Daily FX Market Commentary

Andy Harrison

Andy Harrison

Good Morning,

LMAX Close
USDJPY 108.656 | EURUSD 1.11244 | AUDUSD 0.68253 | NZDUSD 0.63484 | USDCAD 1.31362 | USDCHF 0.98797 | GBPUSD 1.28915 |

LMAX highs and Lows 05.00 GMT
Highs | Lows
EURUSD 1.11308 | 1.11215
USDJPY 108.686 | 108.524
GBPUSD 1.28935 | 1.28425
USDCHF 0.98835 | 0.98722
AUDUSD 0.68388 | 0.68219
USDCAD 1.31422 | 1.3134
NZDUSD 0.63761 | 0.63448
EURCHF 1.09897 | 1.09837
EURGBP 0.86628 | 0.86306
EURJPY 120.965 | 120.749
For Today
• GBP: A steady drift through the session having opened just short of the 1.2900 levels drifting through to the 1.2845 area before finding some light support to hold the market through to the grey hour just above the 1.2850 area, Topside offers light through to the 1.3000 areas with possibly strong congestion through the level for the day, a push through the level is likely to see stops appearing and while there may be congestion however, this is all dependent on the Saturday House of Commons result, given that there is likely to be no guarantees for the Sunday opening with the topside likely to be open through to the 1.3500 level and the downside too the 1.2000 at least, no result and there will be some scrambling but it will depend on the commentary forthcoming after the vote is lost. Downside bids likely to be light through to the 1.2750 areas with limited congestion through to the 1.2700 areas and a break here opens up the 1.2500 level and then your guess would be as good as mine.
• JPY: A very minor range for the USDJPY, dipping a little from the opening around the 108.65 areas and moving into the Tokyo session testing the 108.55 level, Tokyo fix saw the market push a little above the opening level but unable to penetrate the 108.70 area holding for a few hours around the 108.66-68 area before running out of effort and drifting through to the 108.54 level with a minor attempt at the 108.50 area before holding just off the 108.52 area lows into the grey hour, Topside offers 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 around the 0.6825 level the Oz was unable to find too much interest, pushing quietly through to test towards the 0.6840 area before narrowing its range down and centring around the 0.6830 level for the move 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 faces stronger selling with the market already cleared through to 0.6820 with no real effect to the offers and congestion likely to be strong through the 0.6840-60 levels and increasing on any push through towards the 0.6880 area and the 69 cents level.
• EUR: Euro maintained a narrow range through the day holding around the opening 1.1125 levels testing weakly above the 1.1130 level and then slipping down to the lows around 1.1122 in quiet trading, Topside offers increasing on a push towards the 1.1150 level with a long term trend line in the area and likely then increasing on a move through the 1.1170 area and into the 1.1200 area with congestion likely through the level to cancel out any weak stops, Downside bids light through to the 1.1060 level then minor congestion through to 1.1040 before the market starts to become more supportive on any dips towards the 1.1000 levels.

Overnight News
GBP:
UK heading for a fairly hard Brexit if Johnson deal passes – RTRS
Unionists in Northern Ireland feel betrayed by Brexit deal – NYT
Brexit deal faces familiar obstacle – Politico
Scottish Court to review bid to stop illegal Brexit deal – BBC
EUR/GBP:
EU shuts down talk of fallback if deal defeated – BBG
USD/EUR:
USTR Confirms planned 10% and 25% tariffs on EU goods to take effect today OCT18 –
US trade representative office, in notice to industry, confirms that planned tariffs on EU goods to take effect
AUD:
Lowe: Australia housing market has turned around – BBG
Lowe: There is a high risk that the main effect of lower interest rates will be to push up prices of existing assets rather than stimulate investment in new assets – BBG
Lowe: Not optimistic that macro-prudential tools can effectively mitigate negative risks of lower interest rates because many risks reside outside formal banking sector – BBG
Lowe: Would not make any assumptions that RBA will need to turn to far lower or negative rates to meet inflation targets or restore trend growth – BBG
Lowe: Negative interest rates are extremely unlikely in my country – BBG
Lowe: Low rates working, economy slowly improving – BBG
Banks are not the right place to have your money – AFR
USD/CNY:
Trump says China will buy $50b a year of US Agriculture, that’s not what China says – WPT
CNY:
China’s economic growth worse than expected, sinking to new low of 6% in 3Q amid trade war – SCMP

Today’s Data
Actual – A | Consensus – C | Previous – P | Revised R | all timings GMT/UTC
JPY National Consumer Price Index YoY (SEP) A 0.2% | C 0.2% | P 0.3%
JPY National Consumer Price Index Ex-Fresh Food YoY (SEP) A 0.3% | C 0.3% | P 0.5%
JPY National CPI Ex-Fresh Food, Energy YoY (SEP) A 0.5% | C 0.5% | P 0.6%
CNY GDP YoY (3Q) A 6.0% | C 6.1% | P 6.2%
CNY GDP YTD YoY (3Q) A 6.2% | C 6.2% | P 6.3%
CNY GDP s.a. QoQ (3Q) A 1.5% | C 1.5% | P 1.6%
CNY Fixed Assets Ex Rural YTD (YoY) (SEP) A 5.4% | C 5.5% | P 5.5%
CNY IP YoY (SEP) A 5.8% | C 4.9% | P 4.4%
CNY IP YTD YoY (SEP) A 5.6% | C 5.5% | P 5.6%
CNY Property Investment YTD YoY (SEP) A 10.5% | P 10.5%
CNY Retail Sales YoY (SEP) A 7.8% | C 7.8% | P 7.5%
CNY Retail Sales YTD YoY (SEP) A 8.2% | C 8.1% | P 8.2%
CNY Surveyed Jobless Rate (SEP) A 5.2% | P 5.2%
EUR European Summit in Brussels (DAY 2)
GBP UK Sovereign Debt to be rated by Fitch
1500 USD Leading Index (SEP) C 0.1% | P 0.0%
1800 USD Baker Hughes US Rig Count (OCT 18) P 856
1845 GBP Governor Carney Speaks in Washington

Harry Hindsight

• GBP: A quiet move through the Asian session with the market pushing a little higher eventually moving off the 1.2820 level and testing only through the 1.2835 level before slipping back and holding the 1.2820 areas through to the grey hour, selling in the last minutes of the Grey hour saw the market quickly dip through to just below the 1.2750 level before bouncing and holding into the London opening before starting a steady rise into early morning, with talks albeit finished and the media waiting the market managed to push back to the 1.2835 level in steady buying, the commentary by PM Johnson that a deal was done saw the market quickly push through to the 1.2990 area before dipping back to below 1.2950 as resistance kicked in a little late and the market steadily drift once it became apparent that it was no different than the Theresa May accomplishments per se and it will still have to be voted through the House of Commons which is signalled for a Saturday sitting however, at best the vote will be tight and on assumes that the opposition will completely block the deal no matter what they say just because they are the opposition, the market tested steadily through to the 1.2850 level for the move into the NYK session and either through pessimism or profit taking the market dipped through to the 1.2760 level again triggering weak stops then bouncing back to the 1.2800 level and slowly grind through to the end of the London session holding around the 1.2850 areas, the run to the close saw a limited rise through to just short of the 1.2900 level in quiet trading as the market awaits the next twist or turn.
• JPY: A little bit more movement through the day with the market slipping lower from the opening around the 108.75 areas testing lightly through to 108.65 before starting a recovery as the USD buyers moved in for the weekend roll, testing lightly through the 108.80 area the market then drifted through to the grey hour and the opening levels, London were slow buyers and a round or two of GBPJPY buying saw the USDJPY push through the 108.90 areas before starting a slow steady drift through the day to make the lows into the London close testing through the 108.45 area before recovering a little for the move to the close.
AUD: Drifting a little from the opening the market moved through to the release of the employment numbers holding around the 0.6755 area before jumping quickly on the back of the better numbers to test quickly to the 0.6780 areas and then grind a little further to test just above the 0.6790 level, the market then held in a tight range between the 0.6780-90 levels through to the grey hour and early London saw a slight sign of selling before starting a strong steady climb from the London opening to push through the 68 cents level easily and test through to the 0.6830 areas peaking just above the level and then holding in a tight range through into the NYK session and narrowed even further but remaining above the 0.6820 to the close.
EUR: Euro meandered a little through the Asian session pushing from just above the 1.1070 level into the NYK session unable to push through the 1.1080 until the Tokyo fix finished and then pushing through to the 1.1085 area before spending the rest of the session drifting through into the London session to make the lows by testing the 1.1065 level, a light rally before the PM Johnson announcement saw the market extend the early highs then after a brief dip and the market rising steadily at first but pushing quickly through to the 1.1140 before dipping back and then ranging around the 1.1120 levels narrowing down as the day ran on but not deviating from the mid 1.1025 area.

Yesterday’s Premiership results
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)
GBP BoE Bank Liabilities/Credit Conditions Surveys
GBP Retail Sales Ex Auto Fuel YoY (SEP) A 3.0% | C 2.9% | P 2.2%
USD Building Permits MoM (SEP) A -2.7% | C -5.8% | P 7.7%
USD Continuing Claims (OCT 5) A 1679k | C 1670k | P 1684k | R 1689k
USD Housing Starts MoM (SEP) A -9.4% | C -3.2% | P 12.3% | R 15.1%
USD Initial Jobless Claims (OCT 12) A 214k | C 215k | P 210k
USD Philly Fed Business Outlook (OCT) A 5.6 | C 7.1 | P 12
USD Industrial Production MoM (SEP) A -0.4% | C -0.2% | P 0.6% | R 0.8%
USD Manufacturing (SIC) Production (SEP) A -0.5% | C -0.3% | P 0.5% | R 0.6%
USD DOE US Crude Oil Inventories (OCT11) A 9281k | C 2495k | P 2927k
AUD RBA Governor Lowe speaks in Washington

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