Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 87.786 | EURUSD 1.31165 | EURJPY 115.154 | AUDUSD 1.05028 | NZDUSD 0.83546 | USDCAD 0.98593 | EURCHF 1.20838 | USDCHF 0.92125 | GBPUSD 1.61152 | EURGBP 0.8139 |

 

Harry Hindsight

·         EUR: The market traded lower from the opening in Asia moving from the 1.3070 level and we saw plenty of cross JPY selling entering the market, moving the market to below 1.3020 were we saw profit taking from the London market, poor figures out of Europe helped to keep the market subdued during the London session we saw the market pick itself up after fixing supply and trade back towards the mid-range for the day, with very little news out of the states the rally continued triggering some weak shorts before pushing back above the 1.3100 level for a slight gain on the day finishing above 1.3110.

·         GBP: Asia sold cross JPY pushing the majors lower in the face of USDJPY stubbornness to hold above the 88.00 level, Cable opened around the 1.6070 level and slowly declined over the course of the session after fixing supply in GBPJPY taking us to a low just above 1.6020 before support was found, EURGBP stayed in line trading around the 0.8130-40 level for the most part and once we moved into London we started to see a recovery in Cable as it climbed steadily over the London and NYK session with rumours of QE moving further away from centre stage we topped out above 1.6110 as we moved to the NYK close for a solid recovery from Fridays lows.

·         JPY: Asia bot JPY during the early stages however after fixing supply in the crosses the market tried to hold above the 88.00 level for several hours and only after Tokyo came back from lunch did the market put it firmly below the level, taking it to the 87.70 area as early Europeans started to make an appearance, although we based off the 87.70 area for the rest of the day the market was again unwilling to lose any more ground and we stayed in a tight 20 point range for the day finishing just off of 87.80.

·         AUD: The Oz remains stuck in no man’s land with sellers willing to sell into rallies above the 1.0500 level for moves lower slowly building long term positions and improving their average each time they turn for a big figure or so. We opened around the 1.0490 area and moved above the 1.0510 level briefly only to be caught by cross supply against the JPY causing the market to sell below the opening and touching 1.0470, London saw the market rise back to the starting area and above 1.0500 again but the market remained mired and what volume we had seen slowly dwindled away as we finished the day around the 1.0500 level.

Yesterday’s premiership results

Actual = A | Consensus = C | Previous = P | Revised = R 

JPY         Monetary Base Y/Y Dec A 11.80% | C 5.30% | P 5.00%    

CHF        Foreign Currency Reserves Dec A 427.2B | C 423.0B | P 424.8B | R 427.4B

EUR        Eurozone Sentix Investor Confidence Jan A -7 | C -13.8 | P -16.8               

EUR        Eurozone PPI M/M Nov A -0.20% | C -0.10% | P 0.10%   

EUR        Eurozone PPI Y/Y Nov A 2.10% | C 2.40% | P 2.60%          

CAD       Ivey PMI Dec A 52.8 | C 51.3 | P 47.5     

For today

USDJPY 
Topside: 87.80-88.10 light offers 88.20-88.50 medium buy stops 88.70-89.00 medium buy stops 
Downside: 87.00-87.30 light sell stops 86.50-86.80 light bids 

EURUSD 
Topside: 1.3170-1.3200 light offers 
Downside: 1.3070-1.3100 light bids 1.3040-1.3070 light bids 

EURJPY 
Topside: 115.30-115.60 light offers  115.70-116.00 light buy stops 
Downside: 114.00-114.30 light sell stops 

AUDUSD 
Topside: 1.0520-1.0540 medium buy stops  1.0550-1.0580 light buy stops  1.0600-1.0630 light offers 
Downside: 1.0450-1.0475 light bids 1.0400-1.0430 light bids

 

EUR/JPY:

Japan Fin Min Aso: Japan to Use FX Reserves to Buy ESM Bonds

JPY:

BOJ Board Member: Open to Calls for Firmer Inflation Target

Japan government, BOJ mull setting job growth as common goal media

Japan government wants framework to cooperate with BOJ

Japan’s Amari: price stability to be focus of BOJ accord

Public-Private Funds to Play Big Role in Japan Growth Strategy -Nikkei

Japan Executives Warn Yen May Get Too Weak

Japan PM Abe: government to Draft Emergency Econ Measures by Fri

Japan to Boost Defence Spending by Over Y100B, 1st Increase in 11 Yrs. – Report

Fitch: won’t change Japan’s rating based on campaign promises

JPY/CNY:

Japan Summons China Envoy for First Time Under PM Abe

AUD:

Australia Nov Trade Deficit A$2.6B Vs. A$2.3B Consensus

GBP:

UK Christmas Retail Sales Underwhelming – BRC

 

·         EUR: A day of crosses with EURJPY initially being sold off as soon as the market opened in the far east, initially EUR held up as the selling balanced against EURAUD buying however, once Tokyo opened the pressure was too great and the Euro moved away from the opening levels 1.3120 area to move down to below 1.3105, then we got the comments from Aso with talk of ESM buying to come out of Japan and Euro’s rallied quickly from the lows to touch above 1.3140 briefly before settling back to the starting levels.

·         GBP: Cable held up and remained in a tight range with Dec sales less than expected if that can be counted as new news. We opened around 1.6115 area failed to make 1.6130 to the topside and moved to 1.6102 on the downside, apart from some early GBPJPY selling we saw EURGBP buying going through on the back of the numbers and the pair moved up 10 tics to the 81.50 area.

·         JPY: USDJPY struggled from the opening with expectations of the comments made chasing the market lower to trigger minor stops below 87.40 moving us from the opening 87.80 area to a low just below 87.25 we recovered after the fixing supply to the 87.50 area and the comments helped the market to move up on the back of EURJPY buying in respect to the comment about buying ESM bonds in the near future, the pair rallied to the opening area only to start dropping off as soon as the rush was over and we hold for the moment around the 87.50 level.

·         AUD: Early Oz trading took the pair higher as we moved back above the 1.0515 level with expectations for a reasonable trade balance alas those that bought soon found themselves on the wrong end of expectations and from the highs we dropped over the remaining part of the session to 1.0480 and that was the big move of the session, we currently look to be heading into London around that area.

 

Today’s data

Actual = A | Consensus = C | Previous = P | Revised = R 

GBP       BRC Sales Like-For-Like Y/Y Dec A 0.30% | C 0.70% | P 0.40%       

AUD       Trade Balance (AUD) Nov A -2637M | C -2300M | P -2088M         

06:45     CHF        Unemployment Rate Dec C 3.00% | P 3.00%       

07:00     EUR        German Trade Balance (EUR) Nov C 15.9B | P 15.2B        

10:00     EUR        Eurozone Retail Sales M/M Nov C 0.30% | P -1.20%         

10:00     EUR        Eurozone Unemployment Rate Nov C 11.80% | P 11.70%             

10:00     EUR        Eurozone Consumer Confidence Dec (F) C -26.6 | P -26.6             

10:00     EUR        Eurozone Economic Confidence Dec C 86.4 | P 85.7         

10:00     EUR        Eurozone Industrial Confidence Dec C -14.5 | P -15.1      

10:00     EUR        Eurozone Services Confidence Dec C -11.5 | P -11.9        

11:00     EUR        German Factory Orders M/M Nov C -1.50% | P 3.90%

Ranges as of 6am London time

                                Highs   Lows

USD/JPY               87.885 | 87.23

EUR/USD             1.3140 | 1.3104

EUR/JPY               115.25 | 114.50

AUD/USD            1.0519 | 1.0476

NZD/USD             0.8378 | 0.8351

USD/CAD             0.9873 | 0.9856

EUR/CHF              1.2092 | 1.20835

USD/CHF             0.9221 | 0.9201

GBP/USD             1.6129 | 1.6102

EUR/GBP             0.8151 | 0.8137

Good luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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