Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 118.839 | EURUSD 1.2286 | EURJPY 146.014 | AUDUSD 0.81655 | NZDUSD 0.77398 | USDCAD 1.15763 | EURCHF 1.20392 | USDCHF 0.97984 | GBPUSD 1.56696 | EURGBP 0.78407 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.40 | 118.82

EUR/USD             1.2292 | 1.2274

EUR/JPY               146.60 | 145.95

AUD/USD            0.8193 | 0.8155

NZD/USD             0.7796 | 0.7758

USD/CAD             1.1590 | 1.1567

EUR/CHF              1.2049 | 1.2038

USD/CHF             0.9815 | 0.97955

GBP/USD             1.5673 | 1.5651

EUR/GBP             0.78465 | 0.7839
For today

• EUR: A very quiet session overall with the market now beginning to look like a market approaching a festive break, the Euro having made its way to below the 1.2300 again struggles along the 1.2280 area with little direction and by the market little intention of testing the downside. Offers light above the 1.2320 and into the 1.2340-50 areas a move through that level will likely see light stops appearing however, with the market fairly neutral only a push back above the 1.2400 areas is likely to trigger any real impetus. Downside sees bids here at current levels and moving lower into the 1.2250 areas, through this low area the market is still likely to run into supportive bids around the 1.2200 areas however, the 1.2000 level is at that point certainly exposed.
• GBP: Cable has drifted a little from the opening 1.5670 levels dipping below the 1.5660 in very quiet trading as with the Euro. Topside offers from the 1.5680 and through to the 1.5720 before the market sees a little glimmer of light but it is only a glimmer and the market really needs to break above the 1.5760-80 areas to really get a run to test higher. Downside 1.5600 is now becoming a real favourite for the market we’ve been back and forwards through the level however, the movement to the downside has been limited by the 1.5550-40 areas with bids building from 1.5600 each time we move back above, so while its weak it still provides helpful guidance for the bids who quickly move in on the dips, a break through the 1.5540 level still leaves the sentimental level of 1.5500 and as we’ve seen they do like sentimental levels for Cable however, as long as the numbers remain benign the drag of the Euro will be limited. EURGBP bids into the 0.7800 areas may be the only concern if the Euro weakens.
• JPY: After the steady rise in USDJPY during the previous session the move into Asia has seen the 119.00 level pushed steadily until the market squeezed through the 119.20-30 areas triggering weak stops and moving steadily to the 119.40 level, the whole market has been fairly contained and light through the session and USDJPY has done more than most, BoJ new saw very little change to the original plan if anything at all with retention of the current 80T Yen rise in monetary base and the votes 8-1 and no surprises. Topside 119.50 is likely to show a little more resistance with the last attempt a week ago failing however, we have been through the level and although the offers are likely to be a little stiffer the market is again open for a test higher and better offers are likely to be in the run to 119.80-120.00 level with the market opening up once through the 120.20-30 levels for another test for the highs but you have to temper that with a likely less active market today and next week and maybe something for the New Year. Downside has been well travelled over the past 48hrs and although the market is likely to see bids into the 11850-118.00 levels they are not likely to hold against a determined market and better bids into the 117.00 area are more likely.
• AUD: AUDJPY has dominated the market in Oz today with a return to a general bid tone for the market as we move into the festive season and the holiday spreads and liquidity issues. Opening around the 0.8160 levels the market has ground out a steady gain over the session to move back to the 0.8190 levels and the offers now appear around the 82 cent level, obviously nothing so special on the level and a little momentum would take it through to trigger light and weak stops however, above that you run into a stronger level around the 0.8220-30 area and further congestion into the 0.8250 area, in fact the whole way to the 83 cent area is likely to see similar selling and light stops through those levels and a continuation of the grind could be the best you could wish for. The downside is less exciting with more light until you start pushing below the 0.8140 level and support starts to appear and likely extends to the 81 cent levels and although I’ve said it previously opens up a test into the 0.79 handle.
• All of the above is wishful thinking on my part and I half expect the market to become as dull as dishwater, but stranger things happen at sea I’m told.

Overnight News

JPY:

Japan Plans 3.5t Yen Stimulus Package, Nikkei Says

BOJ Keeps Record Easing as Oil’s Fall Challenges Kuroda

JPY/CNY:

Japan to Impose Anti-Dumping Tariff on Imports From China: MOF

USD/JPY:

U.S. and Japan Postpone Defence Guidelines to First Half of 2015

CNY:

China Monetary Tools to Weigh Capital Flows More: Sec. Journal

EU/RUB:

Hollande Breaks EU Ranks on Russia, Floats Sanctions Relief

EUR:

Germany to Borrow Less Than Planned in 2014, Ministry Says

Kenny Says Ireland Has Options for Recapitalization of Banks

Hollande Says France to Be in Line With 2015 Growth Target

NZD:

N.Z. Annual Emigration to Australia Falls to 20-Year Low

NZD:

NZ Businesses Optimistic About Prospects, ANZ Survey Shows

GBP:

U.K. Dec. GfK Consumer Confidence -4 vs Est. -1

Today’s data

Actual = A | Consensus = C | Previous = P | Revised = R All timings GMT

NZD       NBNZ Business Confidence Dec A 30.4 | P 31.5

GBP       GfK Consumer Confidence Dec A -4 | C -1 | P -2

04:30     JPY         All Industry Activity Index M/M Oct A | C 0.20% | P 1.00%

07:00     EUR        German PPI M/M Nov C -0.20% | P -0.20%

07:00     EUR        German PPI Y/Y Nov C -1.10% | P -1.00%

07:00     EUR        German GfK Consumer Confidence Jan C 8.60% | P 8.70%

09:00     EUR        Eurozone Current Account (EUR) Oct C 27.8B | P 31.0B

09:30     GBP       Public Sector Net Borrowing (GBP) Nov C 14.8B | P 7.1B

11:00     GBP       CBI Reported Sales Dec P 27

13:30     CAD       CPI M/M Nov C -0.20% | P 0.10%

13:30     CAD       CPI Y/Y Nov C 2.30% | P 2.40%

13:30     CAD       BoC CPI Core M/M Nov C 0.10% | P 0.30%

13:30     CAD       BoC CPI Core Y/Y Nov C 2.40% | P 2.30%

13:30     CAD       Retail Sales M/M Oct C -0.40% | P 0.80%

13:30    CAD       Retail Sales Less Autos M/M Oct C 0.20% | P 0.00%

Harry Hindsight              

• EUR: A quiet steady Asian session saw the market move around the 1.2400 levels for the session before moving into the grey hours and early pre London sellers entering the market to test below 1.2300 after the release of the SNB rate cut, with CHF weakening quickly moving from 0.9740 areas to above 0.9840 on the USDCHF, the consequence of this lifted the EURCHF quickly higher and driving through profit taking to drive the Euro lower as the EURCHF failed to keep pace with the CHF movement. The market in the Euro bounced off the 1.2290 levels into the London session as the whole market adjusted to the CHF weakness and the opening saw the Euro’s holding above 1.2300 and into the 1.2340 levels. As events turned out the Euro became the whipping post for several currencies as German numbers remained uninspiring and the release of the UK retail sales sent the next cross EURGBP spiralling lower, Euro’s again tested through the 1.2300 levels pushing to the 1.2270 levels and unable from that point to regain the initiative and remaining around the 1.2280 from the NYK session onwards.
• GBP: The Cable gradually moved from the opening 1.5580 levels to the 1.5590 level and through Asia that’s as much as you got, the move into the grey hours saw a light sell as GBPCHF reacted in a similar fashion to the EURCHF, driving the GBP leg a little lower and towards the 1.5550 area matching the previous days lows almost before starting to rally into the London session and then a quick push higher as the retail sales came in a massive 1.60% against the 0.30% expectations and pushing to the 1.5660 levels in the pre-NYK market. EURGBP dropped quickly from the number and steadily extended the losses from the 0.9720 Asian levels and into the 0.7830’s and a quiet close. Cable maintained its levels through the NYK session and was more active than the Euro for a change during the NYK session.
• JPY: USDJPY spent much of the session caught below the 119.00 levels having tested early in the session in Asia to push through it gave ground over the balance and into London, the dip in Euro’s and GBP helped the USDJPY to again close to the level before dropping back again as the London range players sold into the market and the market made its lows touching through the 118.30’s before steadily recovering in the run to NYK. NYK took the market through just before the opening but was unable to extend to far through the 119.20 levels with initial claims helping only for Philly Fed number to send the market back down into the Asian range and a steady movement around the 118.80-119.00 levels into the close.
• AUD: Who would have expected AUDCHF to be that exciting however, after a steady grind from the 0.8120 areas to the 0.8160 level half way through the Asian session the market seemed to recovering that is until liquidity disappeared and the longs lost their appetite allowing the market to sag back towards the lows. The move into the grey hours looked very weak and the saving grace was the AUDCHF not an unattractive cross however, with the SNB suddenly became even more attractive as a carry trade and quickly pushing the Oz to the 82 cent levels and light offers into the London session. The market remained around the 0.8190 levels for several hours and only a slightly stronger USD against the Oz changed the picture in light trading and a move back towards the 0.8150. The final hours were a quiet affair with only slight movement and a finish into the 0.8170 levels.

Yesterday’s premiership results

Actual = A | Consensus = C | Previous = P | Revised = R All timings GMT

NZD       Gross Domestic Product Q/Q Q3 A 1.00% | C 0.70% | P 0.70%

CHF        Trade Balance (CHF) Nov A 3.87B | C 2.41B | P 3.26B | R 3.23B

CHF        SNB Libor Rate  A -0.25% | P 0%

EUR        German IFO – Business Climate Dec A 105.5 | C 105.3 | P 104.7

EUR        German IFO – Current Assessment Dec A 110 | C 110.3 | P 110

EUR        German IFO – Expectations Dec A 101.1 | C 100.9 | P 99.7

GBP       Retail Sales M/M Nov A 1.60% | C 0.30% | P 0.80% | R 1.00%

USD       Initial Jobless Claims (DEC 13) A 289K | C 297K | P 294K | R 295K

USD       Philly Fed Survey Dec A 24.5 | C 30 | P 40.8

USD       Leading Indicators Nov A 0.60% | C 0.50% | P 0.90%

This will be the last Daily Rambles for a week as I go away to entertain the in laws or be entertained I’m not sure which yet but I’m sure I’ll have fun, so have a merry festive period.

Good Luck,

Andy