Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 84.40 | EURUSD 1.32269 | EURJPY 111.632 | AUDUSD 1.04812 | NZDUSD 0.83698 | USDCAD 0.98869 | EURCHF 1.20816 | USDCHF 0.91337 | GBPUSD 1.62453 | EURGBP 0.81419 |

 

Harry Hindsight

·         EUR: Asia moved higher as it caught up with news in Europe with particularly the upgrade for Greece by S&P and we moved from the 1.3225 area to above 1.3255 by mid-session, we saw some heavy buying of EURAUD during the session, Obama and Boehner seem closer to a deal than we’ve seen in recent days, we moved into London on slightly changed from the open however, IFO numbers helped the market to move higher after the release and we saw the Euro move to above 1.3300 as the NYK market opened, from there we reversed as more Obama, Boehner rumours and chatter kicked in and the Euro returned to its starting levels, a good day for the day trade as we move to the close, close to 1.3230 level.

·         GBP: Cable went into a steady rise keeping a pace with the Euro as the EURGBP seems to be well bid at the current levels, we moved from the opening 1.6250 level rising throughout Asia and continued in the early part of the London session with interest rates remaining static as expected but remained static on QE leaving the total at 400bln reported sales fell in Dec however, expectations were probably a little inflated by the over spill from the Olympics. Cable reached above 1.6305 by mid London but, as with the Euro started a steady decline once the NYK market opened and optimism over a deal between Obama and Boehner started to kick in and we moved the opening levels for no change for the day.

·         JPY: Risk on Risk off, or so the mantra goes, we saw USDJPY rising in early Asia from the 84.25 level to just above 84.40 before slipping back again as we saw exporter offers in EURJPY supplying the market dropping us back below the start however, once we moved into London and the Euro started to rally JPY weakened again against most currencies and we saw the market move to a high above 84.60 as we moved into the NYK session, as risk was taken off the board and Euro’s declined JPY strengthened and we again pushed down towards the 84.20 level, we moved off the lows later in the session as underlying fundamentals kicked in and the USDJPY moved to the 84.40 level and held for the remaining few hours of the session. 

·         AUD: The Oz struggled with the usual Gamma players controlling the market and a poor leading index creating interest to buy EURAUD in the early part of the session, while the Oz moved from 1.0535 to 1.0505 it managed to claw back most of the loss over the course of the Asian session however, as we moved back to the levels we saw a succession of sellers move into the market and we remained offered throughout the remainder of the London session trading to a low below 1.0490 as NYK moved in, with the USD ascending during the US hours Oz remained weak and while it extended the low only marginally in never recovered as the early Sydney guys came in selling to take us below 1.0480.

Yesterday’s premiership results

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

NZD       Current Account Balance Q3 A -4.418B | C -4.400B | P -1.797B    

AUD       Westpac Leading Index M/M Oct A 0.10% | P 0.70% | R 0.60%

JPY         Trade Balance (JPY) Nov  A 0.87T | C -0.81T | P -0.62T     

JPY         All Industry Activity Index M/M Oct A 0.20% | C 0.20% | P -0.30%             

EUR        Eurozone Current Account Oct A 3.9B | C 5.8B | P 0.8B  

EUR        German IFO – Business Climate Dec A 102.4 | C 102 | P 101.4       

EUR        German IFO – Current Assessment Dec A 107.1 | C 108.1 | P 108.1            

EUR        German IFO – Expectations Dec A 97.9 | C 96.5 | P 95.2  

GBP       BoE Minutes A 0—0—9 | C 0—0—9 | P 0—0—9     

GBP       CBI Reported Sales Dec A 19 | C 25 | P 33             

CAD       Wholesale Sales M/M Oct A 0.90% | C 0.40% | P -1.40%

USD       Housing Starts Nov A 861K | C 873K | P 894K | R 888K

USD       Building Permits Nov A 899K | C 875K | P 866K | R 868K

USD       Crude Oil Inventories A -0.9M | P 0.8M 

For today

USDJPY 
Topside: 84.50-84.80 medium offers  84.90-85.20 light offers  85.30-85.60 medium buy stops 
Downside: 83.60-83.90 medium bids 83.20-83.50 medium sell stops 

EURUSD 
Topside: 1.3230-1.3260 light offers  1.3270-1.3300 medium buy stops  1.3300-1.3330 light buy stops 
Downside: 1.3170-1.3190 medium sell stops 1.3120-1.3150 light bids 

EURJPY 
Topside: 111.70-112.00 light offers  112.00-112.30 light offers 
Downside: Nothing of note  AUDUSD 
Topside: 1.0500-1.0530 light buy stops  1.0540-1.0570 light buy stops  1.0580-1.0610 medium buy stops 
Downside: 1.0430-1.0460 light sell stops 1.0390-1.0420 light bids

 

JPY:

BOJ expands stimulus again amid pressure from incoming PM

BOJ should show resolve for “unlimited” easing – LDP official

Japan auto lobby head: yen still is very strong

Japan fund managers cut stocks allocation slightly

USD:

White House Said to Tell Business Leaders Budget Talks Regress

CNY:

China to Raise Railway Investment by 11% in 2013 – Report

NZD:

New Zealand 3Q Adjusted GDP +0.2% vs. 2Q; Market Expected +0.35%

NZ business confidence slips in December – ANZ survey

AUD:

Australia’s Treasurer Swan Says Budget Surplus Unlikely

Australia’s Reserve Bank Eases off Currency Sales

TWD/CNY:

Talks to start for China firms to list in Taipei – Taiwan regulator

SGD:

Singapore’s Temasek raises stake in Olam to 18%

HKD:

H.K. Property Overheating Poses Financial Risks, HKMA Says

 

·         EUR: We started the day with a quick move down, rumour had it that the White house had released a statement however, upon checking it had been out for hours and the real reason was some major CTA’s had started to liquidity positions in late NYK and into the next day’s session during a rather illiquid point, Euro’s dropped from the opening level 1.3225 area to below the 1.3200 touching the 1.3190 level before bouncing back above, we struggled back above the 1.3225 but it never looked convincing at that point and we soon started to drop back towards the 1.3200 area again as we move towards London we remain below 1.3210.

·         GBP: Cable remained steady on the opening around the 1.6245 area moving steadily higher over the session to touch above 1.6260 and EURGBP selling appeared in the market as the Euro was sold off through the crosses. We saw a round of selling as the Yen strengthened after the announcements and one suspects that the CTA’s had a lucky day. We dropped from the highs on further cross selling as we move to the London session touching 1.6245 levels again.

·         JPY: Yen strengthened throughout the day with EURJPY selling kicking off in the dying minutes in NYK taking out stops in EURJPY and dragging both Euro’s from 1.3250 and EURJPY  from above 111.70 to 110.80 area in a quick move caused by the above, the market had expected a no change to rates however, I believe it was expecting comments on the target for inflation that was banded around pre-election at 2% completely missing from the dialogue released leaving the market vulnerable to too a further fall, which it did late in the session, with USDJPY trading below 83.90 and EURJPY making new lows below 110.80.

·         AUD: Oz continued to slide catching the early movement through the cross Yen moving to the mid 1.0460’s before trading sideways, only when the Government announced it had given up on the idea of telling us that it would be in surplus this year did the Oz react and it went up to the starting area for a flat day moving into the London session.

 

 

Today’s data

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

NZD       GDP Q/Q Q3 A 0.20% | C 0.40% | P 0.60% | R 0.30%

JPY         BoJ Rate Decision A 0.10% | C 0.10% | P 0.10%

CNY        Conference Board Leading Index Nov A 1.10% | P 1.50%

07:00     CHF        Trade Balance (CHF) Nov C 2.25B | P 2.82B

07:00     EUR        German PPI M/M Nov C -0.20% | P 0.00%

07:00     EUR        German PPI Y/Y Nov C 1.40% | P 1.50%

09:30     GBP       Retail Sales M/M Nov C 0.40% | P -0.80%

13:30     CAD       Retail Sales M/M Oct C 0.10% | P 0.10%

13:30     CAD       Retail Sales Less Autos M/M Oct C 0.20% | P 0.00%

13:30     USD       GDP (Annualized) Q3 (T) C 2.80% | P 2.70%

13:30     USD       GDP Price Index Q3 (T) C 2.70% | P 2.70%

13:30     USD       Initial Jobless Claims (DEC 15) C 359K | P 343K

15:00     EUR        Eurozone Consumer Confidence Dec (A) C -26.5 | P -26.9

15:00     USD       Philly Fed Survey Dec C -3 | P -10.7

15:00     USD       Existing Home Sales Nov C 4.90M | P 4.79M

15:00     USD       House Price Index M/M Oct C 2.30% | P 0.20%

15:00     USD       Leading Indicators Nov C 0.20% | P 0.20%

15:30     USD       Natural Gas Storage P 2B

 

Ranges as of 6am London time

                                Highs   Lows

USD/JPY               84.395 | 83.86

EUR/USD             1.32305 | 1.3187

EUR/JPY               111.625 | 110.74

AUD/USD            1.0491 | 1.0464

NZD/USD             0.8362 | 0.8330

USD/CAD             0.9893 | 0.9885

EUR/CHF              1.2080 | 1.20725

USD/CHF             0.9153 | 0.9128

GBP/USD             1.6263 | 1.6238

EUR/GBP             0.81395 | 0.81155

Good luck

Andy