Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 111.276 | EURUSD 1.21854 | AUDUSD 0.79709 | NZDUSD 0.73063 | USDCAD 1.24365 | USDCHF 0.96551 | GBPUSD 1.38301 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.22091 | 1.21647

USDJPY                 111.481 | 111.117

GBPUSD               1.38390 | 1.38053

USDCHF               0.96760 | 0.9636

AUDUSD              0.79972 | 0.79418

USDCAD               1.24687 | 1.24276

NZDUSD               0.72959 | 0.72456

EURCHF                1.17671 | 1.17522

EURGBP               0.88276 | 0.88085

EURJPY                 135.847 | 135.428

For today

• EUR: The market was reasonably choppy over the Asian session with a combination of strong volumes meeting patches of illiquidity at times, opening around the 1.2180 levels the early market traded down through the 1.2170 to set the lows before reversing on the Tokyo opening to push through to the 1.2200 areas however, the market struggled to push through the level until late in the session on the run to the grey hours trading lower first to the 1.2170 areas again before rising steadily to test towards the 1.2210 level, topside offers weak through to the 1.2280-1.2300 levels again even here the market doesn’t truly gain sufficient resistance until the market moves towards those 3 year highs around the 1.2320 level where it is likely to be substantial and the possibility as with yesterday of ECB member turning up in the news to manipulate the market lower again, a push through the 1.2340 level will likely see stops appearing and while there may be light interference opens the way to the 1.25 handle. Downside bids into the 1.2160-40 area are likely to be weak with stronger bids starting to move in around the 1.2120 level with stops limited on a push through the level and congestion appearing on a run towards the 1.2050 level with that push through the 1.2090 pushing the 200 DMA out of the way.
• GBP: Cable followed the same pattern with the market testing down below the 1.3810 levels before rising again on the opening of Tokyo to push through to the 1.3840 area but remaining for the most part around the 1.3820 levels into the grey hours. Topside offers light through to the 1.3940 levels, light offers possible just above todays highs however, weak stops may be seen on a push through again and the market quickly making headway towards the 1.3900 light offers and the focus on increasing the years highs however, no direct data for the day leaves the market possible consolidating the gains it’s made for the day. Downside bids into the 1.3800 level likely to be a bit stronger today with weak stops on a push through the 1.3750 areas and the market seeing further sentimental bids into the 1.3700 level
• JPY: Opening around the 111.30 level the market spent a good deal of time around that level unable to push beyond the 111.40 level and unwilling to test below 111.20 area, late in the session saw the market rising towards the 111.50 quickly and then drifting back through to the grey hours testing towards the 111.10 level. Downside bids have broadly held with minor penetrations of the 110.50 level in the past two days but always finding a reason to move off those lows, a push through again would see the same type bids below and likely to run to the 110.00 stronger bid area with stops through the 109.80 levels opening a deeper move. Topside offers light through the current 111.50 high with stronger congestion on a test to the 112.00 level and weak stops appearing on a push through the level to open the 112.50 level for the initial test zone, from that point the market becomes more congested on any move to the 113.00 level and stronger resistance in that area.
• AUD: Very flat and quiet day for the Oz with the market basing from the NYK session and into the Tokyo session along the 0.7970 areas dipping into the 0.7950 levels before quickly rising through the opening level to test the 0.7995 areas on the better than expected employment numbers with the usual detail reversing the initial move to test down towards 0.7940 level and a steady rise through to the 0.7970 opening levels again. Downside bids into the 0.7940 level remain and a push through the level will see limited sentimental bids before moving back on the 78 cent handle and the possibility of stops appearing through the 0.7880 level, congestion then continues however, the market has some chance of pushing back to the 78 cent level and the stronger congestive bids appear, topside offers into the 80 level have all but been cleared with possible day traders fascinated with the market just above that level and into the 0.8040 area before congestion starts to thin out and the possibility of a challenge of the 81 cent level last seen in October.

Overnight News

NZD:

December home sales fall 10.1% from year ago REINZ

USD:

Apple, returning overseas cash, to pay $38B tax bill

Fed’s Mester sees upside risk to her outlook from US Tax cuts

Trump considers big fine over China intellectual property theft Reuters

EUR:

Bavarian ally dodges question of whether Merkel would lead in new vote

Today’s data

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

AUD       Consumer Inflation Expectation Jan A 3.70% | P 3.70%

GBP       RICS House Price Balance Dec A 0.00% | C -1.00% | P 0.00%

AUD       Employment Change Dec A 34.7K | C 15.2K | P 61.6K | R 63.6K

AUD       Unemployment Rate Dec A 5.50% | C 5.40% | P 5.40%

JPY         Industrial Production M/M Nov (F) A | C 0.60% | P 0.60%

07:00     CNY        GDP Y/Y Q4 C 6.70% | P 6.80%

07:00     CNY        Retail Sales Y/Y Dec C 10.20% | P 10.20%

07:00     CNY        Industrial Production Y/Y Dec C 6.10% | P 6.10%

07:00     CNY        Fixed Assets Ex Rural YTD Y/Y Dec C 7.10% | P 7.20%

13:30     CAD       ADP Employment Dec P 59.2K

13:30     USD       Housing Starts Dec C 1.27M | P 1.30M

13:30     USD       Building Permits Dec C 1.29M | P 1.30M

13:30     USD       Philadelphia Fed Business Outlook Jan C 24 | P 26.2

13:30     USD       Initial Jobless Claims (JAN 13) C 251K | P 261K

15:30     USD       Natural Gas Storage P -359B

16:00     USD       Crude Oil Inventories P -4.9M

 

Harry Hindsight

• EUR: US funding bill sparked a little USD sell off on the move into the Tokyo session with the market initially opening around the 1.2260 areas before rising quickly to push through the 1.2320 levels however, having seen the highs the market comments from Villeroy de Galhau and Constancio saw the market drop back initially to the opening levels and then continue through in the grey hours to the 1.2220 levels as Constancio stated in a different way a strong Euro was unwelcome, the move through into the London session saw the market holding the 1.2210 level through to NYK before dipping on the opening to lightly push through the 1.2200 level before starting a slow climb through the NYK session to push back towards the 1.2290 levels, again the market rejected the level with strong selling pushing the market again to the 1.2220 areas trickling through to the 1.2205 area before weak stops saw the market dipping through to the close around the 1.2180 level. Trumps comment helped the USD higher with terminating NAFTA would yield the best deal in renegotiations.
• GBP: Opening around the 1.3800 areas the market pushed slowly into the Tokyo session reacting to the US news in the same fashion to test to the 1.3830 level before drifting through into the grey hours to test the 1.3780 areas, London saw limited selling on the opening but the market moved off the 1.3760 areas and slowly rose through the morning session to the 1.3800 levels again, the move through into the NYK session saw limited action however, once the early US numbers were out of the way the market picked up and again pushed towards the highs and after a couple of hours broke through the 1.3840 broke and rose quickly through to the 1.3940 with plenty of weak stops with some limited profit taking towards the top the market turned and slowly dropped back to the break out point into the close.
• JPY: USDJPY drifted in early trading touching through to the 110.20 levels before starting a slow recovery through to the opening 110.50 areas, the market saw some limited buying to push the market through the 110.60 level to test to the 110.70 area before struggling the market lifted late in the session to test through to the 110.90 levels and that was it for the bulk of the day with the market holding around the 110.80 level through to deep into the NYK session with the range contained within the 110.60-90 levels, late in NYK the market started to rise higher pushing through to the 111.20 levels and a slow move through to the close around the 111.30 areas.
• AUD:

Yesterday’s premiership results

AUD       Westpac Consumer Confidence Jan A 1.80% | P 3.60%

JPY         Machine Orders M/M Nov A 5.70% | C -1.20% | P 5.00%

AUD       Home Loans M/M Nov A 2.10% | C 0.00% | P -0.60%

EUR        Eurozone CPI Y/Y Dec (F) A 1.40% | C 1.40% | P 1.50%

EUR        Eurozone CPI M/M Dec A 0.40% | C 0.40% | P 0.10%

EUR        Eurozone CPI Core Y/Y Dec (F) A 0.90% | C 0.90% | P 0.90%

USD       Industrial Production M/M Dec A 0.90% | C 0.40% | P 0.20% | R -0.10%

USD       Capacity Utilization Dec A 77.90% | C 77.30% | P 77.10% | R 77.20%

CAD       BoC Rate Decision A 1.25% | C 1.25% | P 1.00%

USD       NAHB Housing Market Index Jan A 72 | C 72 | P 74

USD       Federal Reserve Beige Book

USD       Net Long-term TIC Flows Nov A $57.5B | P 23.2B | R 26.2B

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