BoE Bank Liabilities/Credit Conditions Surveys
0930 GBP Retail Sales Ex Auto Fuel YoY (SEP) C 2.9% | P 2.2%
1330 USD Building Permits MoM (SEP) C -5.8% | P 7.7%
1330 USD Continuing Claims (OCT 5) C 1670k | P 1684k
1330 USD Housing Starts MoM (SEP) C -3.2% | P 12.3%
1330 USD Initial Jobless Claims (OCT 12) C 215k | P 210k
1330 USD Philly Fed Business Outlook (OCT) C 7.1 | P 12
1415 USD Industrial Production MoM (SEP) C -0.2% | P 0.6%
1415 USD Manufacturing (SIC) Production (SEP) C -0.3% | P 0.5%
1600 USD DOE US Crude Oil Inventories (OCT11) P 2927k
2100 AUD RBA Governor Lowe speaks in Washington

Harry Hindsight

• GBP: Who’s right? Asia saw a slow drift through to test through the 1.2740 level in early Tokyo from the opening just above 1.2770 before slowly pushing through to the grey hour testing the 1.2760 level before rising to close to the 1.2790 level into London, London saw the market dip sharply on the opening through to the 1.2730 level holding for a brief period before the DUP commentary was taken more seriously then add other blockers and pessimism appeared in the market dipping through to the 1.2680 level before buyers reappeared, the recovery was limited testing to the 1.2750 level and nose diving again through to the 1.2660 level to post the low of the day and the market becoming increasingly nervous and choppy through to late in the session, the rally from the low was quickly back towards the 1.2780 areas with the market bouncing around in 50 pip sudden moves several times until the NYK session where the market rose quickly on the opening towards the 1.2840 level dipping back sub figure levels and then running again, the market continued the pattern through to the London close pushing to just short of the 1.2880 level to make the high of the day holding quietly through the 1.2850 level before quickly dropping back to the 1.2830 level for a long run to the close.
• JPY: A reasonably quiet session for the USDJPY opening on its highs and then starting a slow slide into the Tokyo session, fixing supply saw the market drop to the 108.60 level and the market more or less based along that level through the day, the market moved through the day generally trading around the 108.70 level with a couple of pushes through the base line into the NYK opening and then through the 108.80 level however, by the end of the day the market finished only a little lower on the day.
• AUD: As with the USDJPY the market saw limited movement with the initial dip at the same time as the Tokyo fix and falling through to the mid 0.6725 level before recovering a little and holding between the 0.6730-40 areas through into the grey hour before testing lightly through the 0.6740 area and increasing its steady range a little through the London session before dipping away for the run into the NYK session with steady selling testing just below the previous low and then deep into the NYK session the market started a steady recovery through the opening levels then pausing for a drawn out move to the close testing the 0.6765 level and holding just off those levels to the close.
• EUR: The choppiness in the GBP effected the Euro throughout the day with the market drifting from the early highs in Asia just below the 1.1040 level before slipping slowly through to the 1.1030 area and then holding through to the grey hour in that narrow range, early Europeans bought quickly taking the market through to the 1.1060 level and the top of the congestion however, the spike failed to break cleanly and although it took time if fell back to the opening levels and then dipped through on the back of weak numbers to test towards the 1.1020 level holding through to NYK and a repeat of the dip before moving back to above the 1.1040 area and starting a more steady grind through to push the 1.1060 level and continuing its rise through to the 1.1080 before running into stronger offers pausing at the 1.1085 area and dipping back for the run to the close.

Yesterday’s Premiership results
NZD Consumer Price Index YoY (3Q) A 1.5% | C 1.4% | P 1.7%
NZD Consumer Price Index QoQ (3Q) A 0.7% | C 0.6% | P 0.6%
AUD Westpac Leading Index MoM (SEP) A -0.08% | P -0.19%
GBP Consumer Price Index YoY (SEP) A 1.7% | C 1.8% | P 1.7%
GBP Core Consumer Price Index YoY (SEP) A 1.7% | C 1.7% | P 1.5%
GBP CPIH YoY (SEP) A 1.7% | C 1.8% | P 1.7%
GBP Consumer Price Index MoM (SEP) A 0.1% | C 0.2% | P 0.4%
GBP House Price Index YoY (AUG) A 1.3% | C 0.6% | P 0.7% | R 0.8%
EUR Eurozone Consumer Price Index MoM (SEP) A 0.2% | C 0.2% | P 0.1%
EUR Eurozone CPI YoY (SEP) A 0.8% | C 0.9% | P 1.0%
EUR Eurozone CPI Core YoY (SEP F) A 1.0% | C 1.0% | P 1.0%
USD MBA Mortgage Applications (OCT11) A 0.5% | P 5.2%
CAD CPI YoY (SEP) A 1.9% | C 2.1% | P 1.9%
CAD CPI nsa MoM (SEP) A -0.4% | C -0.3% | P -0.1%
USD Retail Sales Advance MoM (SEP) A -0.3% | C 0.3% | P 0.4%
USD Retail Sales Control Group (SEP) A 0.0% | C 0.3% | P 0.3%
USD Retail Sales Ex-Auto and gas (SEP) A 0.0% | C 0.3% | P 0.1%
GBP BoE’s Carney takes part in panel discussion at IMF event
USD Business Inventories (AUG) A 0.0% | C 0.2% | P 0.4% | R 0.3%
USD NAHB Housing Market Index (OCT) A 71 | C 68 | P 68
USD Federal Reserve Beige book
USD Net Long-Term TIC flows (AUG) A -$41.1b | P $84.3b

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