Daily FX Market Commentary

Andy Harrison

Good morning,

NYK Close SYD open

USDJPY 92.841 92.75-88 | EURUSD 1.36404 1.3639-55 | EURJPY 126.64 126.57-85 | AUDUSD 1.04064 1.0390-15 | NZDUSD 0.84505 0.8436-70 | USDCAD 0.9966 0.9964-75 | EURCHF 1.2385 1.2364-1.2400 | USDCHF 0.90793 0.9075-87 | GBPUSD 1.56979 1.5681-1.5705 | EURGBP 0.86905 0.8681-0.8711 |

 

Weekend News

CNY:

China Services Industries Expanded at Faster Pace in January 
China’s Wen Warns Excessive Power Leads to Official 
China to Boost Energy Exploration, Mining Surveys, Paper Says
Baidu Chief Li, Politburo’s Yu Join Top China Advisory Body
China Reports Record Capital-Financial Account Gap for 2012 
China to Relax Curbs on Brokerages’ Expansion Under Draft Rules
JPY:

Abe Aide Says 2% Inflation Reachable in 2 Yrs, Mainichi Reports
Aso: Ending Deflation, Reviving Economy May Take a Few Years
Opposition Leader Suggests Takenaka for BOJ Governor, Asahi Says
New BOJ Governor Should Have Large Market Influence, Amari Says
Japan’s Abe Won’t Act on Base Move Before Obama Talks, Jiji Says
Japan Panel Urges Power Industry Split Within 6 Years: Nikkei
USD/JPY:

US, Japan to Speed Immigration Process at Airports, Nikkei Says
JPY/CNY:

Japan Detains Chinese Boat Captain for Incursion, Kyodo Says
USD:

Bullard Sees U.S. Growth Strong Enough to Cut QE Pace by Midyear
U.S. Mutual Funds Reaping Record Investor Cash as Markets Rally
AUD/EUR:

Euro Area’s Jobless Rate Remains ‘Unacceptably High,’ Swan Says
EUR:

Spain’s Rajoy Says Allegations of Graft against Him are ‘False’
GBP:

Cameron Plans to Keep Osborne at Treasury Until 2015, Aide Says
U.K’s Osborne Said to Want RBS Libor Fine Paid From Bonus Pool

Harry Hindsight

·         EUR: We saw the market rise from the opening 1.3580 on stop hunting and fixing demand in the EURJPY from importers rising initially to above 1.3620 however, once the stops were cleared we struggled to make headway until into Tokyo lunch when another round of buying saw the Euro above 1.3630 peaking just below 1.3640 as we ran to London it went quiet again and early Europeans and break traders took a small profit from the move before the employment figures were released in Europe. A rise in Eurozone PMI helped the market move up again triggering some stops through 1.3650 before stalling above 1.3665, we then dipped back on the employment numbers which came in the same as the previous month but better than expected by the market, then it was a matter of sitting and waiting for the NFP from the US, and while NFP was slightly better than expected a rise in unemployment had the market jumping around dropping initially to below 1.3590 squeezing out short term longs only to bounce aggressively back to above 1.3710, once the numbers were out of the way it was a slow decline into the close moving steadily lower to 1.3640.

·         GBP: Cable held up in Asia trading in a tight quiet range opening around 1.5860 and basing of that level to just below 1.5880, only when we moved into London did we see some change with Cable dropping to just above the 1.5800 level, and EURGBP rising through 0.8600 triggering stops along the way, more chatter of the UK losing its triple A rating ran around the market but for the moment the damage was done as the cross hit just below the 0.8650 level and Cable held around 1.5820, as we moved into NYK it would seem that everyone turned against the GBP and we saw another stop run moving the cross above 0.8700 touching above 0.8515 before trading sideways with base of 0.8690.

·         The Cable dropped sharply from this point falling to below 1.5700 as pressure from the EURGBP rally forced GBP lower and helped the Euro rise the way it did.

·         JPY: USDJPY continued to rise with the help of EURJPY stops as well as USDJPY stops along the way, while one can’t ignore the NFP it would be more in line to say that Euro was the key mover today, and USDJPY was really a lack of interest into selling into Euro’s, USDJPY moved in Asia quietly until the Euro started to rise we opened around the 91.60 area and slowly moved above 91.80 before the Euro made its move, we triggered stops in both EURJPY and USDJPY pushing through the 92.20 area and basing off 92.10 as we moved into London, and so it remained until US figures, we saw a dip as with the Euro on NFP only for USDJPY to rally aggressively to above 92.60 before finding any resistance, we again had a run higher in the last few hours of trading pushing up to just short of 93.00 one assumes again on stops being triggered. 

·         AUD: With more talks about rate cuts than we’ve hear in a while the Oz underperformed the rest of the majors, losing ground on the China PMI number and ignoring its own numbers, we opened around the 1.0430 area peaked at 1.0440 area before dropping for the first time to breach the 1.0400 level and following through again in Asia to below 1.0385, once we’d made the lows some support appeared and held the market, however, the bounce was short lived to above 1.0400 and London walked in as sellers, taking the Oz down to just above 1.0360 fairly quickly taking out some of the support we’d seen but more resting bids below the lows held the market and we moved into NYK with a supportive tone to the market, come the figures and we moved back above 1.0420 but couldn’t find any momentum to move to the opening levels and traded sideways into a quiet close just above the 1.0400 level.

Friday’s premiership results

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   

CHF        SVME-PMI Jan A 52.5 | C 50.4 | P 49.5 | R 49.2

EUR        Eurozone PMI Manufacturing Jan (F) A 47.8 | C 47.5 | P 47.5       

GBP       PMI Manufacturing Jan A 50.8 | C 51 | P 51.4 | R 51.2

EUR        Eurozone CPI Estimate Y/Y Jan A 2.00% | C 2.20% | P 2.20%         

EUR        Eurozone Unemployment Rate Dec A 11.70% | C 11.90% | P 11.80% | R 11.70%

USD       Change in Non-farm Payrolls Jan A 157K | C 155K | P 155K | R 196K

USD       Unemployment Rate Jan A 7.90% | C 7.80% | P 7.80%    

USD       U. of Michigan Confidence Jan (F) A 73.8 | C 71.3 | P 71.3             

USD       Construction Spending M/M Dec A 0.90% | C 0.50% | P -0.30%  

USD       ISM Manufacturing Jan A 53.1 | C 50.5 | P 50.7  

USD       ISM Prices Paid Jan A 56.5 | C 56 | P 55.5

For today

USDJPY:
Topside: 93.00-93.30 decent buy stops 93.30-93.60 decent buy stops 94.00-94.30 decent offers
Downside: 91.50-91.80 light bids 91.20-91.50 medium bids

EURUSD:
Topside: 1.3690-1.3720 light offers 1.3720-1.3750 light buy stops 1.3750-1.3780 light offers
Downside: 1.3540-1.3570 light mixed bag

EURJPY:
Topside: 128.60-128.90 light buy stops
Downside: 122.00-122.30 light sell stops AUDUSD:
Topside: 1.0440-1.0460 light buy stops 1.0500-1.0530 light offers
Downside: 1.0360-1.0390 light sell stops

 

JPY:

Japan Fin Min Aso: Overcoming Yen Strength Still a Priority

JPY: Japan Pension Fund’s Bonds Too Many If Abe Succeeds, Mitani Says

CNY:

China exchanges to raise margins ahead of holidays

AUD:

Australia’s Gillard Slumps in New Poll

Australia Home-Building Permits Fell 4.4% in December

Australia job advertisements dip in Jan – ANZ

Australia Inflation Climbs 0.3% in January, Survey Finds

NZD:

N.Z. Treasury Says Inflation Pressures Remain Weak

 

·         EUR: Euro opened a touch higher after the weekend news, with several trying to keep a lid on the rally in Euro however once we opened the market was reluctant to continue pushing and we was a successive rounds of EURJPY from onshore accounts coming to market driving us down in waves to reach below 1.3620 on what looks to be a quiet day with less volume than you’d expect on a 40 tic move.

·         GBP: Cable remained in a tight range around the 1.5700 level with 10 tics containing the range, with the EURGBP cross dominating the market moving down from above 0.8700 to the current 0.8675 area. Very light volumes
JPY: USDJPY opened around the 92.80 level and was moving sideways into the Tokyo opening from there we saw retail and exporter selling going through taking us down to below 92.50 briefly before moving back in to the 92.65 area where we traded quietly for the best part of the session. EURJPY selling seemed to be the biggest selling area dropping from above the 126.80 area and forcing both legs lower to just above 126.00.

·         AUD: The Oz opened around where it closed on Friday and moved a touch higher until the Building approvals number hit worse than expected and for once the Oz reacted on one of its on figures dropping to the 1.0410 level but no further and we soon found ourselves back basing off the 1.0425 area in a very quiet session.

 

Today’s data

Actual = A Consensus = C  Previous = P Timings GMT

AUD       TD Securities Inflation M/M Jan A 0.30% | P 0.40%           

JPY         Monetary Base Y/Y Jan A 10.90% | C 13.20% | P 11.80% 

AUD       Building Approvals M/M Dec A -4.40% | C 1.00% | P 2.90%           

09:30     EUR        Eurozone Sentix Investor Confidence Feb C -1.7 | P -7   

09:30     GBP       PMI Construction Jan C 49.2 | P 48.7       

10:00     EUR        Eurozone PPI M/M Dec C -0.20% | P -0.20%        

10:00     EUR        Eurozone PPI Y/Y Dec C 2.10% | P 2.10%               

15:00     USD       Factory Orders Dec C 2.20% | P 0.00%

Ranges as of 6am London time

                                Highs    Lows

EUR                        1.3660 | 1.26185

JPY                         92.91 | 92.50

GBP                       1.5710 | 1.5683

CHF                        0.9095 | 0.9076

AUD                       1.0438 | 1.0402

NZD                       0.8493 | 0.8448

CAD                       0.9977 | 0.9965

EURCHF                1.2405 | 1.2375

EURGBP               0.8704 | 0.8675

EURJPY                 126.84 | 126.06

 Stay lucky

Andy