Daily FX Market Commentary

Andy Harrison

Good morning,

NYK Close SYD open

USDJPY 89.191 89.23-28 | EURUSD 1.33438 1.3335-45 | EURJPY 119.006 119.00-20 | AUDUSD 1.05378 1.0530-40 | NZDUSD 0.83664 0.8360-70 | USDCAD 0.98496 0.9835-45 | EURCHF 1.21908 1.2190-1.2200 | USDCHF 0.91365 0.9135-45 | GBPUSD 1.61309 1.6120-30 | EURGBP 0.82724 0.8273-83 |

 

Weekend News

JPY:

Japan’s Abe Says He’ll Seek ‘Bold Leader’ to Head Central Bank
Japan’s LDP Plans 10% Tax Break for Company Pay Hikes: Nikkei
Japan May Increase Top Income Tax Rate to 45%, Nikkei Reports
USD:

Treasury, Fed Oppose Using Platinum Coin to Avoid Debt Ceiling
Senate Democrats Urge Obama to Act on U.S. Debt If Necessary
CNY:

China Mulls Trial Program for Individuals Investing Overseas
AUD/CNY:

China Is Cause for Optimism on World Economy, Swan Says 
EUR:

Greek Lawmakers Pass Tax Bill Required for EU, IMF Bailout Funds
Hollande Backs French Labour Deal Allowing Cuts to Hours, Wages
Merkel Throws Weight Behind Cypriot Opposition Before Election
French Airstrikes Counter Northern Mali Islamist Insurgency
EUR/GBP:

Cameron’s Europe Speech Risks Spoiling Franco-German Party: FT

SGD:

Singapore Imposes More Measures to Curb Property Speculation
AUD:

Gillard ‘Never More Ready’ for Australian Election Year Battles

 

Harry Hindsight

·         EUR: We started the day in Asia quietly with all the action during the previous session, one supposes that the market was a little fearful of testing the topside only to fail as we have this year each time above the 1.3300 level, we opened just below the 1.3280 level and that high remained all the way through Asia moving down below 1.3260 but only by a few tics and staying around the 1.3260 level for the most part until London started to push a little even so it wasn’t until the NYK market opened that we saw the market break higher, the US trade balance seemed to be the catalyst for the move and also a US investment houses recommendations also seemed to coincide with the move higher pushing to above 1.3360 in early NYK before settling down into a 1.3340-60 range for the balance of the session.

·         GBP: Cable struggled throughout the session, with Asia opening around the 1.6160 mark and slowly declining over the Asian session to 1.6140, with a poor set of IP and MP numbers coming out it sent Cable lower during the early part of London pushing us down to 1.6110 levels before a poor trade balance number in the US sent GBP higher to above the 1.6170 level this was short lived as EURGBP buying kicked in sending the GBP leg lower against both the Euro and a follow through against the USD hitting below 1.6090 before bouncing and finding a more comfortable level basing of off 1.6120 closing just above the 1.6030 level on the day.

·         JPY: Asia followed through after a late run higher in USDJPY with another 50 tic move through the 89.00 level to touch just above the 89.30 level in early Asia, we dropped back below the level in trading through the day but not for long and we saw the pair ranging between 88.80-89.10 during the most part of the session, we struggled to do anything special through the early part of London but caught a rally as the Euro and GBP went bid on the poor US trade numbers, making a new high for the day above 89.40, before settling down into the 89.20 area towards the close.

·         AUD: The Oz steadily gave ground over the whole day, having looked to have stepped into a new range we saw the market slide from the opening levels just below 1.0600 to a low in Asia just below 1.0570 and continued the same mode in London, while the rest of the market caught a rally as USD suffered on the trade numbers the Oz actually slipped lower and was unable to follow the rest of the market with EURAUD cross bought fairly aggressively over part of the session, towards the end of the session the market had moved to just above the 1.0530 area and ran out of time to move back into the previous levels, with plenty of leverage types selling and very little in the way of profit taking we are so used to seeing in the late session appearing, probably because it was Friday.

Friday’s premiership results

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

JPY         Current Account (JPY) Nov A 0.23T | C 0.31T | P 0.41T    

CNY        CPI Y/Y Dec A 2.50% | C 2.30% | P 2.00%               

CNY        PPI Y/Y Dec A -1.90% | C -1.80% | P -2.20%          

JPY         Eco Watchers Survey: Current Dec A 45.8 | C 41.1 | P 40

CHF        CPI M/M Dec A -0.20% | C -0.10% | P -0.30%      

CHF        CPI Y/Y Dec A -0.40% | C -0.30% | P -0.40%          

GBP       Industrial Production M/M Nov A 0.30% | C 0.80% | P -0.80% | P -0.90%

GBP       Industrial Production Y/Y Nov A -2.40% | C -2.00% | P -3.00%      

GBP       Manufacturing Production M/M Nov A -0.30% | C 0.50% | P -1.30%        

GBP       Manufacturing Production Y/Y Nov A -2.10% | C -1.30% | P -2.10%           

CAD       International Merchandise Trade (CAD) Nov A -2.0B | C 0.3B | P -0.17B 

USD       Import Price Index M/M Dec A -0.10% | C 0.10% | P -0.90%         

USD       Trade Balance Nov A -48.7B | C -41.1B | P -42.2B              

GBP       NIESR GDP Estimate Dec A -0.30% | P 0.10%       

USD       Monthly Budget Statement Dec A -22.1B | P -172.1B      

For today

USDJPY:
Topside: 89.70-89.80 light mix 89.80-90.10 decent offers 90.10-90.40 light offers 90.40-90.70 light offers
Downside: 89.10-89.40 light bids 88.70-89.00 light sell stops

EURUSD:
Topside: 1.3410-1.3445 light offers 1.3450-1.3485 light offers 1.3490-1.3520 medium offers
Downside: 1.3300-1.3330 light mix 1.3270-1.3300 light bids

EURJPY:
Topside: 120.20 light offers
Downside: 118.60-118.90 light bids AUDUSD:
Topside: 1.0560-1.0595 light offers 1.0600-1.0640 light offers
Downside: 1.0460-1.0500 light sell stops 1.0430-1.0460 light bids

 

JPY:

Nakao Says Abe Doesn’t Intend Competitive Devaluation of Yen

Amari Says Too Weak Yen Also Burdens Japan, Kyodo Reports

Japan voters back PM Abe’s efforts to spur growth, beat deflation

Top Japan General Calls for Beefed-Up Defence’s

USD:

Fed’s Evans Says He Expects Interest Rates to Stay Low Until ‘15

Fed’s Evans Says He’s Comfortable with Current Monetary Policy

U.S. economy to grow 2.5% this year -Fed’s Evans

Fed’s latest actions to boost growth, prevent inflation: Evans

Apple Cuts Orders for Iphone Parts as Demand Slips

EUR:

Proposal Wants Eurozone Nations to Pay More for Bank Bailouts -FT

CNY:

China SAFE Sets up Office to Innovate Forex Reserves Use

PBOC Official: Inflation Poses Top Risk to Economy – Report

China can increase 10 times the level of RQFII, QFII quotas -CSRC head

China Faces Difficulty in Expanding Real Estate Tax to More Cities – Report

JPY/KRW:

BOK Governor Backs Action against Yen’s Steep Drop to Stabilize FX Market

SGD:

Singapore property stocks plunge on new cooling measures

AUD:

Australia Nov Housing Finance -0.5% vs. Oct; Forecast +0.5%

Australia job advertisements fall 3.8% in Dec -ANZ

Australia inflation gauge remains benign in Dec

NZD:

Economic Shock Would Put Pressure on NZ’s 4 Big Banks IMF

 

·         EUR: After Fridays rally Asia came in strongly picking the pair up just above the 1.3340 area and taking it to above the 1.3400 area, helped along by EURJPY stops being triggered and also comments from the Fed’s Evans, although we traded a couple of times above the 1.3400 one would not be surprised if the resistance we’ve seen above there is not option related and will take the London market to clear however, for the moment decent sized offers remain.

·         GBP: The Cable remains caught by its on economic woes and while everyone seems to think Europe is all on the mend one only has to look at the European data and not the US data to see its far from it, and we have still to reckon with Greece in the middle of next month not to be a doom and gloom merchant. Cable dropped from the opening with minor EURGBP trades going through but managed to limit the downside to just below 1.6120 before rallying with GBPJPY buyers appearing in the market and taking Cable up to just below 1.6155 before dropping back a little into the mid 1.6130’s and holding for the moment as we run to London opening.

·         JPY: USDJPY opened strongly triggering some minor stops around the 89.50 area and in the EURJPY before sliding to a halt at above 89.65 as the buying ran into the fix with supply to hold the market and chase it back to the 89.40 area from the lows we lowly made our way back to above 89.60 but once there did very little else and running into Tokyo lunch dipped back below and drifted in a tight range into the London grey market.

·         AUD: The Oz started the day in the same frame of mind as on Friday with the opening at 1.0540 steadily sold down to just above 1.0520 but with the rally in Euro’s moving to above 1.3400 briefly the Oz caught some of the drag and we saw it reverse some of the losses from Friday touching above 1.0560 towards the late part of the Asian session as we move towards London we are hanging in around the highs in what remains of a quiet session.

 

Today’s data

Actual = A Consensus = C  Previous = P Timings GMT

AUD       TD Securities Inflation M/M Dec A 0.40% | P -0.10%        

AUD       Home Loans Nov A -0.50% | C 0.50% | P 0.10%  

10:00     EUR        Eurozone Industrial Production M/M Nov C 0.20% | P -1.40%     

15:30     CAD       BoC Business Outlook Survey    

           

Ranges as of 6am London time

                                Highs   Lows

USD/JPY               89.67 | 89.2
EUR/USD             1.3404 | 1.3335
EUR/JPY               120.13 | 119.1
AUD/USD            1.0563 | 1.0521
NZD/USD             0.8408 | 0.8363
USD/CAD             0.9849 | 0.9836
EUR/CHF              1.2234 | 1.2187
USD/CHF             0.9144 | 0.91215
GBP/USD             1.6156 | 1.6118
EUR/GBP             0.8298 | 0.827

 Stay lucky

Andy