Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 114.192 | EURUSD 1.05996 | AUDUSD 0.7477 | NZDUSD 0.71036 | USDCAD 1.31776 | USDCHF 1.01177 | GBPUSD 1.20472 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.06594 | 1.05982

USDJPY                 114.284 | 113.373

GBPUSD               1.21164 | 1.20177

USDCHF               1.01175 | 1.00684

AUDUSD              0.75371 | 0.74647

USDCAD               1.31892 | 1.31061

NZDUSD               0.71589 | 0.70959

EURCHF                1.07342 | 1.07208

EURGBP               0.88194 | 0.87911

EURJPY                 121.200 | 120.819

For Today

• EUR: A reasonably quiet session saw the Euro moving quietly higher through the session, rising in the opening of Tokyo the market touched towards the 1.0620 areas before limping a little through to the middle of the session, the market then started a steady and continual rise through to the 1.0650 areas and into the grey hours, light congestion through the current highs with possible weak stops on a push through the 1.0660 with stronger offers then appearing on a move towards the 1.0700 levels, stops likely on a push through the 1.0710-15 areas and the market then open to the 1.0740 areas before a renewal of stronger offers. Downside bids light into the 1.0600 areas with congestive bids dominating and those bids likely to continue through to the 1.0540 levels before some weakness appears through to 1.0500-1.0480 level.
• GBP: Early selling saw the market push down from the 1.2050 levels in what appeared to be system led selling with the market testing to the 1.2020 before the market started to recover with through to the Tokyo opening pushing through the opening levels and holding around the 1.2050 levels for a few hours, further USD weakness appeared in the market as President elect criticized a cornerstone of House Republicans on corporate tax plans which was an alternative to proposed import tariff, in the interview with the Wall street Journal he was asked about USD strength said it was already too strong, this led to Cable pushing steadily through towards the 1.2100 levels through the session and into the grey hours and breaking through on the move.
• JPY: Quiet start to the day with the USDJPY dipping from the opening 114.20 levels on the move into the Tokyo session dipping to the 113.90 areas before seeing fixing demand taking the market towards the 114.30 levels and the highs, Trumps comments out in the public domain saw a steady decline in the USD dropping steadily through to the 113.40 levels in the grey hours. Topside offers light through the 114.50 levels likely to see weakness appearing on a run to the 115.00 levels, then limited congestion on further rises, downside bids into the 113.20 areas with a push through the 112.80 areas likely to see stops appearing and a possible test to the 112.00 areas and the market becoming very vulnerable to stronger test lower.
• AUD: The Oz traded very quietly through the early part of the session with the market drifting through the 0.7470 areas before regaining the opening levels around the 0.7480 area and pushing through to the grey hours above the 0.7510 areas and continuing through into the grey hours, offers into the current areas with stops likely on a breakthrough of the 0.7560 areas and then sentimental offers into 76 cent area with the market then able to challenge higher on a push through the 0.7650 area. Downside bids light through the 0.7450 areas and then limited bids until just below the 74 cent levels protects a lightly congested area around the 0.7350 areas.

Overnight News

GBP/EUR:

May Said Ready to Announce U.K. Will Leave EU Single Market

GBP:

U.K.’s May Said to Announce 12-Point Plan for Brexit: Telegraph

U.K. Business Confidence Frozen as Firms Await Brexit Details

JPY/USD:

Japan’s Aso Says Contents of Trump’s Statements Are Changing

USD:

Trump Says GOP Border Adjustment Tax Plan ‘Too Complicated’: WSJ

CNY:

China Shouldn’t Be Afraid to Float the Yuan: Securities News

SGD:

Singapore Dec. Non-Oil Domestic Exports +9.4% Y/y; Est. +5.8%

KRW/JPY:

1. Korea’s Song: No Plan to Seek Restart of Japan FX Swap Talks

AUD:

Australia Nov. Home-Loan Approvals Rise 0.9% M/M; Est. 0.3%

NZD:

New Zealand Home Sales Fell 10.7% in December From Year Ago

N.Z. Business Confidence Steady, Points to Inflation, NZIER Says

Today’s data

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

AUD       Home Loans Nov A 0.90% | C 0.00% | P -0.80% | R -0.60%

JPY         Industrial Production M/M Nov (F) A 1.50% | C 1.50% | P 1.50%

09:30     GBP       CPI M/M Dec C 0.30% | P 0.20%

09:30     GBP       CPI Y/Y Dec C 1.40% | P 1.20%

09:30     GBP       RPI M/M Dec C 0.40% | P 0.30%

09:30     GBP       RPI Y/Y Dec C 2.30% | P 2.20%

09:30     GBP       PPI Input M/M Dec C 2.40% | P -1.10%

09:30     GBP       PPI Input Y/Y Dec C 15.50% | P 12.90%

09:30     GBP       PPI Output M/M Dec C 0.40% | P 0.00%

09:30     GBP       PPI Output Y/Y Dec C 2.90% | P 2.30%

09:30     GBP       PPI Output Core M/M Dec C 0.20% | P 0.00%

09:30     GBP       PPI Output Core Y/Y Dec C 2.20% | P 2.20%

09:30     GBP       House Price Index Y/Y Nov C 6.10% | P 6.90%

10:00     EUR        German ZEW (Economic Sentiment) Jan C 18.4 | P 13.8

10:00     EUR        Eurozone ZEW Survey (Economic Sentiment) Jan C 24.2 | P 18.1

10:00     EUR        German ZEW (Current Situation) Jan C 65 | P 63.5

13:30     USD       Empire State Manufacturing Jan C 8.5 | P 9

Harry Hindsight              

• EUR: Brexit new dominated the opening of the session with the Euro opening around the 1.0630 areas and testing through to the 1.0615 quickly before moving into the Tokyo session just above the opening levels, overall volumes were not so bad given the Martin Luther King bank holiday in the US, Euro drifted lower towards the grey hours with early Europeans buying the market back to the opening levels and the early London traders sold it again taking the market to the lows around the 1.0580 areas, the rest of the bank holiday was taken with the market slowly rising back to the 1.0600 areas to the close.
• GBP: The mover of the day with the market opening 160 pips or so lower a little messy at the start with a lot of concern about the downside liquidity however, the market held up and traded from the low 1.2020 areas and into the 1.0250 levels through into the Tokyo session, the market ranged quietly through the bulk of Tokyo between the 1.2020-40, grey hours selling saw the market test to its lows 1.1986 before bouncing fairly firmly higher pushing to 1.2060, possibly, Newspaper reports about the possible content of PM Theresa May’s coming speech on Brexit would seem to have been released to limit the impact on the day a very dangerous plan if that was the case, this then was countered by comments from President elect on the subject generally of Europe, he stated that Great Brexit would probably not be the last and that the straw that broke the camel’s back was increased immigration at the behest of Angela Merkel, he mentioned that NATO was obsolete, pointing out that only Five members continued to comply with the financial requirements on spending and Europe had been slow to respond to terrorism, the market managed therefore to push off the lows and remain in a reasonably tight 1.2040-80 range through to the close of the day, of course both the German Chancellor and French President both responded in kind.
• JPY: USDJPY was active through the Asian session, with the market only slightly weaker, the market moved quietly in the first hour with the GBP holding attention and then USDJPY dropped from the opening 114.45 areas to the 114.10 with stronger domestic CGPI being released, the market recovered slowly through the session and then the comments from Trump saw the USD sold back this time to the 114.00 areas, the move towards the grey hours again saw a weak recovery however, by the time we moved into the period the market again was testing the lows and the follow through of the early Europeans saw the market testing towards the 113.60 levels, this time the recovery was just that as the move into the London session saw the market steadily push through to the 114.40 areas and then range between there and the 114.00 levels to the close.
• AUD: With the early session dominated by the crosses, early Oz buying pushing the market from its low opening and filling the gap on the charts to the 0.7505 areas, the move into the Tokyo session saw reverse crosses then playing with the Oz moving from GBPAUD selling to AUDJPY selling as the USDJPY dipped and the market moved through the session dipping to the 0.7475 areas, the move into the London session saw quick selling in London and a test of the 0.7460 levels, that was the extend of the range and the move through the London session and through to the close saw the market slowly pushing off the lows and trading into the close around the 0.7480 area.

Yesterday’s premiership results

JPY         Machine Orders M/M Nov A -5.10% | C -1.40% | P 4.10%

JPY         Domestic CGPI M/M Dec A 0.60% | C 0.40% | P 0.40%

AUD       TD Securities Inflation M/M Dec A 0.50% | P 0.10%

GBP       Rightmove House Prices M/M Jan A 0.40% | P -2.10%

JPY         Tertiary Industry Index M/M Nov A 0.20% | C 0.20% | P 0.20% | R 0.00%

JPY         Machine Tool Orders Y/Y Dec (P) A 4.40% | P -5.60%

EUR        Eurozone Trade Balance (EUR) Nov A 22.7B | C 20.8B | P 19.7B | R 19.9B

Good Luck,

Andy

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