Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 87.043 | EURUSD 1.30813 | EURJPY 113.869 | AUDUSD 1.0533 | NZDUSD 0.83459 | USDCAD 0.98663 | EURCHF 1.20888 | USDCHF 0.92409 | GBPUSD 1.60551 | EURGBP 0.81481 |

 

Harry Hindsight

·         EUR: The Euro held steady through Asia with some cross selling contributing to produce the los below 1.3110 however, the market bounced back to touch the 1.3140 level when Japanese FinMin Aso started to speak and told the market of impending ESM bond purchases from there we traded sideways and even into the raft of poor numbers in the Eurozone we managed to hold above the 1.3100 level in some decent flows over the course of the early London session, retail sales was the only silver lining for the day and probably saved the Euro from deeper moves lower, eventually the 1.3100 level broke and triggered weak stops taking the market through to 1.3090 and only slowing its decent over the course of early NYK, we eventually made a low below 1.3060 before the market started to hold up, as the fiscal cliff in the US raises it’s head again with rumours that they will run out of funds by 15th Feb, or require the debt ceiling to be raised once more. As we head to the close we’ve clawed back some of the losses and are currently holding just above the 1.3080 level.

·         GBP: The picture is the same for Cable we saw a sideways movement throughout the Asian session with only the non-news of sales figures for Dec showing an increase of 0.30% below what was expected, I’m not going to check it but seems to me we have the same thing each year higher numbers in Oct-Nov and drop off in Dec how strange, We fell from the highs of just below 1.6130 to an Asian low of 1.6080 area before support kicked in however, we never seemed to move away from that low and struggled in early London to move briefly above the 1.6100 level only to see the same move lower once the fiscal cliff news kicked in moving to a low of 1.6030 before finding new support in the market, we’ve managed to claw back to 1.6060 area for the moment as we move towards the close.

·         JPY: The opening in Asia saw the USDJPY drop back quickly from the opening area of 87.80 to belwo 87.20 as minor stops were triggered in Yen crosses, Aso made several comments during the session as the new Government starts to set out on it’s plans to stimulate an economy that has been on the back foot since the 1980’s Asian crisis so I’m not holding my breath, we held on the downside for several hours and managed to claw back to above 87.70 on the ESM comments but the Yen seems to be the focus of safe haven buying again and while London was quiet per sae holding the 87.40 area as soon as early US came in the market dropped again to test the 87.00 level from above 87.50 as the fiscal cliff peaked above the hole it was shoved in, we currently see late selling going through as people move funds back out of the US to a more comfortable home to be found probably later in the day, we look to be going out around the 86.90 level with some stops close so an interesting opening to look forward too.

·         AUD: Does the picture change, as much as the Ozzies are facing their own problems the fact the interest rates attracts the carry trade players means the Oz as a whole will attract the safe haven flows whether it actually is a safe haven with the same story being applicable to the CHF as well, one remains sceptical about whether it can continue at the same level for much longer we’ve seen passive intervention and probably we’ll see it again however, as short term fixes goes it didn’t work the first time so time for a change one would imagine. The Oz traded lower from the Highs above 1.0515 with cross selling hitting the AUD after the weaker than expected trade numbers, we dropped to 1.0470 just pre London only to start the slow march back up as poor Euro numbers hit the EURAUD buyers we saw in Asia and then safe haven flows on the fiscal cliff comments and we were back above 1.0500 in a market trapped.

Yesterday’s premiership results

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

GBP       BRC Sales Like-For-Like Y/Y Dec A 0.30% | C 0.70% | P 0.40%       

AUD       Trade Balance (AUD) Nov A -2637M | C -2300M | -2088M            

CHF        Unemployment Rate Dec A 3.00% | C 3.00% | P 3.00%   

EUR        German Trade Balance (EUR) Nov A 14.6B | C 15.9B | P 15.2B | R 14.9B

EUR        Eurozone Retail Sales M/M Nov A 0.10% | C 0.30% | P -1.20% | R -0.70%

EUR        Eurozone Unemployment Rate Nov A 11.80% | C 11.80% | P 11.70%       

EUR        Eurozone Consumer Confidence Dec (F) A -26.5 | C -26.6 | P -26.6           

EUR        Eurozone Economic Confidence Dec A 87 | C 86.4 | P 85.7            

EUR        Eurozone Industrial Confidence Dec A -14.4 | C -14.5 | P -15.1 | R -15

EUR        Eurozone Services Confidence Dec A -9.8 | C -11.5 | P -11.9        

EUR        German Factory Orders M/M Nov A -1.80% | C -1.50% | P 3.90% | R -3.80%

For today

USDJPY:
Topside: 87.60-87.90 light mix 87.90-88.20 light buy stops
Downside: 86.60-86.90 medium sell stops 86.30-86.60 light sell stops

EURUSD:
Topside: 1.3110-1.3140 light mix 1.3140-1.3170 light buy stops 1.3170-1.3200 light mix
Downside: 1.3030-1.3060 light sell stops 1.3000-1.3030 light bids

EURJPY:
Topside: 114.50-114.65 light buy stops 114.70-115.00 light offers
Downside: 113.40-113.70 light sell stops 113.10-113.40 light bids AUDUSD:
Topside: 1.0520-1.0550 light buy stops 1.0550-1.0580 light buy stops 1.0580-1.0610 light offers
Downside: 1.0450-1.0480 light bids 1.0420-1.0450 light sell stops

 

JPY:

Next BOJ Governor Should See Need for Bold Monetary Easing: Suga

Fitch: Would Consider Japan Downgrade without Action on Debt

Japan Plans Y5.2T in Public Works Spending Under Extra Budget -Nikkei

Japan Plans $2.1 Bln Military Spend in Stimulus Package – Official

AUD:

Australian November Retail Sales -0.1% vs. +0.3% Consensus

Australia new home sales up 4.7% in Nov-industry

AUD/NZD:

NZ state-owned Meridian mulls Australia wind farm stake sale

AUD/CNY:

China Investment Corp Bids for Stake in Australia Dairy -Sources

NZD:

NZ new housing consents down in Nov on apartment slowdown

 

·         EUR: A fairly static day with very little movement in the market we opened around the 1.3085 area trading above 1.3090 just after the Tokyo fix before reversing lower to hit the 1.3065 area just after the retail sale numbers out of Oz since then we have managed to claw back into the 1.3080’s but very quiet market.

·         GBP: A steady decline for the Cable with little movement or action in the market biggest upset was the Oz figures and we saw Cable drift from 1.6070 area to 1.6045 before stabilising somewhat then continuing to drift lower trading just below 1.6040 we move towards London around the 1.6050 level.

·         JPY: Spent the day reversing some of yesterday’s losses, moving from the lows of 86.85 we saw interest during the fix with demand for USD’s and a rise to above 87.10 and the market continued to steadily move high once the demand was over trading up to the 87.50 area helped by the slight dip in the Oz we saw retail Japan buying AUDJPY carry for the day.

·         AUD: The Oz opened quietly and we saw the market rise to above 1.0520 as early of AUDJPY brightened the day, while the JPY weakened against most currencies the retail numbers when they arrived disappointed and we saw the market move off its highs to hit below 1.0490 before finding some support, even so it struggled for a time to stay above the 1.0490 area and we only started to see the Oz pick up again as we moved into the Tokyo lunch period and we managed to push above the 1.0505 area, and should hold the level moving into London.

 

Today’s data

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

GBP       BRC Shop Price Index Y/Y Dec A 1.50% | P 1.50%               

AUD       Retail Sales M/M Nov A -0.10% | C 0.30% | P 0.00%         

09:30     GBP       Visible Trade Balance (GBP) Nov C -9.0B | P -9.5B             

10:00     EUR        Eurozone GDP Q/Q Q4 (F) C -0.10% | P -0.10%   

11:00     EUR        German Industrial Production M/M Nov C 1.00% | P -2.60%        

13:15     CAD       Housing Starts Dec C 198K | P 196.1K      

15:30     USD       Crude Oil Inventories P -11.1M 

Ranges as of 6am London time

                                Highs   Lows

USD/JPY               87.55 | 86.825

EUR/USD             1.3091 | 1.3066

EUR/JPY               114.44 | 113.55

AUD/USD            1.0523 | 1.0487

NZD/USD             0.8398 | 0.8364

USD/CAD             0.9876 | 0.9861

EUR/CHF              1.2090 | 1.20865

USD/CHF             0.92515 | 0.9233

GBP/USD             1.6068 | 1.6037

EUR/GBP             0.8150 | 0.8143

 

Good luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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