Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 87.335 | EURUSD 1.31852 | EURJPY 115.168 | AUDUSD 1.05029 | NZDUSD 0.83157 | USDCAD 0.98499 | EURCHF 1.21029 | USDCHF 0.91788 | GBPUSD 1.62533 | EURGBP 0.81119 |

 

Harry Hindsight

·         EUR: We opened quietly just below the 1.3200 level with all eyes watching the US for indications of a deal and when the news hit the Euro went into overdrive moving quickly to touch briefly above the 1.3300 level as details emerged from that point though the market was contained with good offers showing above the 1.3300 level as longer term players looked to take short positions. We moved sideways over the next few hours running into London just below the 1.3300 level and unable to make any further gains, poor inflation numbers in Germany and a worsening PMI number for the Eurozone helped to ease the Euro away from further gains and we started to see it moving down into the mid 1.32’s by NYK opening the market was holding around the 1.3250 level and took the ISM numbers well with USD rallying and regaining some of the early losses, Euro’s dropped back to below the starting point for the year and we saw lows below 1.3160 towards mid NYK before moving towards a flat start to the year.

·         GBP: The picture was very much the same for Cable with a quick spike higher after the announcement before we started to see a steady decline over the Asian session after the high above 1.6380 from the opening 1.6250 area opening, by London opening we had already slipped back below the 1.6300 level as liquidity in the pair was patchy at best as could be seen by the spike higher, EURGBP spiked higher during the period again more through liquidity problems as the funny season continued to rumble on in some parts of the world we saw the pair breech 0.8150 at one stage before slipping back into the more comfortable 0.8130 area where we started. As we moved into NYK more mundane mechanics of the market started to take over as the US stock market started to rise and we started to see steady requirements for USD’s and the added ISM numbers saw the USD rise across the board and Cable dropped back below the opening area to trade around the 1.6230 level before moving to settle around 1.6250 for the day.

·         JPY: USDJPY opened weakly pre announcement and we saw the market move from the 86.80 area down to just above 86.50 in the first couple of hours of trading, the announcement sparked the market up a little and we saw the pair rally to above 87.30 and hold above 87.00 for the remainder of the day, London sold the pair from the highs but struggled to push through the 87.00 trying a couple of time as early NYK came in to again take the pair back to its highs as jawboning from the new incumbent government started in earnest to manipulate the JPY, NYK set new highs into the close pushing to the 87.35 level for a 30month High into the close.

·         AUD: As risk goes the Oz had a better day than most with AUDJPY being a big mover over the course of the day, and the straight AUDUSD holding onto the early gains, as risk went on the board after the announcement. We moved from just below the 1.0400 level quickly to 1.0490 and have struggled around the 1.0500 area for the remainder of the day, we saw London make the first attempt to break higher fail, and it wasn’t until the NYK market was in full swing that it eventually pushed through the level to hit just above 1.0520 before moving back to below the 1.0500 level again, we held onto the level for the remainder of the day and one suspects that the fortunes of the Oz may be attached to the carry trades for the short term.

Yesterday’s premiership results

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

EUR        Eurozone PMI Manufacturing Dec (F) A 46.1 | C 46.3 | P 46.3      

GBP       PMI Manufacturing Dec A 51.4 | C 49.1 | P 49.1 | R 49.2

EUR        German CPI M/M Dec (P) A 0.90% | C 0.70% | P -0.10% 

EUR        German CPI Y/Y Dec (P) A 2.10% | C 1.90% | P 1.90%      

USD       Construction Spending M/M Nov A -0.30% | C 0.60% | P 1.40% 

USD       ISM Manufacturing Dec A 50.7 | C 50.2 | P 49.5 

USD       ISM Prices Paid Dec A 55.5 | C 53.2 | P 52.5          

For today

USDJPY:
Topside: 87.40-87.70 light buy stops 87.70-88.00 decent buy stops 88.00-88.30 medium buy stops
Downside: 86.80-87.10 light bids

EURUSD:
Topside: 1.3200-1.3240 light mix 1.3250-1.3280 light offers 1.3300-1.3330 light mix
Downside: 1.3100-1.3125 light sell stops

EURJPY:
Topside: 115.90-116.20 light mixed bag
Downside: Nothing significant AUDUSD:
Topside: 1.0540-1.0575 light buy stops 1.0580-1.0610 light offers
Downside: 1.0460-1.0480 light sell stops

 

IMF:

Says US cliff actions not enough for long term fiscal health

 

·         EUR: We opened around the 1.3180 level and moved sideways quietly in early trading till the announcement by the IMF which happened to be the only news worthy event in the world or so it seems, the market dipped down to the 1.3165 however, we didn’t bounce and rumours from yesterday of weak stops had the market moving lower quickly after about an hour trading down to the 1.3125 level as all the longs from yesterday were turfed back out, on what is really old news having already heard from Moody’s and a couple of others that it fixes very little and will stimulate nothing in the US. Volumes were reasonable but nothing spectacular.

·         GBP: Cable struggled but it would seem not as badly as the Euro, we saw the market drop from the opening highs of 1.6256 to below 1.6240 in the opening couple of hours only to return to above 50 a lot quicker as EURGBP selling appeared in the market triggering some minor stops below 0.8100 however, we saw some heavy selling well into the Tokyo market from the 1.6240 level to give us a low just above 1.6200 as Euro dropped on the IMF no news, from there we held above the figure with a bounce to 1.6230 and then the market died and we’ve been particularly quiet since.

·         JPY: USDJPY dipped from the opening levels of 87.30 having moved to above 87.35 at the start the pair dropped back as we saw a succession of EURJPY selling go through the market to push us down to the waiting bids around 87.10 on an otherwise quiet day which saw the market move back to the 87.25 level as we head to London.

·         AUD: As quiet as the JPY, with very little impact from the China number we saw the market move off its highs just above 1.0500 to trade steadily lower to push briefly below the 1.0480 but generally holding that area as we move to London.

 

 

 

 

Today’s data

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

CNY        Non-manufacturing PMI Dec A 56.1 | P 55.6       

08:00     CHF        KOF Leading Indicator Dec C 1.4 | P 1.5  

08:30     CHF        SVME-PMI Dec C 48.3 | P 48.5   

08:55     EUR        German Unemployment Change Dec C 11K | P 5K           

08:55     EUR        German Unemployment Rate Dec C 6.90% | P 6.90%     

09:00     EUR        Eurozone M3 Y/Y Nov C 3.80% | P 3.90%              

09:30     GBP       PMI Construction Dec C 49.5 | P 49.3      

12:30     USD       Challenger Job Cuts Y/Y Dec P 34.40%    

13:15     USD       ADP Employment Change Dec C 138K | P 118K  

13:30     USD       Initial Jobless Claims (DEC 29) C 355K | P 350K

19:00     USD       FOMC Minutes

 

Ranges as of 6am London time

                                Highs   Lows

EUR                        1.3190 | 1.3124

GBP                       1.6255 | 1.6202

JPY                         87.36 | 87.09

CHF                        0.92115 | 0.9175

AUD                       1.0505 | 1.0476

NZD                       0.8342 | 0.8314

CAD                       0.9869 | 0.9852

EURCHF                1.2106 | 1.20895

EURJPY                 115.17 | 114.48

EURGBP               0.8117 | 0.8094

 

Good luck and Happy New Year

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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