Daily FX Market Commentary

Andy Harrison

Good Morning,

LMAX Close

USDJPY 111.215 | EURUSD 1.12445 | AUDUSD 0.7070 | NZDUSD 0.68293 | USDCAD 1.33937 | USDCHF 1.01069 | GBPUSD 1.3150 |

LMAX highs and Lows 06.00 GMT

                                Highs | Lows

EURUSD               1.12741 | 1.1244

USDJPY                 111.458 | 111.175

GBPUSD               1.32910 | 1.31454

USDCHF               1.01101 | 1.00945

AUDUSD              0.70804 | 0.70575

USDCAD               1.34048 | 1.3385

NZDUSD               0.68459 | 0.68274

EURCHF                1.13847 | 1.13615

EURGBP               0.85558 | 0.84759

EURJPY                 125.490 | 125.009

For Today

• GBP: Opening around the 1.3160 level the market quickly stabbed higher on the news that some agreement was reached over the Backstop and the market quickly ran higher testing to the 1.3290 levels as stops pushed the spike a little further than normal with limited liquidity into the new session, the market dipped quickly back to the 1.3250 level and then pushed through to the 1.3200 areas bouncing around a little through into the Tokyo session before drifting from that point through the 1.3200 areas for the run to the grey hours, topside offers through the 1.3300 level likely to be reasonably strong with stops appearing on any push through the 1.3350 areas however, this is all Brexit dependent with stronger offers likely to appear on any push to the 1.3400 levels and possibly opening the market to a larger move higher if it can be breached, downside bids weak back through to the congestion around the 1.2950-1.3000 areas with any breach of the lower 1.2950 areas opening the market to slightly stronger 1.2900 areas but still suspect if the vote goes the wrong way or even if it occurs and with limited support until deep into the 1.2760 areas.
• JPY: Drag of the GBP saw the USDJPY moving up from the opening 111.20 levels to move into the Tokyo session ranging around the 111.30 levels and Tokyo opening forced the market through to the 111.45 area with the market then ranging quietly through to the grey hours holding around the 111.40 level and dipping a little through to the 111.35 areas. Topside offers through the 111.80 level and increasing into the 112.00 areas and through the level, having spent a week or so banging at the 112.10 levels the market is likely to initially struggle with the level but any break above the 112.20 areas is possibly going to see strong stops appearing and a quick run to the 112.60 area before resistance starts to increase again to slow the market into the 113.00 level. Downside congestion likely to be congested through to the 110.40 with limited weak stops exposing the 110.00 levels with stronger congestions into that level and likely continuing deep through the level.
• AUD: The Oz dipped a little from the opening with lower confidence numbers dominating the opening in Tokyo and falling back slightly through the 0.7060 before bouncing a little to the opening area around the 0.7075 area and a slow range through the grey hours holding around the 0.7070 level. downside bids into the 70 cents level and possibly just through the level before weak stops appear however, congestion is possibly all the way down to the 0.6950 levels and strong in that area with only limited weakness on any further pushes to wards 69 cent, topside offer light through to the 71 cent level and while there may be some resistance that resistance is still building and a push through the 0.7120 level will see the congestion swept away to open the market to a slow grind higher and stronger offers through 0.7150.
• EUR: The Euro opened with the same thrust higher, moving from the 1.1240 areas to push through 1.1250 and quickly spike through to the 1.1275 areas before holding for a short period in the 1.1265 levels before dipping a little for the Tokyo session and ranging around the 1.1260 level quietly for several hours before moving into the grey hours falling back through to the 1.1250 level. Downside weakness exposes the 1.1170 levels still with congestion then reappearing and running through to the 1.1140 area before the market opens to very limited congestion and the potential for a deeper move through the 1.1080 areas and stops. Better bids likely around the sentimental areas possibly slowing a decline. Topside sees some congestion for any move towards the 1.1280 level and limited resistance to any move through the 1.1300 area and weak stops likely on a push through the 1.1310-20 area opening the market to a slow grind from there on.

Overnight News

GBP/EUR:

Brexit sources suggest more progress has been made than expected in PM May talks with Juncker BBC RTR

Lidington sets out new Brexit agreement in Parliament

Lidington whole UK Cabinet approves Brexit deal improvements

London’s Finance industry has decided: Brexit is already a reality

Pro-Brexit MP says doubt alternative backstop arrangements BLG

Emergency Brexit meeting held by Irish Government PAN

Majority of voters do not think PM’s deal delivers the type of Brexit people voted for Telegraph

Brexit plot: May and Juncker orchestrating Theatre show to unveil new Brexit Daily Express

Juncker: UK must leave by May 23 or hold elections

Juncker: Time for Brexit deal to be brought to a good end

Juncker: The UK to stay in EU hearts and minds

Juncker: Cites possibility of Brexit not happening

May: Backstop cannot become permanent arrangement

May: Today we have agreed legally binding changes to backstop

Baker: Brexiteer, not for the first time that the government has had to put a very good gloss on something which falls short of what was expected Radio 4

Not a word has changed in the withdrawal agreement, says Peterson institutes Kirkegaard – BLC

JPY:

BoJ watchers see chance of more stimulus amid shift at Fed, ECB

AUD:

FIRE: vampire drains record blood from Aussie economy/household financial confidence free falls to new low MB

ANZ weekly consumer confidence falls 4.6% to 109.5 – BFW

NZD:

NZ Feb heavy traffic index rises 0.4% MoM ANZ

CNY:

Chinese steelmaker says iron’s surge is overdone and can’t last BBG

China may increase NPL tolerance for small companies SEC Times

Today’s Data

Actual A | Consensus C | Previous P | Revised R | all timings GMT/UTC

JPY         BSI Large Manufacturing Q/Q Q1 A -7.3 | C 4.8 | P 5.5

AUD       NAB Business Conditions Feb A 4 | C 5 | P 7

AUD       NAB Business Confidence Feb A 2 | C 3 | P 4

AUD       Home Loans M/M Jan A -2.60% | C -2.00% | P -8.20%

09:30     GBP       GDP M/M Jan C 0.20% | P -0.40%

09:30     GBP       Index of Services 3M/3M Jan C 0.50% | P 0.40%

09:30     GBP       Visible Trade Balance (GBP) Jan C -12.11B | P -12.10B

09:30     GBP       Industrial Production M/M Jan C 0.20% | P -0.50%

09:30     GBP       Industrial Production Y/Y Jan C -1.30% | P -0.90%

09:30     GBP       Manufacturing Production M/M Jan C 0.20% | P -0.70%

09:30     GBP       Manufacturing Production Y/Y Jan C -1.90% | P -2.10%

09:30     GBP       Construction Output M/M Jan C 0.80% | P -2.80%

12:30     USD       CPI M/M Feb C 0.20% | P 0.00%

12:30     USD       CPI Y/Y Feb C 1.60% | P 1.60%

12:30     USD       CPI Core M/M Feb C 0.20% | P 0.20%

12:30     USD       CPI Core Y/Y Feb C 2.20% | P 2.20%

23:30     AUD       Westpac Consumer Confidence Mar P 4.30%

23:50     JPY         Domestic CGPI Y/Y Feb C 0.70% | P 0.60%

23:50     JPY         Machine Orders M/M Jan C -1.50% | P -0.10%

Harry Hindsight

• GBP: A quiet range through deep into the London morning with the market opening down from Fridays close around the 1.2970 level and trading quietly through to the Tokyo session rising towards the 1.2990 level, Tokyo squeezed a little lower and by early morning the market was pushing to the 1.2960 areas and slowly edging back to the opening levels for the move into the grey hours, limited lift into the London opening saw the 1.3010 areas tested and the gap on the charts filled, before dipping back again through to the previous low, optimism for the updated view of the backstop and Brexit saw the market starting to rally slowly through the day, and the move into the NYK session saw the market rising through to the 1.3100 level before holding around the level into the London close. With London out of the way the market again rose steadily pushing easily through the 1.3150 levels for the close.
• JPY: A little bit of cross JPY selling to start the day before the market moved up weakly to attempt to close the gap, the market topped out around the 111.15 levels before cross selling reappeared and dipped to the 111.00 and bounced back again through to the 111.15 area again for the move into the Tokyo session, the selling this time took the market to the lows of the day testing a little through the 110.90 areas with another round of cross selling and GBPJPY dominating before bouncing again and heading back to the 111.10 levels for the move into the grey hours, with the buying continuing through into the London opening and testing to the 111.30 level for the high of the day, drifting from the highs the market moved through to the NYK session testing through to the 111.00 areas again before lifting back through 111.20 for a long run to the close.
• AUD: Opening below Fridays close and trading initially around the 0.7040 level the market dipped a little with AUDJPY selling moving through and testing through to the high 0.7020’s before slowly recovering through to the grey hours trading around the opening levels, London saw early buying through to the 0.7050 areas the move through to NYK was uneventful for the most part and early buying pushed the market through to the 0.7065 areas before holding around the 0.7060 through to late in the session and another quick round of buying took the market to the 0.7075 level before dipping a little to the 0.7070 for the end of the session.
• EUR: Euro’s opened only slightly short of the Friday close, quickly filling that small gap and testing through to the 1.1237 areas before dipping into the Tokyo session with cross JPY selling dominating early trading, the Tokyo session saw the market dipping through into the low 1.1220’s ranging quietly in early trading before slowly starting to rise to the opening levels into the grey hours, the markets move into the London opening saw the market pushing steadily through to the 1.1250 level before holding for a short period and ignoring the weak German numbers to test through to the 1.1260 in a quick stab higher only to drop quickly back and range through to the NYK session holding around the 1.1240 areas, limited buying into the NYK open then saw the market dipping back to test a little through the early lows and then starting a slow and steady climb through to the close on very limited volumes.

Yesterday’s Premiership results

JPY         Japan Money Stock M2+CD Y/Y Feb A 2.40% | C 2.40% | P 2.40%

JPY         Machine Tool Orders Y/Y Feb (P) A -29.30% | P -18.80%

EUR        German Industrial Production M/M Jan A -0.80% | C 0.50% | P -0.40%

EUR        German Trade Balance (EUR) Jan A 18.5B | C 21.2B | P 19.4B

USD       Retail Sales Advance M/M Jan A 0.20% | C -0.10% | P -1.20% | R -1.60%

USD       Retail Sales Ex Auto M/M Jan A 0.90% | C 0.30% | P -1.80% | R -2.10%

USD       Business Inventories Dec A 0.60% | C 0.60% | P -0.10% | R 0.00%

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