Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 93.563 | EURUSD 1.32824 | EURJPY 124.268 | AUDUSD 1.0257 | NZDUSD 0.83665 | USDCAD 1.01649 | EURCHF 1.2313 | USDCHF 0.92685 | GBPUSD 1.52333 | EURGBP 0.87184 |

 

Harry Hindsight

·         EUR: Having opened around the 1.3385 levels we moved quickly higher into the Tokyo opening pushing above the 1.3430 level as we took out near term stops above 1.3400 before running into light offers, we drifted from this point towards the London opening and early buyers in the grey hour before the official opening again took the market back towards its highs but failed to do any better, once we moved into London and we started to see comments from some of the ECB players one in particular Asmussen speaking of a mild recovery, while others played down any interest rate cuts, German PPI was a little over done and we saw the market drop on the back of these numbers, balance this with a break higher in EURGBP through the 0.8700 level triggering stops and the quick drop was limited to just above the 1.3390 level continuing slowly towards the NYK opening, trading just above 1.3380, once NYK was in swing the US data started to play its part with inflation numbers more or less in line with expectations but the leading PPI lower than expected, Euro dropped again moving to the 1.3340 area before steadying and trading sideways into the Eurozone confidence number, a push through the lows triggered some weak stops and 1.3300 level was quickly pushed through and only stopped once the 1.3280 level was broached, from there the market died and we did very little else into the close. 

·         GBP: As on previous days the GBP underperformed the rest of the market opening around the 1.5420 level we traded up in Asia to hold above the 1.5440 levels for the most part and moved into London with little difference, the release of the BoE minutes saw an increase in the number wanting to increase QE this sent the market in a spiral lower with nobody wondering why the jobless numbers are dropping but GDP isn’t improving, one for the rocket scientists among the community one assumes, we dropped quickly to 1.5340 however, we hadn’t yet got into NYK, the market slowly declined, with EURGBP moving through the 0.8700 level triggering a good number of stops pushing quickly to 0.8765 before stopping, from there both currencies started to trade lower with Euro’s doing a little catch up, comments from the ECB had the Euro dropping quicker from this point and the EURGBP cross started to reverse its gains moving in the end to the 0.8710 level, Cable continued to decline, being dragged a little by the Euro, and spiking below 1.5200 on what looked to be a bit of a stretch by someone possibly option interest, we steadied into the close holding above the 1.5220 level.

·         JPY: A mixed day for the USDJPY with the Asian session buying from 93.55 levels pre Tokyo to above the 93.80 level only for it to be quickly reversed once Tokyo opened with an increase initially in the trade balance worrying the market then a turnaround once the Industry activity numbers appeared, by the time the market was moving to London we’d hit the lows for the day, with a burnt retail Japan close to liquidation points with Gold struggling on its lows as well as JPY crosses. London changed all that and the market started to recover albeit slowly moving to 93.60 as NYK entered the fray, a late IMM liquidation saw the USDJPY rising quickly again and pushing through the 94.00 on a spike higher before moving back to the 93.50 almost as quickly once the play was over and we ran out just above the opening levels several hours earlier.

·         AUD: The Oz in itself had a reasonably quiet session during Asia with its own numbers not surprising the market that much, comments from the RBNZ’s Wheeler set the market off with the AUDNZD collapsing a big figure when he made the comment that they were prepared to intervene, although the NZD itself only dropped 60 tics against the USD as the market didn’t believe they had the ability to effect the currency even if they really did have the will power, the Oz rose comfortably above the 1.0360 level and only traded down to the starting levels as we approached the London opening, several hours of drifting eventually the Oz began to get caught up in the Euro and GBP declines gradually dropping through the London session and continuing the move into the NYK session, by the end of the IMM session 2000hrs GMT the market had reached its lows and early Sydney were waking up with possible new ideas on buying the 1.0240 lows, we pushed up for a close around the 1.0260 in a slow reverse but it was a slow rise.

 

Yesterday’s premiership results

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

NZD       PPI Inputs Q/Q Q4 A -0.30% | C 0.30% | P -1.00%              

NZD       PPI Outputs Q/Q Q4 A -0.10% | C 0.40% | P -0.90%          

AUD       Conference Board Leading Index Dec A -0.10% | P -0.20%            

AUD       Westpac Leading Index M/M Dec A 0.20% | P 0.60% | R 0.70%   

JPY         Trade Balance (JPY) Jan A -0.68T | C -0.59T | P -0.80T | R -0.78T  

JPY         All Industry Activity Index M/M Dec A 1.80% | C 1.60% | P -0.30% | R -0.40%       

EUR        German PPI M/M Jan A 0.80% | C 0.30% | P -0.30%         

EUR        German PPI Y/Y Jan A 1.70% | C 1.20% | P 1.50%              

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

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

GBP       Bank of England Minutes A 0—0—9 | C 0—0—9 | P 0—0—9            

GBP       Jobless Claims Change Jan A -12.5K | C -6.0K | P -12.1K | R -15.8K

GBP       Claimant Count Rate Jan A 4.70% | C 4.80% | P 4.80%     

GBP       ILO Unemployment Rate (3M) Dec A 7.80% | C 7.70% | P 7.70%

CHF        ZEW (Expectations) Feb A 10 | P -6.9      

USD       Housing Starts Jan A 890K | C 925K | P 954K        

USD       Building Permits Jan A 925K | C 920K | P 903K     

USD       PPI M/M Jan A 0.20% | C 0.40% | P -0.20%          

USD       PPI Y/Y Jan A 1.40% | C 1.60% | P 1.30%

USD       PPI Core M/M Jan A 0.20% | C 0.20% | P 0.10% 

USD       PPI Core Y/Y Jan A 1.80% | C 1.60% | P 2.00%     

EUR        Eurozone Consumer Confidence Feb (A) A -24 | C -23.1 | P -23.9              

For today

USDJPY 
Topside: 93.85-94.10 medium buy stops  94.20-94.50 medium offers 95.00-95.30 medium stops
Downside: 93.00-93.30 medium sell stops 93.00-92.90 light sell stops 92.60-92.90 medium bids 

EURUSD 
Topside: 1.3300-1.3330 light offers  1.3340-1.3370 light offers 1.3420-1.3440 light offers
Downside: 1.3200-1.3230 medium sell stops 

EURJPY 
Topside: 124.70-124.80 light offers  125.00-125.30 light offers 
Downside: 123.70-123.80 light sell stops  AUDUSD 
Topside: 1.0270-1.0300 medium offers  1.0300-1.0330 light buy stops 
Downside: 1.0220-1.0230 light bids 1.0200-1.0180 medium bids 1.0150-1.0130 medium stops

 

JPY: Japan Public Pension Giant To Review Asset Weightings -Nikkei

JPY:

Japan DPJ’s Maehara: wouldn’t automatically reject Muto for BOJ gov

Japan manufacturers’ mood set to turn optimistic-Reuters Tankan

USD/KRW:

U.S., South Korea to Stage Major Joint Military Exercises

CNY:

China’s top four banks step up new lending in first half of Feb-report

China Faces Downside Risk From Overinvestment, S&P Report Says

AUD:

Australia central bank sold net A$393 mln in Jan

EUR:

EU Commission to Issue Worse Outlook for France – Report

 

·         EUR: Having opened around the 1.3285 level the market initially looked to be holding up after the previous days drops, however, the closer we got to Tokyo opening the more volume seemed to be coming to market as supply, and on the opening we were already off from the 1.3290 levels to 1.3270, Tokyo came in and we saw some EURJPY cross buying going through from medium term players but the demand soon died down and the Euro failed around the 1.3290 level for the second time and started to move lower, when the CNY number the only figure for Asia today came out at and the Euro started to drop pushing to the lows before holding for several hours, before news that the EU was to issue a worse than expected outlook for France and we dropped another leg lower to the 1.3260 level, again a similar pattern however, this time Cable broke and dragged the Euro with it and while doing this we moved again to the 1.3240 area, EURGBP cross rose quickly however, the drag by the GBP and the fact that players are selling into the EURGBP rally has the Euro being pressured now Cable is off its lows.

·         GBP: Cable opened quietly around the 1.5230 area and looked to be hanging in pushing slowly above the 1.5240 level but not failing to move beyond the level, we pottered around the 1.5230 area for several hours, then we saw some selling appear which was either a large clip being done untidily or someone gunning for stops/option barriers around the 1.5200, either way the first attempt failed and we held around the 1.5210 level for about an hour before the market again dropped lower very quickly in a very untidy move from the 1.5210 to 1.5130, EURGBP rose quickly from the 0.8720 area to nearly 0.8760 as the move took dealers by surprise, Cable bounced of the 1.5130 area however, it was not a convincing bounce and while we speak it is stuck at the 1.5160 level.

·         JPY: USDJPY rallied in the first half of trading rising from the opening 93.55 area to above 93.85, with very little of note in the market the JPY has been caught with moves in the carry trades and drops in Euro and Cable causing JPY to strengthen against most currencies as investors try to move away from risk. USDJPY moved off the highs and has been steadily dropping and reached the 93.35 levels as retail Japan tries to limit any fall out.

·         AUD: With nothing to talk about the Oz has been side lined by movements in the Euro and Cable, we opened just below 1.0260 and slowly drifted lower to hold for the moment just off the 1.0230 lows were there seems to be some light support from European banks.

 

Today’s data

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

02:00     CNY        Conference Board Leading Index Jan A 0.10% | P 0.40%

07:00     CHF        Trade Balance (CHF) Jan  C 1.74B | P 1.00B           

08:00     EUR        French PMI Manufacturing Feb (P) C 43.9 | P 42.9            

08:00     EUR        French PMI Services Feb (P) C 44.5 | P 43.6         

08:30     EUR        German PMI Manufacturing Feb (A) C 50 | P 49.8            

08:30     EUR        German PMI Services Feb (A) C 55.2 | P 55.7      

09:00     EUR        Eurozone PMI Manufacturing Feb (A) C 48.4 | P 47.9      

09:00     EUR        Eurozone PMI Services Feb (A) C 49 | P 48.6       

09:30     GBP       Public Sector Net Borrowing (GBP) Jan C -11.3B | P 13.2B             

13:30     USD       CPI M/M Jan C 0.10% | P 0.00%

13:30     USD       CPI Y/Y Jan C 1.70% | P 1.70%    

13:30     USD       CPI Core M/M Jan C 0.20% | P 0.10%      

13:30     USD       CPI Core Y/Y Jan C 1.80% | P 1.90%          

13:30     USD       Initial Jobless Claims (FEB 17) C 361K | P 341K     

15:00     USD       Philly Fed Survey Feb C 1.5 | P -5.8          

15:00     USD       Existing Home Sales Jan C 4.91M | P 4.94M         

15:00     USD       Leading Indicators Jan C 0.20% | P 0.50%              

15:30     EIA         Natural Gas Storage C -119B | P -157B   

15:30     USD       Crude Oil Inventories C 1.9M | P 0.6M   

Interbank Ranges as of 6am London time

                                Highs    Lows

USD/JPY               93.87 | 93.35

EUR/USD             1.3289 | 1.32385

EUR/JPY               124.70 | 123.64

AUD/USD            1.0262 | 1.0230

NZD/USD             0.8363 | 0.8336

USD/CAD             1.0193 | 1.0163

EUR/CHF              1.2334 | 1.2314

USD/CHF             0.9303 | 0.92675

GBP/USD             1.5240 | 1.5130

EUR/GBP             0.8759 | 0.8710

Good luck

Andy