Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 92.868 | EURUSD 1.33624 | EURJPY 124.096| AUDUSD 1.03603 | NZDUSD 0.8470 | USDCAD 1.00103 | EURCHF 1.23087 | USDCHF 0.92118 | GBPUSD 1.54933 | EURGBP 0.86239 |

 

Harry Hindsight

·         EUR: Asia opened quietly around the 1.3450 area and traded in a tight range of 1.3440/55 for the most part eventually breaking lower towards the end of the session, in the grey period before London open, first the early number from France set the ball rolling dropping the Euro from 1.3440 to below 1.3390 then the German which was expected to be particularly poor came in worse than expected, finally the Italian far worse than expected and obviously the Eurozone was never going to be enthralling, by the time all the GDP numbers were out the Euro was trading below 1.3320 and on its lows for the day, we never recovered and there was a significant amount of consolidation around the lows, NYK only slowly picked up the Euro from its lows and the recovery was barely 40tics throughout the session with the Euro finishing the day just below the 1.3360 level.

·         GBP: Some GBPJPY selling after the opening seemed to be reminiscent of long weekend roll capture going through why with interest rates so low would anyone deign to be bothering is a mystery however, that is what it looked like as Cable opened some 10 tics or so lower, Asia was slow going with the low being 1.5525 before rallying to fill the gap from the opening however, we saw some late session GBP selling coming to market which seemed to be pre London position squaring more than anything before we started to move into the European GDP numbers, while Cable failed to rally in anyway and was dragged lower it did find some resistance to the move we saw in the Euro and EURGBP started to drop lower as the Euro saw successive rounds of selling as each number hit the market, dropping from the highs above 0.8665 to below 0.8585 once all the data was in view, Cable drifted lower over the session with some spikes higher thought out the session however it was never going to recapture the highs as the Euro dropped so low and we tested down to the 1.5475 level a couple of time before we started to see the market rise moving to just below the 1.5500 level into the close.

·         JPY: With the G-20 cloud hanging over the USDJPY we saw the market slowly lose ground through the day, while there are few specifics one or two mutterings from Russia in particular about specific guidelines/language against misalignment of currencies, we started the day with the USDJPY around the 93.20 level moving higher as the JPY GDP came in weaker than expected taking us to above 93.70 towards the end of the session in Asia, London held the market around the 9350-60 area however, once all the GDP numbers were in for Asia the fall in Euro’s impacted on the EURJPY cross and the USDJPY leg suffered falling initially to 93.10, then chatter about this weekend’s G-20 started to kick in during the NYK session and the USDJPY started to drift holding the 93.00 area for a few hours before late selling crept in as positions were closed before the meeting starts taking us below 92,70 and finishing the session around the 92.90 area.

·         AUD: The Oz was effected today both by movements in the Euro and its GDP data and the JPY with its attached baggage we opened above the 1.0365 levels gradually sliding throughout the session to reach a low below 1.0345 before finding some support as the Euro began to slide and we saw EURAUD selling entering the market taking the AUD back above the opening levels, as the declines continued though in the Euro, the Oz began to give ground as the movement in the market became a USD rally overall leaving the Oz at its lows below 1.0330, then as JPY started to strengthen the Oz started to rally again as the all-important carry trade remained bid and the Oz moved back towards the highs.

Yesterday’s premiership results

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

JPY         BoJ Rate Decision A 0.10% | C 0.10% | P 0.10%   

JPY         GDP Q/Q Q4 (P) A -0.10% | C 0.10% | P -0.90%  

JPY         GDP Deflator Y/Y Q4 (P) A -0.60% | C -0.60% | P -0.80% 

AUD       Consumer Inflation Expectation Feb A 2.20% | P 2.00% 

EUR        French GDP Q/Q Q4 (P) A -0.30% | C -0.20% | P 0.10%   

EUR        German GDP Q/Q Q4 (P) A -0.60% | C -0.50% | P 0.20% 

EUR        Italian GDP Q/Q Q4 (P) A -0.90% | C -0.50% | P -0.20%   

EUR        Eurozone GDP Q/Q Q4 (A) A -0.60% | C -0.40% | P -0.10%            

USD       Initial Jobless Claims (FEB 10) A 341K | C 361K | P 366K | R 368K

USD       Natural Gas Storage A -157B | P -118B

For today

USDJPY 
Topside: 93.00-93.30 light buy stops  93.40-93.70 light offers  93.70-94.00 light offers 
Downside: 92.40-92.70 medium bids 92.00-92.30 medium bids 91.70-92.00 light bids 

EURUSD 
Topside: 1.3380-1.3410 light buy stops 1.3420-1.3450 light offers 
Downside: 1.3300-1.3330 light bids 1.3250-1.3280 light sell stops 

EURJPY 
Topside: Nothing noted 
Downside: 123.50-123.80 light sell stops 123.00-123.30 light sell stops  AUDUSD 
Topside: 1.0370-1.0400 medium buy stops  1.0410-1.0440 light offers 
Downside1.0300-1.0330 light sell stops 1.0270-1.0300 light bids

 

JPY:

Japan PM close to choosing nominee for BOJ chief-sources

Abe Ally Yamamoto Says Currency Devaluation Spurs Global Growth

Japan’s Amari: ex-MOF official for BOJ head post would be OK

Toyoda Says Yen Correcting from ‘Excessively’ Strong Level

Transport Minister: May Have to Consider Govt Support to Airlines Due to Boeing 787 Suspension

Japan revised Dec industrial output up 2.4% MoM

JPY/CNY:

China Ships Enter Japan Waters near Senkakus – Kyodo

AUD:

Australia Stung by Strong Currency, Says RBA Board Member

NZD:

NZ 4Q Real Retail Sales +2.1% on Quarter; Consensus +1.2%

Non-residents holdings of NZ debt rise in January – RBNZ

G20:

There not specific currency mentioned for the moment in the agenda for the meeting Official source

·         EUR: Euro opened slightly strong as EURJPY buying appeared in the market just after the NYK close, and we traded the high for the Asian session in the first few minutes above the 1.3370 level before moving back in line to where it was in late NYK, we drifted in the first half of the session, and remained in a tight range throughout of some 20 tics with selling appearing towards the end of the session moving into the grey area.

·         GBP: GBP saw minor supply in GBPJPY during the fix taking us to a low around the 1.5485 however, from that point on we saw minor EURGBP selling and straight Cable buying to take Cable above 1.5520 over the course of the session with only small volume before this weekend’s G20 meeting, more than likely position squaring from retail Japan.

·         JPY: USDJPY continued to move lower as position squaring continues in front of this weekend’s G20 meeting although there has been no specific mention of Japan the meeting is most likely to focus on monetary policy, USDJPY opened around the 92.90 area moving up to trade above 93.10 but with ever increasing rumours and retail nervousness it steadily dropped from the highs to trade below 92.30 into Tokyo lunch, we moved off the lows as the market in Japan looked sated for the time being and normal importer/exporter flow started to dominate moving it back above the 92.50 levels. In what hopes will be the last day of the holidays and we will see a pickup of volumes into next week.

·         AUD: Retail sales figures in NZD kicked off a selloff in AUD/NZD taking the cross from above 1.2250 to below 1.2150 with the Oz leg seemingly doing a lot of work to the downside, losing some 35 tics in the early part of the session trading below 1.0345, once the rush was over EURAUD selling appeared to help the Oz move back above the highs touching the 1.0375 level in the latter half of the session with the market holding above the 1.0365 level for the most part.

Today’s data

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

NZD       Retail Sales Q/Q Q4 A 2.10% | C 1.10% | P -0.40%             

JPY         Industrial Production M/M Dec (F) A 2.40% | C 2.50% | P 2.50% 

09:30     GBP       Retail Sales M/M Jan C 0.50% | P -0.10%               

10:00     EUR        Eurozone Trade Balance (EUR) Dec C 10.7B | P 11.0B      

13:30     CAD       Manufacturing Shipments M/M Dec C -0.40% | P 1.70%

13:30     USD       Empire Manufacturing Feb C -3 | P -7.78              

14:00     USD       Net Long-term TIC Flows Dec C 34.3B | P 52.3B  

14:15     USD       Industrial Production Jan C 0.30% | P 0.30%        

14:15     USD       Capacity Utilization Jan C 78.90% | P 78.80%        

14:55     USD       U. of Michigan Confidence Feb (P) C 74.6 | P 71.3                                            

 

Ranges as of 6am London time

                                Highs    Lows

USD/JPY               93.12 | 92.25

EUR/USD             1.33705 | 1.3347

EUR/JPY               124.37 | 123.195

AUD/USD            1.0375 | 1.0342

NZD/USD             0.8534 | 0.8502

USD/CAD             1.0013 | 1.0002

EUR/CHF              1.2319 | 1.2306

USD/CHF             0.92255 | 0.9211

GBP/USD             1.5521 | 1.5486

EUR/GBP             0.8628 | 0.86025

Good luck

Andy