Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 91.714 | EURUSD 1.35792 | EURJPY 124.526 | AUDUSD 1.0426 | NZDUSD 0.84004 | USDCAD 0.99733 | EURCHF 1.23596 | USDCHF 0.91008 | GBPUSD 1.58576 | EURGBP 0.85632 |

 

Harry Hindsight

·         EUR: Another quiet day over all, with Asia stuck in a very tight range around the 1.3570 level, early Europeans initially bought to try and force a break above 1.3600 however, they were caught and the market quickly retraced and dropped to below 1.3550 on a bit of a scramble to cut short term longs, the market held above 1.3540 as London opened  German retail sales dropping significantly were ignored to some extent and with a mixture of further data Employment in Germany the only one showing some silver we stayed pinned towards the lows, personal income and jobless claims upset the market in what would have been a bland picture from the US data allowing the Euro to move off the lows and push once again to try and break the 1.3600, we ticked higher than previously and at least managed to get within 5 or 6 tics of the mark before failing and slipping back once again to below 1.3580 on what has been a quiet day considering the amount of data we’ve seen.

·         GBP: Cable opened around the 1.5800 level and steadily rose during Asia, although held to a 25 point range overall, we saw the market move to its highs until Early Europeans attempted to move the Euro higher and failed Cable dropped back to the opening levels, before again trying to move higher, having dropped lower on fixing supply and traded to below 1.5780 we saw the market reversing strongly over the remainder of the session, with EURGBP weakening for the first time in several days leaving what appeared to be a lack of liquidity in the pair between 0.8560-90 as we moved back and forth before settling for a move into the 0.8550’s late in the session, at which point Cable had recovered its mid-session losses and rallied to above 1.5870 as USD lost ground and Euro remained static.

·         JPY: USDJPY struggled during the Asian session opening above the 91.00 level it failed to move above exporter offers around 91.15 and eventually started to give ground in mid-session, only the continued verbal intervention seemed to steady the ship today and by Tokyo lunch we were just coming back off the lows around 90.75, we moved into London still struggling to break out of the 90.75/95 range we had found ourselves trapped in, Euro weakening had triggered some minor stops to the downside in EURJPY and we only started to see USDJPY rising once the NYK market had opened and US investors started to move into the market to extend the highs to above 91.55 in the late session.

·         AUD: Comments during the mid-Asian session left the Oz on its back foot having looked to be comfortably trending back to higher levels, we dropped from above 1.0430 to touch 1.0380 after S&P warned of economic worries for the Ozzies, however, once London walked it we saw renewed carry trade buying taking it to a pre-NYK peak above 1.0425 and NYK repeated the move pushing it back to above 1.0450. Early Ozzies have entered the market and are quietly selling it into the NYK close taking us back down to the London highs but still finishing the day away from the 1.0415 area for a change.

Yesterday’s premiership results

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

NZD       RBNZ Rate Decision A 2.50% | C 2.50% | P 2.50%               

JPY         Industrial Production M/M Dec (P) A 2.50% | C 4.10% | P -1.40%               

GBP       GfK Consumer Sentiment Jan A -26 | C -28 | P -29           

AUD       Import Price Index Q/Q Q4 A 0.30% | C 0.40% | P -2.40%              

JPY         Housing Starts Y/Y Dec A 10.0% | C 13.50% | P 10.30%    

GBP       Nationwide House Prices M/M Jan A 0.50% | C 0.20% | P -0.10% | R 0.00%

EUR        German Retail Sales M/M Dec A -1.70% | C -0.10% | P 1.20% | R 0.60%

EUR        German Unemployment Change Jan A -16K | C 8K | P 3K | R -2K

EUR        German Unemployment Rate Jan A 6.80% | C 6.90% | P 6.90%  

USD       Challenger Job Cuts Y/Y Jan A -24.40% | P -22.10%           

EUR        German CPI M/M Jan (P) A -0.50% | C -0.50% | P 0.90%

EUR        German CPI Y/Y Jan (P) A 1.70% | C 2.00% | P 2.10%       

USD       Employment Cost Index Q4 A 0.50% | C 0.50% | P 0.40%               

USD       Personal Income Dec A 2.60% | C 0.80% | P 0.60%           

USD       Personal Spending Dec A 0.20% | C 0.30% | P 0.40%        

USD       PCE Core M/M Dec A 0.00% | C 0.10% | P 0.00%               

USD       PCE Core Y/Y Dec A 1.40% | C 1.50% | P 1.50%   

USD       Initial Jobless Claims (JAN 27) A 368K | C 355K | P 330K  

CAD       GDP M/M Nov A 0.30% | C 0.20% | P 0.10%        

CAD       Industrial Product Price M/M Dec A 0.00% | C 0.00% | P -0.30% 

CAD       Raw Materials Price Index M/M Dec A -2.00% | C 0.80% | P -1.90%          

USD       Chicago PMI Jan A 55.6 | C 51 | P 51.6    

USD       Natural Gas Storage A -194B | C -198B | P -172B

For today

USDJPY:
Topside: 92.30-92.50 medium buy stops
Downside: 91.00-91.30 light bids 90.70-91.00 light bids

EURUSD:
Topside: 1.3640-1.3670 light buy stops 1.3670-1.3700 light buy stops
Downside: 1.3520-1.3550 light bids 1.3490-1.3520 light bids 1.3450-1.3485 light sell stops

EURJPY:
Topside: Nothing of note
Downside: 123.40-123.70 light sell stops AUDUSD:
Topside: 1.0460-1.0500 light stops 1.0500-1.0520 light offers
1.0426/28 market
1.0350-1.0375 light bids

 

JPY:

Amari: Think PM Abe Now Narrowing List of BOJ Candidates

Japan Dec household spending falls 0.7 pct year/year

Japan jobless rate edges up to 4.2 pct in December

Fitch Colquhoun: Japan Funding Shock Risk Still Remote

CNY:

China’s Jan official factory PMI eases to 50.4

China HSBC final PMI jumps to two-year high

China to postpone widening of property tax pilot programme – report

NZD:

NZ CB head repeats price, financial stability key focus

AUD:

Australia home prices rise 1.2% in January-RPData

 

·         EUR: The Euro opened around the 1.3580 level and immediately targeted the 1.3600 level trading quickly to 1.3610 as stops were triggered, we fell back briefly however, the market had the bit between the teeth with more stops above the 1.3620 area to close to be ignored and although we pottered around the 1.3600-10 level for several hours we eventually ran to the topside to trade just through the 1.3630 level where we have seen some European banks with offers.

·         GBP: Cable struggled throughout the session opening around 1.5855 area, we saw some GBPJPY fixing demand go through taking us up above the 1.5870 area but from there we started to gravitate back to the opening levels, only when the Euro lifted for the second time did we see Cable move up to make new highs above the 1.5875 area as EURGBP cross again rose 20 tics to yesterday’s highs,  for the moment we are hanging around the highs as we move towards London.

·         JPY: USDJPY was the talk of the town in the early session with the market opening around 91.55 several banks mentioned the 92.00 level before we’d really moved, we immediately rose to above 91.80 from the opening and stayed around the area for several hours helped by a poor employment figure and a dip in household spending, then comments from Moody’s about the stimulus likely to lift the economy out of recession, one would have expected a reversal at this point however, the financial press came back with effect on growth likely to be temporary, which clinched for Japanese players and we saw some large tickets going through EBS moving us quickly to a high of 92.27 before settling back a little however we remain above the 92.00 area as we move to London

·         AUD: The Oz opened up around the 1.0425 level having drifted off in late NYK, we saw some fresh buying enter the market in the run up to China figures everything was looking good and we’d rally to above 1.0440 however, the AUD PPI  number was worse than expected and far worse than previously sending the market down quickly from its highs to trade around the 1.0400 level it struggled at the level to push through and we remained in a small range for a few hours until the Manufacturing PMI figure was released in China showing another poor one and the Oz broke lower for the second time, one suspects the run in JPY might have relieved some pressure as the AUDJPY remained in line broadly speaking and little effect for the carry, only the last move in Euro kept the Oz from the bids below 1.0375 for the time being, as we move to London the market remains just short of the 1.0400 level.

 

Today’s data

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

JPY         Unemployment Rate Dec A 4.20% | C 4.10% | P 4.10%   

JPY         Household Spending Y/Y Dec A -0.70% | C -0.20% | P 0.20%        

AUD       PPI Q/Q Q4 A 0.20% | C 0.30% | P 0.60%               

CNY        Manufacturing PMI Jan A 50.4 | C 51 | P 50.6      

CNY        HSBC Manufacturing PMI Jan (F) A 52.3 | C 52 | P 51.5   

08:30     CHF        SVME-PMI Jan C 50.4 | P 49.5    

09:00     EUR        Eurozone PMI Manufacturing Jan (F) C 47.5 | P 47.5        

09:30     GBP       PMI Manufacturing Jan C 51 | P 51.4      

10:00     EUR        Eurozone CPI Estimate Y/Y Jan P 2.20% 

10:00     EUR        Eurozone Unemployment Rate Dec C 11.90% | P 11.80%              

13:30     USD       Change in Non-farm Payrolls Jan C 155K | P 155K              

13:30     USD       Unemployment Rate Jan C 7.80% | P 7.80%        

14:55     USD       U. of Michigan Confidence Jan (F) C 71.3 | P 71.3              

15:00     USD       Construction Spending M/M Dec C 0.50% | P -0.30%      

15:00     USD       ISM Manufacturing Jan C 50.5 | P 50.7   

15:00     USD       ISM Prices Paid Jan C 56 | P 55.5                           

 

Ranges as of 6am London time

                                Highs    Lows

USD/JPY               92.27 | 91.61

EUR/USD             1.3634 | 1.35735

EUR/JPY               125.75 | 124.40

AUD/USD            1.0446 | 1.0382

NZD/USD             0.8440 | 0.8388

USD/CAD             0.9978 | 0.9966

EUR/CHF              1.2415 | 1.2358

USD/CHF             0.9109 | 0.9089

GBP/USD             1.5878 | 1.5845

EUR/GBP             0.8588 | 0.8565

 

 

Good luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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