Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 87.877 | EURUSD 1.30633 | EURJPY 114.806 | AUDUSD 1.05141 | NZDUSD 0.83868 | USDCAD 0.98773 | EURCHF 1.20888 | USDCHF 0.92542 | GBPUSD 1.60232 | EURGBP 0.81526 |

 

Harry Hindsight

·         EUR: USD strengthened slightly across the board with the FED’s Lacker warning of the risk of higher inflation, for the moment that does not appear to bear up in the data but that remains to be seen, we opened just above the 1.3080 level and struggled throughout the Asian session to move to far away from that level peaking just above 1.3090 and touching just below 1.3070, when we moved into London we had very little change peaking just above 1.3095 and starting to decline shortly after the opening dropping steadily throughout London and into the NYK session touching below 1.3040 before recovering to the 1.3080 on light profit taking from day traders, since then we’ve held around the 1.3050-60 level as we move towards the close with volumes off in the second half of the day, which is not surprising as the market while on whole believes there will be no rate cut seems to have a niggling doubt in the back of its consensus of heads.

·         GBP: A fairly tight range with only Visible trade balance numbers to effect the market however, while it was worse than expected it was better than the previous month making it pretty much a non-event, the market opening around the 1.6050 in Asia and struggled to move higher trading just below the 1.6070 level before dropping back a little on GBPJPY supply during the fix in Tokyo, we slid to the 1.6040 as we moved to London and caught a few bids just prior to the market open taking us back to the start the non-event helped us to creep back above the 1.6070 to make the highs, the market turned at this point as cross GBP selling seemed to be the name of the game and we followed the Euro to the lows for the day as we ran to the NYK session, light take profit buying was seen around the 1.6000 area as we hit lows just below and the market spent the rest of the session clawing its way back to the 1.6030 area in light and unconvincing move.

·         JPY: USDJPY put in a reversal of the previous day dragging itself from the opening area of 87.00 touching below 86.90 and then on fixing demand for EURJPY and USDJPY moved steadily up to above 87.50 during the early part of Asia, with comments from Suga as the Government officials met with BoJ officials on how to manage the stimulus issues that have failed under previous governments to well stimulate. Several comments and rumours helped to push the USDJPY to its highs before we reached the London market they inturn took the market slightly higher to above 87.70 before NYK and Lacker’s comments kicked in to set the days highs just short of 88.00, as we move to the close we’ve dropped back from the high and are hovering around the 87.70/80 level.

·         AUD:  Day traders heaven up down and so on as the market struggles to break to the topside pushing for a new weekly high above 1.0535 it again found plenty willing to sell into rallies only to take profit on dips while the range seems to be moving Northward the market seems to be ignoring any and all bad news out of Australia, maybe the Governments eyes are elsewhere with large fires raging across the country side, and only uncomfortable news out of China is effecting the Oz in any meaningful manner. In the meantime the market traded between 1.0490-1.0535 on the day and the only major currency to hold out against a stronger day for the USD.

Yesterday’s premiership results

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%         

GBP       Visible Trade Balance (GBP) Nov A -9.2B | C -9.0B | P -9.5B          

EUR        Eurozone GDP Q/Q Q4 (F) A -0.10% | C -0.10% | P -0.10%             

EUR        German Industrial Production M/M Nov A 0.20% | C 1.00% | P -2.60%   

CAD       Housing Starts Dec A 198K | C 198K | P 196.1K    

USD       Crude Oil Inventories A 1.3M | C -645M | P -11.1M

For today

USDJPY 
Topside: 88.20-88.30 medium buy stops 88.30-88.60 medium buy stops 
Downside: 87.50-87.80 light bids 87.00-87.30 light bids 

EURUSD 
Topside: 1.3070-1.3100 light offers  1.3100-1.3130 light offers 
Downside: 1.3000-1.3030 light sell stops 1.2970-1.3000 light sell stops 

EURJPY 
Topside: 115.20-115.50 medium offers  115.50-115.80 light buy stops 
Downside: 114.20-114.50 light bids 113.80-114.10 light bids  AUDUSD 
Topside: 1.0550-1.0580 medium buy stops  1.0580-1.0610 light offers 
Downside: 1.0480-1.0490 medium sell stops 1.0450-1.0480 light sell stops 1.0420-1.0450 light bids

 

JPY:

BOJ to Introduce 2% Inflation Target at Next Meeting, Asahi Says

Japan government plans more support for home buyers-Nikkei

Japan December foreign reserves fall to $1.268 trln

JPY/PHP:

Japan to Boost Strategic Partnership with Philippines: Kishida

CNY:

China Dec exports jump 14.1% y/y, beats forecast

China Dec money supply up 13.8%

China expects trade situation to improve in 2013

AUD:

Australian November Building Approvals +2.9%

NZD:

NZ Nov Goods Trade Deficit NZ$700M; Consensus Deficit NZ$630M

NZ house prices hit fresh record high in Dec – QV

 

·         EUR: A slow drift lower in quiet trading before the rate decision, we started the day just below 1.3070 and drifted slowly lower to trade to just below 1.3040 before finding a base for the moment we hold the 40 level but with less volume going through. EURAUD selling was noticeable and early buyers in EURJPY.

·         GBP: A similar story as the Euro with a lacklustre day dominated by rate decisions in both Europe and the UK later in the day, We moved from 1.6030 level to a low of 1.6005 before finding any support in the early part of the session and have traded quietly between 1.6020-05 since.

·         JPY: Government and BoJ talks continue as the push for stimulus to achieve inflation in the economy continues to be talked about with a 2% target back on the board, we moved from the opening 87.80 area quickly to above 88.15 triggering minor stops in EURJPY and AUDJPY along the way, fixing supply drop the market back to the 88.00 area however we again forged high to above 88.20 post fix and have stayed in this range with quiet trading in the European currencies.

·         AUD: After this week’s poor figures the long awaited Chinese figures hit the news and the AUD was off to the races, having drifted lower from the NYK close moving from the 1.0520 area down to below 1.0500 as soon as the China numbers hit we moved smartly above 1.0550 pushing through several layers of offers like a knife through butter only to hit a wall just above 1.0550 where suspected weak stops rest in the market, since hitting the highs we’ve not stepped away from the level and hold as we move to London.

 

Today’s data

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

21:45     NZD       Trade Balance (NZD) Nov A -700M | C -670M | P -718M

00:30     AUD       Building Approvals M/M Nov A 2.90% | C 3.10% | P -7.60% | R -5.10%    

12:00     GBP       BoE Rate Decision C 0.50% | P 0.50%      

12:00     GBP       BoE Asset Purchase Target Jan C 375B | P 375B  

12:45     EUR        ECB Rate Decision C 0.75% | P 0.75%      

13:30     EUR        ECB Press Conference                                                  

13:30     CAD       New Housing Price Index M/M Nov C 0.20% | P 0.20%   

13:30     CAD       Building Permits M/M Nov C 2.40% | P 15.00%  

13:30     USD       Initial Jobless Claims (JAN 5) C 365K | P 372K       

15:00     USD       Wholesale Inventories Nov C 0.30% | P 0.60%   

15:30     USD       Natural Gas Storage C -185B | P -135B   

Ranges as of 6am London time

                                Highs   Lows

USD/JPY               88.22 | 87.865

EUR/USD             1.3063 | 1.30385

EUR/JPY               115.145 | 114.77

AUD/USD            1.0554 | 1.0494

NZD/USD             0.8406 | 0.8384

USD/CAD             0.9881 | 0.9867

EUR/CHF              1.2090 | 1.20855

USD/CHF             0.92675 | 0.9254

GBP/USD             1.6024 | 1.6005

EUR/GBP             0.81535 | 0.8145

 

Good luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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