Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 93.106 | EURUSD 1.31892 | EURJPY 1.22792 | AUDUSD 1.02471 | NZDUSD 0.83453 | USDCAD 1.01853 | EURCHF 1.2281 | USDCHF 0.93114 | GBPUSD 1.52523 | EURGBP 0.8647 |

 

Harry Hindsight

·         EUR: The Euro remained in a tight range in Asia with some minor opening around the 1.3285 level  as we moved to the Tokyo opening we saw some EURJPY selling coming in taking the Euro leg down to 1.3270, before moving back to its opening levels, we saw a little bit of movement around the China number however, news that the EU was to issue a worse than expected outlook for France started the market moving down in earnest, breaking to below 1.3240, it attempted to rally in the grey market before the London open moving back above 1.3270 however the market became a little nervous before the numbers were released and we started to see it moving lower again and when we did get the numbers the market broke down completely trading quickly through the 1.3200 area and then declining in a more orderly fashion to touch below 1.3170, with both French and Eurozone numbers looking decidedly sick, it didn’t really matter what the German numbers were like however, we don’t usually get a warning beforehand and one has to be sceptical about the motives behind the announcement in the first place. We slowly picked up from the low and as we moved into the NYK session the market had made its way slowly to the 1.3200 level with NYK open we saw the Euro take back another 20 tics just before the release of US data which with a balanced inflationary set sent the Euro back down to make a new low just short of 1.3160, we saw some IMM profit taking kicking in towards the close however, at such a late stage it never really looked as if it could make to much headway trading around the 1.3180-90 level for a few hours.

·         GBP: Cable opened around the 1.5230 area and looked to be holding its own and traded quietly until the French news was released then it followed the Euro dropping to 1.5140 and reacting worse than the Euro, once we’d made it to the grey hours, the market started to reverse its losses and once London opened we started to see decent sized EURGBP cross selling going through as the European data entered the market helping GBP to regain some of its losses. PSBR was less than expected and the market took the number as somewhere close with a revision of the poor number from last month we continued to rise to above the 1.5260 area, before stalling, we traded in a reasonably narrow band from then on with some minor movement around the US numbers before closing a little better than the previous day above 1.5250. With EURGBP back to below 0.8650 over a big figure from its highs, one can only suspect either some rather large fund involved in the cross or a mergers and acquisition has been seen in the market as the way its moved around is a little abnormal.

·         JPY: USDJPY ran higher from the NYK close touching the 93.85 levels just after the Tokyo open but started to struggle from that point on as we saw successive EURJPY sellers coming to market, in fact that’s all that seemed to be driving the market and the usual plethora of comments were absent for the day to some extent, once we moved to the London opening we had already traded the 93.50-60 levels for several hours, and London is never one to miss an opportunity and early sellers started to take it lower again with Euro dropping we triggered more EURJPY stops from weak retail Japanese and it was below the 93.00 level before bouncing, as we moved towards the NYK opening there was some longer term players seen buying however, the market could only move to the 93.30 area before finding some offers significant enough to stop any further rise even NYK attempted to move through the level having made a low below 92.90 in mid session but failed and the market closed around the 93.10 level.  

·         AUD: You would have thought that with so much movement in 3 of the major pairings that what used to be called a minor would have been hopping around, in fact the Oz stayed quiet tight throughout the day having drift lower from the opening just below 1.0260 to 1.0230 just before the grey hours, London saw the market put in a move higher however throughout the day the market couldn’t penetrate the 1.0260 level with any conviction moving to the area several times but always moving back off, I suppose for the day trader it was one of those markets that if you got it right the first time you’d have nailed it throughout the day with the low being made in late NYK pushing to just above 1.0220, IMM profit taking was seen entering the market however, it still remained below the opening even if only just.

Yesterday’s premiership results

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

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

CHF        Trade Balance (CHF) Jan  A 2.13B | C 1.74B | P 1.00B | R 0.90B

EUR        French PMI Manufacturing Feb (P) A 43.6 | C 43.9 | P 42.9           

EUR        French PMI Services Feb (P) A 42.7 | C 44.5 | P 43.6        

EUR        German PMI Manufacturing Feb (A) A 50.1 | C 50 | R 49.8            

EUR        German PMI Services Feb (A) A 54.1 | C 55.2 | P 55.7     

EUR        Eurozone PMI Manufacturing Feb (A) A 47.8 | C 48.4 | P 47.9     

EUR        Eurozone PMI Services Feb (A) A 47.3 | C 49 | R 48.6      

GBP       Public Sector Net Borrowing (GBP) Jan A -9.9B | C -11.3B | P 13.2B | R 12.4B

USD       CPI M/M Jan A 0.00% | C 0.10% | P 0.00%            

USD       CPI Y/Y Jan A 1.60% | C 1.70% | P 1.70%

USD       CPI Core M/M Jan A 0.30% | C 0.20% | P 0.10% 

USD       CPI Core Y/Y Jan A 1.90% | C 1.80% | P 1.90%     

USD       Initial Jobless Claims (FEB 17) A 362K | C 361K | P 341K   

USD       Philly Fed Survey Feb A -12.5 | C 1.5 | P -5.8       

USD       Existing Home Sales Jan A 4.92M | C 4.91M | P 4.94M    

USD       Leading Indicators Jan A 0.20% | C 0.20% | P 0.50%          

USD       Natural Gas Storage A -127B | C -119B | P -157B

USD       Crude Oil Inventories A 4.1M | C 1.9M | P 0.6M

For today

USDJPY:
Topside: 93.40-93.70 light mix  93.70-94.00 light mix
Downside:
92.50-92.80 medium sell stops 92.20-92.50 light mix 91.90-91.80 light stops EURUSD:
Topside: 1.3215-1.3230 light offers 1.3230-1.3260 light mix 1.3260-1.3290 light mix
Downside: 1.3120-1.3150 medium bids 1.3100-1.3080 medium bids

EURJPY:
Topside: 123.40-123.75 light mix 123.80-124.10 light buy stops
Downside: 122.20-122.50 light sell stops AUDUSD:
Topside: 1.0270-1.0300 medium buy stops 1.0310-1.0330 medium stops 1.0340-1.0360 light offers
Downside: 1.0200-1.0220 light bids 1.0170-1.0200 medium bids 1.0140-1.0170 medium sell stops

 

AUD:

Australia Central Bank Signals Pause in Rate Cuts

Stevens Says 3% Rate Working, Aussie Intervention Bar High

JPY:

Japan Aso: Next BOJ head doesn’t have to be from MOF

Aso: New BOJ Chief Has To Have Experience In Managing Large Institution

Amari: Market Is Looking at Whether BOJ is Serious about Overcoming Deflation

SGD:

Singapore Economy Expands at Faster Pace in 4Q Than Earlier Expected

CNY:

China Jan home prices rise 0.8% YoY-Reuters calc

China’s Pension Funding Gap Exaggerated – Official Newspaper

USD/KRW:

GM pledges $7.3 bln investment in S.Korea unit

 

·         EUR: The Euro opened just below 1.3190 and struggled to move in either direction in early trading, Tokyo opened and initially we saw EURJPY selling forcing the Euro down to below 1.3185 however, one suspects that having tried the downside the market altered its strategy and moved for the upside triggering some minor stops through 1.3200 to run just short of 1.3220, with some volume going through. For the moment we look to be hovering around the highs running towards London.

·         GBP: Cable opened mutely rising slowly to 1.5260 from the 1.5250 level before moving back slowly to the starting level, the market seemed for a good while to be stuck and looking rather lacklustre then we saw some strong selling in EURGBP and the cross moved from 0.8655 to below 0.8625 in a quick move Cable reacted and we saw it move quickly above 1.5320 triggering some significant stops above 1.5280-1.5300 with European banks, it failed to hold above there and has since drifted down to the 1.5290 levels were we seem to be holding for the moment.

·         JPY: A mixed and tired looking day for the USDJPY, we opened around the 93.10 level and saw some immediate selling going through as the AUD rose quickly, however having pushed below the 92.95 level it bounced back smartly and the end of the bounce coincided with Tokyo opening and we ran to 93.35 areas before beginning to drift back to the lows again, some weak comments helped to buoy the market and we slowly struggled to touch above 93.40 but failing to test the offers lined up on the topside, and currently hold some 10 tics off the highs. 

·         AUD: The mover of the day with heavy buying kicking in after comments from RBA governor Stevens in his semi-annual testimony why the market reacted the way it did is beyond a mere mortal like myself, he stated that there are a good deal of rate stimulus in the pipeline indicating that there are 1 or 2 easing’s over the coming 12months so the AUD rallied quickly from the opening levels of 1.0250 to above 1.0300, from there Japanese retail picked up the baton and took it to above 1.0320 whether they’ve taken the comments as not yet remains to be seen, we remain just off the highs as we move to London.

 

Today’s data

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

07:00     EUR        German GDP Q/Q Q4 (F) C -0.60% | P -0.60%     

09:00     EUR        German IFO – Business Climate Feb C 104.6 | P 104.2      

09:00     EUR        German IFO – Current Assessment Feb C 108 | P 108      

09:00     EUR        German IFO – Expectations Feb C 100.8 | P 100.5              

13:30     CAD       CPI M/M Jan C 0.20% | P -0.60%               

13:30     CAD       CPI Y/Y Jan C 0.70% | P 0.80%    

13:30     CAD       BoC CPI Core M/M Jan C 0.10% | P -0.60%           

13:30     CAD       BoC CPI Core Y/Y Jan C 1.10% | P 1.10% 

13:30     CAD       Retail Sales M/M Dec C -0.30% | P 0.20%              

13:30     CAD       Retail Sales Less Autos M/M Dec C 0.10% | P -0.30%       

 

Interbank Ranges as of 6am London time

                                Highs    Lows

USD/JPY               93.42 | 92.92

EUR/USD             1.3219 | 1.3183

EUR/JPY               123.45 | 122.58

AUD/USD            1.0323 | 1.0236

NZD/USD             0.8391 | 0.8335

USD/CAD             1.0187 | 1.0160

EUR/CHF              1.2285 | 1.2270

USD/CHF             0.93135 | 0.9286

GBP/USD             1.5330 | 1.5243

EUR/GBP             0.86565 | 0.8625

 

Good luck

Andy