Daily FX Market Commentary

Andy Harrison

Good Morning,

For Today

• GBP: Choppy opening before settling down around the 1.3690 area and ranging through into the Tokyo session testing towards the 1.3700 before drifting off through the 1.3675 for the low of the session and more or less defining the day so far, the market then held through to the grey hours in an ever tightening range around the 1.3680 area, Topside offers through the 1.3700 level with weak stops likely on a move through the 1.3720 area to quickly test through to the 1.3750 area and some limited offers likely and increasing offers through to the 1.3800 area and stronger congestion likely from there on, downside bids light back through the 1.3600 level with weak stop light through the level and light bids through the sentimental levels before stronger bids appear around the 1.3450 level.
• JPY: Quiet range around the 103.80 areas with a limited dip to the 103.70 area and unable to push much beyond the 103.85 areas to define a decreasing range through to the grey hours, topside congestion around the 104.40-60 area and then increasing into the 104.80 level with strong offers through the 105.00 area, Downside bids light through to the 103.00 level before stronger bids start to appear and increase through to the 102.50 area with very little in the way of stops on a dip through with likely increasing bids to the 102.00 areas and likely to see stronger bids continuing from importers.
• AUD: The move through into the Tokyo session but only marginally before running towards the 0.7790 area for the high of the session before slowly drifting through to the 0.7760 area into the grey hours, with some limited liquidity around the current levels, light bids into the 0.7700 area and then a little patchy through to the 0.7660-40 area with stronger bids on a move through to the 0.7620 level with weak stops likely through into the 0.7580 area and the market then congested through sentimental levels. Topside offers into the 0.7780 area likely to be quite strong through to the 0.7820 area before option barriers are likely to be cleared and break out stops join weak stops for a strong move through to the 0.7850 area however, congestion is likely to kick in from there through to the 0.7880 area and increasing into the 79 cents level before the topside opens up for a move towards the 80cents level.
• EUR: Similar pattern to the other pairs with Tokyo early highs as the Euro pushed lightly through the 1.2160 area before drifting through to the 1.2145 level and basing through to the grey hours, Topside offers light through the 1.2220 area and continuing lightly through to the 1.2250 area where the market starts to thicken a little on the offer and the closer the market moves to the 1.2280 area the stronger the offers, a push through the 1.2300 area will likely see stronger offers building with short term sellers likely joining the queue with weak stops on a strong push through the 1.2320-30 areas opening only to the 1.2350 areas. Downside bids getting stronger the closer the market gets to the 1.2120 area with likely stronger congestion through the area and strong stops on a push through the 1.2080 area with very limited bids to support the market through to the 1.20 handle.

Overnight News

AUD:
New South Wales mutant coronavirus strain cases double in a week – SMH
USD:
Biden to propose $1.9t Covid 19 package
Biden calls for $15/hour minimum wage, renewed paid leave rules – DJ
Biden proposes $350b in state aid, $160b for vaccines and testing – DJ
NYK Deaths surge – BBG
EUR:
Germany weighs tighter lockdown – BBG
JPY:
Japanese bought net 730.7B JPY overseas debt last week – BBG
CNY/AUD:
China may allow imports of some stranded Australian coal cargoes – BBG
CNY:
China’s 2020 GDP growth slowest in over four decades – AFP
GBP:
UK Planning labour regulation overhaul in post Brexit shake up – FT

Today’s Data
JPY Tertiary Industry Activity Index MoM A -0.7% | P 1.0% | R 1.6%
0700 GBP Industrial Production MoM A | C 0.5% | P 1.3%
0700 GBP GDP MoM A | P 0.4% |
0700 GBP Manufacturing Production MoM (NOV) A | C 0.9% | P 1.7%
0700 GBP Monthly GDP 3M/3M Change A | P 10.2%
0700 GBP Trade Balance (NOV) A | C -10.18b | P -12.0b
0700 GBP Trade Balance Non-EU (NOV) A | C -1.40b | P -4.54b
0800 EUR Spanish CPI YoY (DEC) A | C -0.5% | P -0.8%
0800 EUR Spanish HICP YoY (DEC) A | C -0.6% | P -0.8%
0910 EUR ECB’s Enria Speaks
1000 EUR Trade Balance (NOV) A | C 26.0b | P 30.0b
1330 USD Core PPI MoM (DEC) A | C 0.2% | P 0.1%
1330 USD Core Retail Sales MoM (DEC) A | C -0.1% | P -0.9%
1330 USD NY Empire State Manufacturing Index (JAN) A | C 6.00 | P 4.90
1330 USD PPI MoM (DEC) A | C 0.4% | P 0.1%
1330 USD Retail Sales MoM (DEC) A | C -0.2% | P -1.1%
1400 GBP NIESR Monthly GDP Tracker A | P -4.8%
1415 USD Industrial Production YoY (DEC) A | P -5.50%
1415 USD Industrial Production MoM (DEC) A | C 0.5% | P 0.4%
1500 USD Business Inventories MoM (NOV) A | C 0.5% | P 0.7%
1500 USD Michigan Consumer Expectations (JAN) A | P 74.6
1500 USD Michigan Consumer Sentiment (JAN) A | C 80 | P 80.7
1500 USD Retail Inventories Ex-Auto (NOV) A | P 0.3%
1800 USD US Baker Hughes Total Rig Count A | P 351

Harry Hindsight

• GBP: Pushing quietly through the early part of the session and into Tokyo testing through to the 1.3655 area for the early highs before strong USD buying moved into the session with Cable testing quickly through to the 1.3620 level before bouncing and then ranging around the 1.3630-40 area, grey hours buying took the market into the 1.3680 level in a quick reversal before steadily dipping back through the London opening and ranging through to the lows again for the move into the NYK session lifting quickly through this time to the 1.3690 area holding the 1.3680-90 for an hour before breaking through triggering some weak stops on a quick spike above the 1.3710 area then instantly dipping through to the 1.3670 level before ranging through to the close around the 1.3690 area.
• JPY: A day of ranging, opening around the 103.90 area and ranging through to the Tokyo session testing the 103.80 area before USD buying pushed the market quickly through to the 104.20 area and then ranging around the 104.00-10 level through the London opening and into the NYK session before dropping quickly back to the 103.60 level and a slow range recovering to the 103.80 area.
• AUD: Towards the lows of the day for the opening saw the Oz move slowly through to the 0.7750 area before quickly dropping back to the 0.7730 in what seemed to be a strong USDJPY move, once that was over the Oz started a slow move through to the grey hours testing up through the 0.7760 areas, a reasonably quiet range through to NYK with the market dipping steadily through the 0.7760 level to test the 0.7740 level and then a quick run through to push through the 0.7800 area before drifting a little through to the 0.7785 area for the close.
• EUR: Early highs into the Tokyo session pushing lightly through the 1.2170 area before USD buying saw the market basing to the 1.2140 area ranging around the 1.2150 area heading into the grey hours, a slow rise through to the opening levels around 1.2160 and initially a quiet run through early London from the opening, the move towards the NYK session saw early sellers appear and the Euro quickly back to the 1.2120 area before eventually starting a steady strong push through to the 1.2180 area for the highs of the day before drifting a little and finishing the day almost unchanged.

Premiership Results
NZD Building Consents MoM (NOV) A 1.2% | P 8.8% | R 8.9%
GBP RICS House Price Balance (DEC) A 65% | C 62% | P 66%
CNY Exports YoY (DEC) A 18.1% | C 15.0% | P 21.1%
CNY Imports YoY (DEC) A 6.5% | C 5.0% | P 4.5%
CNY Trade Balance (USD) (DEC) A 78.17b | C 72.35b | P 75.40b
EUR ECB Monetary Policy Statement
USD Export Price Index MoM (DEC) A 1.1% | C 0.5% | P 0.6% | R 0.7%
USD Import Price Index MoM (DEC) A 0.9% | C 0.6% | P 0.1% | R 0.2%
USD Initial Jobless Claims A 965k | C 780k | P 787k | R 784k
USD FOMC Member Bostic Speaks
USD Fed Chair Powell Speaks
USD FOMC Member Kaplan Speaks

Best Regards
Andy

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