Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 112.288 | EURUSD 1.20586 | AUDUSD 0.78293 | NZDUSD 0.71027 | USDCAD 1.25116 | USDCHF 0.97169 | GBPUSD 1.35901 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.20665 | 1.2042

USDJPY                 112.400 | 112.172

GBPUSD               1.36100 | 1.35887

USDCHF               0.97275 | 0.97111

AUDUSD              0.78368 | 0.78053

USDCAD               1.25309 | 1.25002

NZDUSD               0.71074 | 0.70734

EURCHF                1.17283 | 1.17113

EURGBP               0.88746 | 0.88578

EURJPY                 135.508 | 135.282

For today

• EUR: Opening around the 1.2055 areas the market moved up to test the 1.2065 area into early Tokyo and the high for the day was set, the market did a little bit of work around the area before drifting back from the highs with EURGBP selling doing some work with the Euro testing down to the 1.2050 levels bouncing off the level a couple of times before dropping through to the low 1.2040’s through into mid-session, the market started a steady recovery helped by the Cable move through the 1.3600 levels and the market recovered through to the grey hours to the 1.2060 level. Topside offers through the 1.2080 level and likely to continue through the 1.2100 areas with weak stops on a push through the 1.2120 levels, possible option plays around the level with the market then opening to a larger move through to the ranges of late 2014 with limited congestion into the 1.22000 level. Downside bids light into the 1.2000 areas with some congestion just below mixed with weak stops, a push through the level will likely see the weak stops continuing through to the 1.1960-40 level with sentimental bids in the area limited and the downside opening to the 1.1900-1.1880 bids and stronger stops on a failure of the level.
• GBP: The end of NYK saw the market holding close to the 1.3600 level for several hours, the move into the Asian session was no different with the market holding the 1.3590 level broadly for several hours and pushing lightly through 1.3600 initially unable to push beyond the level to far, as the market moved towards the grey hours it managed a push through the level and tested to the 1.3610 area with plenty of two way trading going through in the battle, offers still appear in the current areas and although there is potential for weak stops the 1.3660 level highs from October are likely to be the target with a strong push through the level likely to trigger strong stops and a quick test of the 1.3700 sentimental level however, technically the market is open to a move through to the 1.3800 levels this is all dependent on how brave the market is in the current market, and FOMC minutes to come later in the day, Downside bids light back through to the 1.3520 levels with limited bids before pushing through the level and triggering weak stops on a opening to the stronger 1.3450 levels and that strength likely to continue through to 1.3400 and plenty of congestion in that area.
• JPY: A very quiet session for the USDJPY with the market dipping from the opening around the 112.30-35 levels to test below 112.20 area before moving into the Tokyo session to push back above the opening levels and extend the high to the 112.40 level into the mid-session area before drifting back into the 112.20’s for the move into the grey hours. Downside bids into the 112.00 have been fairly robust over the past month however, a push through the 111.80 level is likely to see some stops appearing and the market opening to the stronger 111.00-110.80 level with weak stops through the level and plenty of congestion on a move then to the stronger 110.50 areas and that type of liquidity likely to continue through to the 110.00 areas. Topside offers into the 113.00 levels with some weak stops and limited offers mixed on a push through with stronger offers likely to start appearing on a move beyond the 113.30-50 areas and into that 114.00 level again.
• AUD: With little news and data for the day the Oz moved from the opening level testing weakly through the 0.7835 area before dropping back to the 0.7805 level on weak selling and then spending the rest of the session recovering to the 0.7825 levels on limited buying. Topside offers through the 0.7840 areas and likely to be particularly strong through to the 0.7850 levels, possible stops on a move through the 0.7860 areas before the sentimental 79 cent comes into play with strong offers with possible option plays around to hold the topside, a push through the level could see stops opening a test higher however, chances would depend on the FOMC minutes at best and a doubtful target of 80 cent appears. Downside bids light back through to the 0.7780 areas with weak stops on a move through the level and the downside opens to a retracement to the 77 cent level before stronger bids reappear.

Overnight News

USD/KRW:

In a tweet Trump said I too have a nuclear button, it’s on my desk and its bigger and more powerful and my button works.

JPY:

Economy showing signs of exiting deflation

USD:

US warns N. Korea against new missile test, plays down talks

Today’s data

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

08:30     CHF        PMI Manufacturing Dec C 64.5 | P 65.1

08:55     EUR        German Unemployment Change Dec C -13K | P -18K

08:55     EUR        German Unemployment Rate Dec C 5.50% | P 5.60%

09:30     GBP       Construction PMI Dec C 53.1 | P 53.1

15:00     USD       Construction Spending M/M Nov C 0.50% | P 1.40%

15:00     USD       ISM Manufacturing Dec C 58.2 | P 58.2

15:00     USD       ISM Prices Paid Dec C 64.5 | P 65.5

19:00     USD       FOMC Meeting Minutes Dec                                     

 

 

Harry Hindsight

• EUR: FX markets were a little thin and patch from the opening with some wide pricing and exaggerated moves however, once Tokyo moved in the markets settled into better liquidity, the Euro pushed through to the 1.2015 areas in early trading and then rose slowly into Tokyo to above the 1.2020 level only to range around those areas through to the grey hours, early London were steady buyers with the market managing to push through to the 1.2030 levels into the official opening eventually breaking through to the 1.2040 and while manufacturing PMI for the different countries were mixed the market took it well and pushed ahead on the Eurozone number to test through to the 1.2080 level before finding the move overdone and drifting back off into the NYK session dipping all the way back to the 1.2030 area into the US numbers and a better PMI figure, the renewal of the Euro rally was limited and the market held around the 1.2050 area for a period before finishing the day pushing just beyond the 1.2060 then holding around that level.
• GBP: Rising from the opening the market pushed to the 1.3520 level and held quietly through the Asian session, moving up from that level into the grey hours the move into the London session saw the market quickly pushing through the 1.3560 level and the drifting through deep into NYK holding around that level, as London moved into the final hour a push higher saw the market quickly testing to the 1.3600 levels before being held in that area through to the close.
• JPY: Little choppy on the opening saw the market dip to the 112.60 level before moving into the Tokyo session testing through towards the 112.80 area in early trading, the market was unable to break through the level and drifted steadily back towards the opening levels through into the grey hours, before dropping quickly on strong selling into the London session, the market saw weak stops on a move through the lows quickly breaking through the 112.50 levels and pausing only slightly into the 112.40 area, before again slipping through to push to the 112.10 level, the market held the areas broadly with one minor dip to 112.05 area in early NYK before slowly recovering to the 112.35 levels on light trading in the USD.
• AUD: Opening unchanged the market moved to the 0.7820 areas before dropping back quickly as Tokyo moved in to test below the 78 cent level and bouncing off the 0.7795 area to trade over the next two hours to the 0.7825 level before pausing and eventually stepping through to 0.7835 and then 0.7840 into the London session although the high was extended to the 0.7845 areas the market was unable to find anymore impetus and ranged around the 40 level through to the NYK opening and drifting back to hold the 0.7820-30 level to the close.

Yesterday’s premiership results

CNY        Caixin PMI Manufacturing Dec A 51.5 | C 50.7 | P 50.8

EUR        Italy Manufacturing PMI Dec A 57.4 | C 58.5 | P 58.3

EUR        France Manufacturing PMI Dec (F) A 58.8 | C 59.3 | P 59.3

EUR        Germany Manufacturing PMI Dec (F) A 63.3 | C 63.3 | P 63.3

EUR        Eurozone Manufacturing PMI Dec (F) A 60.6 | C 60.6 | P 60.6

GBP       PMI Manufacturing Dec A 56.3 | C 57.9 | P 58.2

CAD       RBC Manufacturing PMI Dec A 54.7 | P 54.4

USD       US Manufacturing PMI Dec (F) A 55.1 | C 55 | P 55

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