Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 93.64 | EURUSD 1.35227 | EURJPY 126.63 | AUDUSD 1.03204 | NZDUSD 0.84249 | USDCAD 0.99555 | EURCHF 1.23087 | USDCHF 0.91024 | GBPUSD 1.56586 | EURGBP 0.86357 |

 

Harry Hindsight

·         EUR: Euro’s opened in Asia quietly and traded in a tight sideways pattern throughout the session moving from the opening area of 1.3580 and attempting brief move towards the 1.3600 level before falling off to just below the opening, as we swung towards the London opening we saw fresh selling emerge as USDJPY pushed up through 94.00 and EURJPY refused to follow, forcing the Euro leg lower, once it had broken down to 1.3560 early Europeans stepped in and started to sell more aggressively and by the official opening in London we were trading down below 1.3520 as weak stops were triggered, with very little news we held a tight range until into the mid-session when comments from Hollande overnight that the EU leaders should steer the currency lower only to be followed later in the day by a German government spokesman saying the Euro was not overvalued, pushing the Euro away from the lows below 1.3500 and slightly higher back above 1.3540, whichever train of thought one suspects the high level of the Euro is effecting the French far more than the Germans which always leads to team spirit.

·         GBP: The less said about the Asian market (misnomer) the better it opened around the 1.5660 area and stayed pretty much 1.5655-65 for almost the whole session only once I’d wrote yesterday’s report did we see any movement as it started to feel the drag of the Euro as it broke lower, even so the movement was muted and we traded down to 1.5630 and once the London market opened we saw opportunists’ buying it back and taking it to the high of the day of 1.5675, while a 40 tic range doesn’t seem too bad in the light of the Euro fall Cable was the poor relative of the EURGBP cross which dropped from the highs above 0.8680 to a low just above 0.8615 in an expensive move for the longs with GBP holding onto the gains for the day in most part Cable finishing 1.5665 area and the cross 0.8630.

·         JPY: We opened around the 93.60 area and saw some AUDJPY cross selling first off with the market in USDJPY dropping to below 93.50 however, once Tokyo opened we saw the market reverse its earlier moves and start to trend higher, as we moved towards Tokyo lunch we started to see a concerted effort by some to move higher and one suspects an option play of some kind as the steady climb to above 83.90 was suddenly grasped and pushed firmly through the 94.00 level and an exchange of decent amounts occurred for several minutes through the level before the buying evaporated and we dropped quickly to 93.80, once the jam through the figure was over the selling continued, it’s probably worth noting that at this point the Euro was in decline as exporters sat offering the EURJPY cross and it was that leg that gave way first, once we moved into the London market there seemed to be a lack of targets for the market to achieve and we meandered towards the NYK session aimlessly holding around 93.65, before starting to drop off as early US sellers entered the market taking the USDJPY to below 93.30, mid-NYK session saw a slight attempt to move back to the opening levels however the market couldn’t sustain the moves and we have seen the market settle around the 93.50 as we move to the close, with volumes above 94.00 probably as much as was traded throughout the NYK session.

·         AUD: The Oz opened around the 1.0385 area running up to above the 1.0400 level in early Tokyo as pre-retail sales buyers took optimistic views of the forth coming numbers, wrong, when the numbers hit worse than expected but in line with previous months the market took it badly and we tumbled very quickly to below the 1.0370 level, from there we continued to trend lower slowly working through some medium term profit taking and the rest of the session once we’d pushed briefly through 1.0350 was spent basing off that level, then the Euro broke lower and JPY started to strengthen after it’s surge through 94.00 and AUDJPY stops became vulnerable and we saw two areas triggered and the AUD moved quickly down to 1.0335 and after holding for an hour move again on the London opening to hit below 1.0320, with 1.0300 so close you knew it would try it and over the course of the London session running into NYK we pushed through the level on three separate occasions however we were met each time by some solid support and we failed to push much beyond 1.0297, once we were in NYK properly the market slowly recovered moving to above 1.0330 and continued to hold pretty much the levels as we moved to the close.

Yesterday’s premiership results

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

AUD       Retail Sales M/M Dec A -0.20% | C 0.30% | P -0.10% | R -0.20%

EUR        German Factory Orders M/M Dec A 0.80% | C 0.70% | P -1.80%

CAD       Ivey PMI Jan A 58.9 | C 53.8 | P 52.8       

USD       Crude Oil Inventories A 2.6M | C 2.7M | P 5.9M

For today

USDJPY:
Topside: 94.00-94.30 light buy stops 94.30-94.60 light mix
Downside: 93.00-93.30 light sell stops 92.70-93.00 light sell stops

EURUSD:
Topside: 1.3530-1.3570 light buy stops 1.3600-1.3635 light buy stops
Downside: 1.3470-1.3500 light mix 1.3430-1.3465 light bids 1.3400-1.3430 light sell stops

EURJPY:
Topside: 127.00-127.30 light buy stops
Downside: Nothing significant AUDUSD:
Topside: 1.0340-1.0370 light buy stops 1.0370-1.0400 light offers
Downside: 1.0270-1.0300 light sell stops

 

JPY:

Japan PM Abe: Deflation can be overcome by monetary policy

Japan PM: New BOJ head must have global communication skills

Aso Says Monetary Easing Is Not Competitive Yen Devaluation

Japan Fin Min Aso: Only Germany Criticizing Japan on Currency

Japan Dec core machinery orders rise 2.8% MoM

Fitch: Japan’s Mega Banks to See Selective Offshore Growth

JPY/CNY:

Chinese Asset Managers to List ETFs In Tokyo – Nikkei

AUD:

Australia employment rises in Jan, jobless steady

Australia business conditions worsen in Q4 survey

 

·         EUR: Euro’s traded quietly in a rather subdued market, with ECB rate/conference later today and a Spanish auction it looks like everyone stayed at home, we opened just above the 1.3520 area and didn’t noticeably improve, once Tokyo moved in we saw some light EURJPY selling going through but noting to get excited about, we traded down to 1.3505 area but with a lack of conviction and the level holds for the moment, one would suspect that no one expects a change the market has wrote in some measure of a cut beforehand.

·         GBP: The Cable initially moved higher in early trading pre-Tokyo moving to the 1.5670 level on some light cross buying however, once Tokyo opened we saw some fixing supply in GBPJPY moving the market down towards the lows and after several hours trading around the 1.5650 area we dipped to a 1.5646 low before rallying above the opening 1.5660 area, we currently are slightly better than the opening moving towards London but not as you’d notice to much.

·         JPY: USDJPY opened on its highs around the 93.60 mark before slowly drifting lower into the Tokyo open, with several comments from ministers today one stands out after a couple of countries had a moan about rate fixing as protectionism, obviously Aso-san has selective hearing but one has to say this ploy has been going on for a good many years so one wonders whether other countries have their collective backs to the wall, once we get past the comments the market moved to below 93.34 with very little interest in the market and we’ve only managed to claw back half the losses from the opening in a very quiet session.

·         AUD: The Oz opened up around the 1.0320 level before drifting lower by about 10 tics as some position flattening occurred pre business confidence, when the number hit we had the usual flurry of activity quickly going up to trade above 1.0330 before dropping quickly back to trade again below 1.0300 only to bounce and steady itself for the next batch of employment numbers this time which turned out to be better than expected and move the pair back slowly to the 1.0330 level as we move towards London although volume was a little thin.

Today’s data

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

NZD       Employment Change Q/Q Q4 A -1.00% | C 0.40% | P -0.40%        

NZD       Unemployment Rate Q4 A 6.90% | C 7.10% | P 7.30%     

JPY         Machine Orders M/M Dec A 2.80% | C -0.90% | P 3.90%               

AUD       NAB Business Confidence Q4 A -5 | P -2               

AUD       Employment Change Jan A 10.4k | C 6.0K | P -5.5K          

AUD       Unemployment Rate Jan A 5.40% | C 5.50% | P 5.40%    

JPY         Leading Index Dec (P) A 93.4 | C 93.6 | P 92.1     

06:45     CHF        SECO Consumer Confidence Jan C -12 | P -17     

08:00     CHF        Foreign Currency Reserves Jan C 428.5B | P 427.2B          

09:30     GBP       Industrial Production M/M Dec C 0.70% | P 0.30%            

09:30     GBP       Industrial Production Y/Y Dec C -2.20% | P -2.40%            

09:30     GBP       Manufacturing Production M/M Dec C 0.60% | P -0.30%               

09:30     GBP       Manufacturing Production Y/Y Dec C -2.60% | P -2.10% 

09:30     GBP       Visible Trade Balance (GBP) Dec C -8.9B | P -9.2B             

11:00     EUR        German Industrial Production M/M Dec C 0.20% | P 0.20%          

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

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

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

13:30     EUR        ECB Press Conference C 0.00% | P 0.00%              

13:30     CAD       New Housing Price Index M/M Dec C 0.10% | P 0.10%

13:30     USD       Non-Farm Productivity Q4 (P) C -1.00% | P 2.90%             

13:30     USD       Initial Jobless Claims (FEB 3) C 360K | P 368K       

13:30     CAD       Building Permits M/M Dec C 4.30% | P -17.90% 

15:00     GBP       NIESR GDP Estimate Jan  P -0.30%           

15:30     USD       Natural Gas Storage C -135B | P -194B

Ranges as of 6am London time

                                Highs    Lows

USD/JPY             93.62 | 93.29

EUR/USD             1.3532 | 1.3503

EUR/JPY             126.59 | 126.045

AUD/USD             1.0333 | 1.0298

NZD/USD             0.8402 | 0.8352

USD/CAD             0.9965 | 0.9951

EUR/CHF             1.2316 | 1.2293

USD/CHF             0.9109 | 0.90985

GBP/USD            1.5689 | 1.5646

EUR/GBP            0.8636 | 0.8624

 

Good luck

Andy