Daily FX Market Commentary

Andy Harrison

Andy Harrison

Good Morning,

LMAX Close
USDJPY 110.182 | EURUSD 1.10956 | AUDUSD 0.68729 | NZDUSD 0.66043 | USDCAD 1.30478 | USDCHF 0.96832 | GBPUSD 1.30095 |

LMAX highs and Lows 06.00 GMT
Highs | Lows
EURUSD 1.10994 | 1.10892
USDJPY 110.224 | 109.897
GBPUSD 1.30219 | 1.29963
USDCHF 0.96880 | 0.96738
AUDUSD 0.68801 | 0.68534
USDCAD 1.30622 | 1.30446
NZDUSD 0.66108 | 0.65962
EURCHF 1.07345 | 1.07338
EURGBP 0.85351 | 0.85226
EURJPY 122.267 | 121.907

For Today
• GBP: Opening unchanged the market slowly drifted from the opening into the Tokyo session testing through to the 1.2996 area before slowly rallying back to the 1.3015 area and the highs for the move into the grey hours, Downside bids congested around the 1.2950 level and requires a forceful push to clear only to run into possibly stronger bids into the 1.2900 areas, weak stops likely to appear on any break through the level with plenty of congestion likely at each sentimental level through to the 1.2765 area where any break out if there is to be one awaits. Topside offers still remain through the 1.3090-1.3100 level with weak stops likely on a push through the level and opening a quick return to at least the 1.3150 area before stronger offers start to appear on any attempt to push the 1.3200 area, and break here will likely see stronger stops appearing and the market then likely to increase into the 1.3300 level.
• JPY: Quiet start saw the USDJPY begin to rise only into the Tokyo session to make the high just above the 110.20 level before the release of JPY date showed an improving GDP set of numbers and the market quickly dropping back through to push through the 110.90 to make the lows, from there the market ranged quietly through to the grey hours, unable to push beyond the 110.00 with any conviction and limited to the downside, Topside congestion through the 110.50 level and likely to increase the closer the market moves to the 111.80 area where stronger offers start to appear leading into stronger congestion on any push to the 112.00 level, downside bids light through to the 109.00 areas with congestion likely to appear once through the 108.80 level and weak stops with the congestion likely to increase on any push through the 108.50 areas through to 108.00.
• AUD: As with the other pairs very slow opening with the early Tokyo session taking the Oz to its highs testing the 0.6880 area before dropping off quickly as AUDJPY selling moved in and news that a possible case of Coronavirus hitting Australia, the market dipped quickly through to the 0.6860 level and then stepped once to the 0.6855 area before bouncing back to the 0.6865 area, market talking about a head shoulders pattern forming however, that for me would show on a daily chart and limited impact on anything shorter but one will have to be careful of short term movements beyond the 0.6850 level and possible larger stops than noted. Topside offers into the 0.6920 area with possible weak stops through the level before congestion appears around the 0.6940-60 areas and increasing offers once the level is cleared through to the 0.6980-0.7000 areas, downside bids light through to the 0.6850 with some congestion around the level and then continuing through to the 0.6800 level with stronger bids start to appear, weak stops through the 0.6780 areas however, the congestion then increases on any dip through to the 0.6750 levels.
• EUR: Light USD buying from the opening saw the Euro dipping through to the 1.1090 level before then spending the rest of the session recovering from the early lows in Tokyo before slowly rising through to the grey hours pressing the 1.1100 area, Topside offers continue through to the 1.1220 area with weak stops likely in the area however, once the stops are out of the way congestion is likely to continue in strength and increase the closer the market moves towards the 1.1300 level, Downside bids light through to the 1.1100 level and bids are still likely to be building with weak stops limited with congestion likely to move through to the 1.1050 level and increasing on a dip to the 1.1020 areas.

Overnight News
NZD:
NZ posts weakest services index reading since 2012 – BBG
HKD:
Moody’s downgrades Hong Kong rating amid political turmoil – BBG
EUR:
EU needs to back up diplomacy with force, Commission chief says – BBG
Von Der Leyen: EU needs to have hard power plus diplomacy – BBG
Von Der Leyen: EU is on the same side of the table as US – BBG
Von Der Leyen: EIB will help to fund green deal
EU agonizes over troop deployment with Libyan oil flows blocked – BBG
EUR/USD:
Macron, Trump reach tariff truce in 2020 over digital tax fight – BBG
EUR/GBP:
EU’s Brexit punishment: EU plotting punitive sanctions to scupper deal -Express
GBP:
The BoE’s in-house report that may hold key to rate cut debate – BBG
CNY:
Fourth China virus death reported, raising contagion concerns – BBG

Today’s Data
Actual – A | Consensus – C | Previous – P | Revised R | all timings GMT/UTC
JPY 10yr Yield Target (JAN 21) A 0.00% | C 0.00% | P 0.00%
JPY BoJ Rate Decision (JAN 21) A -0.10% | C -0.10% | P -0.10%
JPY BoJ CPI Current Forecast +1 (1Q) A 1.0% | P 1.1%
JPY BoJ GDP Current Forecast (1Q) A 0.8% | P 0.6%
JPY BoJ GDP Current Forecast +1 (1Q) A 0.9% | P 0.7%
0930 GBP Average Weekly Earnings (3M/YoY) (NOV) C 3.1% | P 3.2%
0930 GBP Claimant Count Rate (DEC) P 3.5%
0930 GBP Employment Change 3m/3m (NOV) C 109k | P 24k
0930 GBP ILO Unemployment rate 3mths (NOV) C 3.8% | P 3.8%
0930 GBP Jobless Claims Change (DEC) P 28.8ik
0930 GBP Weekly Earnings ex-bonus 3m/YoY (NOV) C 3.4% | P 3.5%
1000 EUR Eurozone ZEW Survey Economic Sentiment (JAN) P 11.2
1000 EUR German ZEW Survey Expectations (JAN) C 15 | P 10.7
1000 EUR German ZEW Survey Current Situation (JAN) C -13.5 | P -19.9
1500 GBP BoE Governor Carney Speaks on Panel of Davos
2330 AUD Westpac Consumer Confidence (JAN) P -1.9%

Harry Hindsight

• GBP: A very quiet day for all markets, opening a little lower from Fridays close the market drifted through the 1.3000 in early trading however, that provided the base from the Asian session and only broke once the market moved into the grey hours to steadily test through the 1.2990 level, early London recovered the minor losses however, on the opening the market dropped back quickly to test through to the 1.2970 held for a short period then attempted to take the 1.2960 level but failed and the market started a steady push through to the opening levels into the NYK session, having regained the opening level the market then ranged through to late into the session holding around the 1.3000 level with minor dips more frequent than the moves higher however, those move higher were unable to push through the 1.3010 level until into the closing 30 mins when it finally made the highs thanks to the Sydney session.
• JPY: A very flat session for the USDJPY with the bank holiday in the US limiting trading, opening just above the 110.10 level that formed the low of the day and the market traded steadily into the Tokyo session pushing to the 110.20’s to make the high for the day, the market then traded between the 110.15-20 level for the most part with one brief attempt to push lower only to fail just above the 110.10 level and a quiet long run to the close.
• AUD: Opening around the 0.6875 area the early period saw the market push to above the 0.6880 level and the move into the grey hours saw the highs made around the 0.6885 area before heading into the London session and sellers quickly appearing to send the market back to the opening and then slowly drifting through to the London close testing the 0.6855 area from there was a slow but steady climb through to the close almost unchanged.
• EUR: A small rise from Fridays close drifting to test the 1.1090 level before moving into the Tokyo session slowly rising to the 1.1095 level but unable to push through the 1.1100 until the market moved into the grey hours, the market peaked into the London opening to just above the figure before dropping off quickly through to the 1.1090 level then drifting to the 1.1085 areas for a long drawn out range around the level, the move through the Bank holiday NYK session saw the market drifting through to the mid 1.1070’s and once Sydney moved in the market started a steady recovery to just above the 1.1095 level to trade quietly to the close.

Yesterday’s Premiership results
GBP Rightmove House Prices YoY (JAN) A 2.7% | P 0.8%
CNY 1yr Loan Prime Rate (JAN) A 4.15% | C 4.10% | P 4.15%
CNY 5yr Loan Prime Rate (JAN) A 4.80% | C 4.80% | P 4.80%
JPY Industrial Production YoY (NOV F) A -8.2% | P -8.1%
CHF IMF Releases World Economic Outlook update
EUR ECB Pres. Lagarde Attends event in Brussels
NZD Performance Services Index (DEC) A 51.9 | P 53.3

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