Daily FX Market Commentary

Andy Harrison

Good Morning,

For Today

• GBP: A quiet steady rise from the opening around the 1.3630 area to push to the 1.3655 area before ranging quietly through the session into the grey hours holding in the area, Topside offers into the 1.3700 area and weak stops likely through the level and stronger stops possibly above the 1.3750 area for a quick test to the 1.3800 area and limited congestion running through to the next sentimental area. Downside bids into the 1.3550 area likely to again be strong with interest likely to be holding around the 1.3500 area for the same sort of support, a break below the level is likely to see weak stops opening the downside bids likely through to the 1.3450 sentimental level and a weak supportive area with congestion then running to the 1.3400 level.
• JPY: Quiet through into the Tokyo session with the USDJPY losing some ground and dipping from the early highs just short of the 103.95 area to test to the 103.75 level and a quiet range around the level for the move through into the grey hours, Light offers through the 104.00 area and increasing a little through to the 104.20 area, weak stops on the move level and light congestion running through to the 104.50 area and increasing offers then through to the 104.80-105.00 level and stronger offers. Downside bids through 103.50 area where stronger bids appear a push through the level and stronger bids then into the 103.00 level and weak stops through the 102.80 areas.
• AUD: USD selling saw the market rising from the early low around the 0.7690 area to push through into Tokyo again testing through the 0.7710 level and after a brief respite running again into the 0.7720’s before drifting a little for the move through into the grey hours, light bids through to the 0.7660 area where support stiffens and the bids continue with only a little weakness to the 0.7620 area with strong stops on any dip through the 0.7580 area before stronger bids again appear in the 0.7550 area. Topside offers through the 0.7750 level and then thickening as the market tests towards the 0.7780 area with weak stops on a move through the 0.7820 areas, stops may cause some problems however, congestion is likely through the 0.7850 area and increase again through the 0.7900 areas.
• EUR: Light USD selling as Yellen suggests supporting the economy for a lengthier period while suggesting the economic disagreement with China will be moving forward with further tools implied use, Euro’s moved off the 1.2130 level opening to push through to the 1.2150 area before running into some offers and drifting through to the grey hours holding the 1.2140 level in reasonably quiet trading, Downside bids into the 1.2050 area with increasing bids into the 1.2000 level with weak stops on any move through into the 1.1980 level with break out stops a possibility, Topside offers through the 1.2100 level light with the topside likely to remain weak through to the 1.2180 area before some stiffness appears through to the 1.2200 level with very little in stops until 1.2220 level and weak stops easily absorbed in stronger resistance.

Overnight News

EUR:
Merkel Strikes deal to extend and tighten German virus curbs – BBG
ECB is capping bond yields but don’t call it yield curve control – BBG
ECB has specific idea of appropriate spreads, one person said – BBG
ECB is said to be pursuing strategy of yield spread control similar to some Asian govts. – BBG
Italian PM wins confidence vote but loses overall majority – RTR’s
MXN/CNY:
Chinese Aerospace firm to invest in N. Mexico says Tatiana Clouthier EcoSec
USD:
US secretary of state nominee calls NATO ally Turkey a “so called strategic partner” – TWT
Blinken: Turkey is not acting in a way an ally should and that is a significant challenge – TWT
Act big now to save economy, worry about debt later, Yellen says in Treasury testimony – BBG
USD/ILS:
Biden to Keep Jerusalem embassy but seek Palestinian state, – Nominee says
USD/KRW:
Biden says US plans full review of approach to N. Korea -RTR’s
CNY:
Beijing steps up COVID19 Response amid most severe outbreak – AUB
China is counting on consumers to bolster the recovery – RTR’s
China barricades part of the Capital as Northern outbreak escalates – BBG
USD/CNY:
US declares China committing genocide against Uighurs – AFP
The US could use a full array of tools against China says Nominee Janet Yellen – Nikkei
USD/EUR/MXN:
US orders Ford to recall 3m vehicles with Takata airbags – AFP

Today’s Data
AUD Westpac Consumer Sentiment (JAN) A -4.5% | P 4.1%
CNY PBoC Loan Prime Rate A 3.85% | P 3.85%
0700 GBP CPI MoM (DEC) A | C 0.2% | P -0.1%
0700 GBP CPI YoY (DEC) A | C 0.5% | P 0.3%
0700 GBP CPI PPI Input MoM (DEC) A | C 0.7% | P 0.2%
0700 EUR German PPI MoM (DEC) A | C 0.3% | P 0.2%
1000 EUR Core CPI YoY (DEC) A | C 0.2% | P 0.2%
1000 EUR CPI MoM (DEC) A | C 0.3% | P -0.3%
1000 EUR CPI YoY (DEC) A | C -0.3% | P -0.3%
1330 CAD Core CPI YoY (DEC) A | P 1.5%
1330 CAD Core CPI MoM (DEC) A | P 0.2%
1330 CAD CPI MoM (DEC) A | P 0.1%
1500 CAD BoC Monetary Policy Report
1500 CAD BoC Rate Statement
1500 CAD BoC Interest Rate Decision A | C 0.25% | P 0.25%
1500 CAD BoC Press Conference
1700 GBP BoE Gov Bailey Speaks
2130 USD API Weekly Crude Oil Stock A | P -5.821m
2350 JPY Exports YoY (DEC) A | C 2.4% | P -4.2%
2350 JPY Trade Balance (DEC) A | C 942.8b | P 366.1b

Harry Hindsight

• GBP: Early lows just after the opening saw the market rising from the 1.3575 area through into the Tokyo session pushing through the 1.3600 level and holding around the 1.3610 area and unable to break through to the 1.3620 area through into the grey hours, London saw a slow rise from its early lows around the 1.3590 area and a push through to the end of the morning session finally pushing the 1.3620-25 area and although the range just tightened through into NYK the market eventually started to slowly move through to the 1.3635 area for the close.
• JPY: A quiet opening with the market dipping from the 103.70 area to test to the 103.65 level and a strong rally through into the Tokyo fix to push towards the 104.10 level and hold around the 104.00 through into the grey hours before dipping away into the end of the London morning to hold around the 103.85-90 area to the close in very quiet trading for the pair.
• AUD: Early AUDJPY buying into the Tokyo session took the market away from the opening area around the 0.7675 level and started a rise through to the 0.7720 level before stabilizing around the 0.7710 for the moving into the grey hours and a quick spike to the highs, London sold from the 0.7735 area through into the 0.7700 area before steadily rising again all the way through to the NYK session not quiet competing with the high, the market then drifted from that point slowly back to the 0.7690 area and a quiet run to the close.
• EUR: Not as dramatic as the AUD but a steady rise from the opening just below the 1.2080 area steadying just below the 1.2100 level through to the grey hours before early London moved in testing through to the 1.2120 level into the official opening, opening buying pushed through eventually testing through to the 1.2145 level through into the NYK opening and USD buying lightly moved in forcing the Euro back to the 1.2120 level for a long quiet run to the close.

Premiership Results
EUR German CPI MoM (DEC) A 0.5% | C 0.5% | P -0.8%
CHF PPI MoM (DEC) A 0.5% | P -0.1%
GBP Labour Productivity (Q3) A 4.0% | P -1.8% | R -1.0%
EUR German ZEW Current Conditions A -66.4 | C -68.5 | P -66.5
EUR German ZEW Economic Sentiment (JAN) A 61.8 | C 60.0 | P 55.0
EUR ZEW Economic Sentiment (JAN) A 58.3 | P 54.4
CAD Manufacturing Sales MoM (NOV) A -0.6% | C -0.1% | P 0.3% | R 0.2%
CAD Wholesale Sales MoM (NOV) A 0.7% | C 1.0% | P 1.0%
GBP BoE MPC Member Hadane Speaks
USD TIC Net Long-Term Transactions (NOV) A 149.2b | P 51.9b

Best Regards
Andy

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