Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close SYD open

USDJPY 93.402 93.90-91 | EURUSD 1.31888 1.3165-85 | EURJPY 123.212 123.619-82 | AUDUSD 1.0320 1.0298-1.0318 | NZDUSD 0.83783 0.8338-79 | USDCAD 1.02126 1.0205-15 | EURCHF 1.22629 1.2258-85 | USDCHF 0.9296 0.9315-30 | GBPUSD 1.51662 1.5133-35 | EURGBP 0.86986 0.86835-0.8726 |

 

Weekend News

JPY:

Japan’s Abe Consulted Kuroda as BOJ Governor, Sankei Says
Japan’s Suga Says No Need to Delay Decision on Trade Agreement
Abe Visit Affirms Ties With Obama Amid China, N. Korea Tensions
EUR:

Italians Vote as Grillo, Berlusconi Challenge Monti Austerity
CNY:

China Will Expand Short-Selling Program in Stock-Market Reform
GBP:

Alexander Says U.K. Rating Downgrade Is ‘Disappointing News’

Harry Hindsight

·         EUR: The Euro remained fairly dormant in the early part of the Asian session trading around the 1.3190 area where it opened, some few hours into the session we saw the market starting to pick up as it pushed up through the 1.3200 level peaking at just below 1.3220 during Asia, the grey period saw the market push a little higher and on the London opening the market again pushed higher moving on a quick spike above 1.3240 on the IFO numbers coming in better than expected however, the rally was short lived as the second prepayment of the 3yr LTRO was weaker than expected sending the market lower, dropping quickly to below 1.3160, add to which concerns about a hung parliament in Italy sent it lower again during the NYK session to drop below the 1.3150 level, before the market found some support and started to slowly rise from that point clawing itself back above the 1.3190 level into the NYK close. We saw a mixture of crosses going through with institutional flow buying into the EURJPY while macro types were seeing selling the EURCHF to balance the market to some extent, while a late surge in EURGBP on the back of the Moody’s announcement pushed the cross back above the 0.8700 level briefly.

·         GBP: Cable traded quietly during Asia for the first part of the session not stepping away from the 1.5250 level to much only for a quick round of EURGBP selling to kick in during mid-session triggering some minor stops as the Euro moved lower and GBP was forced higher to top above the 1.5320 level, the market settled down from there slowly drifting into the London opening around the 1.5260 level and trading sideways after the opening staying just above the opening levels with a brief move higher again on another round of EURGBP selling just before the NYK opening taking the pair to the 0.8620 level and ultimately to below 0.8610 during NYK, Cable continued to drift lower as the Euro dropped dragging GBP with it until just before the close when Moody’s announced a downgrade for the UK losing its AAA standing for the first time since 1978. Cable dropped before the close to below 1.5170 and only the closure of the market halted a larger slide one suspects. EURGBP as stated above moved back to the 0.8700 level as Cable caught up and surpassed the EURUSD losses on the day.

·         JPY: A reasonably quiet day for USDJPY with the market trying the downside just after the close of NYK dropping to touch below 92.95 before rising quickly on the Tokyo opening to above 93.35 with EURJPY buying going through, only to be resold after the opening taking USDJPY down to a similar low, from there we moved steadily higher over the course of the session making a new high in Asia and moving into a London market happy to buy anything USD as concerns over the Eurozone gathered, we moved into the NYK market off the highs and they were just as interested to buy as had been London and they took the market to the high for the day above the 93.50 but having reached it dropped back quickly to the 93.20 area which seemed to provide the weak support area for the day, we finished the day quietly above the 93.40 level and even the drop in GBP had little effect with the pair finishing around the 93.35 levels.

·         AUD: The Oz opened around the 1.0250 area and after flirting with the 1.0240 level squeezed higher on the RBA Steven’s comments after they were interpreted more bullish than expected, running the market up above the 1.0300 level holding for awhile before pushing ahead to 1.0310 into the London opening, we saw EURAUD selling move into the market during the London session and we peaked above 1.0340 before USD started to take over as the dominant currency for the day, with everything else starting to drift lower, the Oz dropped back to the 1.0300 level during the early part of NYK and slowly recovered to finish the day around the 1.0320 level dipping slightly into the close in sympathy with GBP.

Friday’s premiership results

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

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

EUR        German IFO – Business Climate Feb A 107.4 | C 104.6 | P 104.2 | R 104.3

EUR        German IFO – Current Assessment Feb A 110.2 | C 108 | P 108   

EUR        German IFO – Expectations Feb A 104.6 | C 100.8 | P 100.5           

CAD       CPI M/M Jan A 0.10% | C 0.20% | P -0.60%          

CAD       CPI Y/Y Jan A 0.50% | C 0.70% | P 0.80%

CAD       BoC CPI Core M/M Jan A 0.10% | C 0.10% | P -0.60%       

CAD       BoC CPI Core Y/Y Jan A 1.00% | C 1.10% | P 1.10%            

CAD       Retail Sales M/M Dec A -2.10% | C -0.30% | P 0.20% | R 0.30%

CAD       Retail Sales Less Autos M/M Dec A -0.90% | C 0.10% | P -0.30% | R -0.20%

For today

USDJPY 
Topside: 94.70-95.00 medium offers  95.00-95.30 light buy stops 95.30-95.60 medium offers  
Downside: 93.70-94.00 light bids 93.30-93.60 light bids 

EURUSD 
Topside: 1.3230-1.3260 medium mix   1.3260-1.3300 light buy stops  1.3300-1.3330 light buy stops 1.3350 light buy stops
Downside: 1.3130-1.3160 light sell stops 1.3100-1.3130 light mix 

EURJPY 
Topside: 125.20-125.50 light offers 
Downside: nothing of note  AUDUSD 
Topside: 1.0330-1.0370 light buy stops  1.0370-1.0400 medium buy stops 
Downside: 1.0230-1.0260 light bids

 

JPY: Japan’s Suga: government has not formally sounded out BOJ candidates

Japan government to nominate ADB Kuroda as next BOJ head sources

Japan EconMin signals ADB Kuroda meets criteria to head BOJ

Japan opposition Democrats say Kuroda suitable as BOJ chief-media

BOJ nominees largely in lines with Komeito demand-Japan coalition head

Kikuo Iwata: Have Been Asked To Be BOJ Deputy Gov

Japan PM to nominate BOJ’s Nakaso as one of 2 deputy BOJ heads-NHK

Hashimoto Calls for BOJ Candidate from Private Sector: Kyodo

Japan PM Abe’s Cabinet Support Rate Rises to 70%: Nikkei Poll

Japan PM Abe Cabinet’s Support Rate Rises to 72.8%: Kyodo Poll

Fitch: Japan’s Major Banks Better Positioned against Interest Rate Risk

Japan Govt Mulling Nominating MOF Nakao as Next ADB Chief – Govt Officials

CNY:

HSBC Preliminary China Feb Manufacturing PMI 50.4 Vs Final Jan PMI 52.3

China CSRC Finishes Revision of RQFII Rules, Securities Says

SGD:

Singapore’s January Inflation Slows More Than Estimated on Food

USD:

Fed’s Rosengren: Higher Large Bank Capital Standards May Be Needed

·         EUR: A wide opening for the Euro with 1.3214/1.3220 seen printing before settling back to the 1.3200 area, with both continuing concerns over a hung parliament in Italy and the downgrading of the UK to AA1 the reaction was to buy anything other than GBP during the Sydney market and pre Tokyo, thus the slightly higher rate once the market opened fully however, once the rush was over and Tokyo opened we saw selling appear in EURJPY as GBP was not the only weak currency with EURJPY on its highs from pre Tokyo opening, Euro’s dipped back below 1.3190 and remains close the levels as we speak moving towards the grey market pre London.

·         GBP: Cable opened down on the Sydney open at 1.5135 area and once we opened we opened around the 1.5075 area with a gap some 90 tics from the close on Friday as the Pacific rim and Far East absorbed the downgrade by Moody’s on late Friday in NYK, once we opened however, we saw the market move up from the lows to around the levels first seen in the premarket and it managed to hold above 1.5120 once it’d made its way there over the early part of Tokyo.

·         JPY: I’m informed that at one stage in the Sydney premarket trading the USDJPY was at 94.77 as it is the market for ourselves opened above 94.30 a big figure higher than the close on Friday in NYK, one can only guess that the market likes the idea of Kuroda taking over as BoJ governor depending on how you read it, he was the ex-head of the MoF some years ago and is currently head of the Asian Development Bank so well versed in what he’s intended to do. So possibly an ally for the politically motivated, while acceptable to the BoJ’s independence. The USDJPY while off from the pre-opening highs continues to hold above the 94.00 area having dipped below only once in early Tokyo trading as exporters took advantage of the run higher and currently hold around the 94.20 level moving to London.

·         AUD: The Oz seemed to be caught by the early selling in GBP opening around the 1.0290 area before trading up to above 1.0300, with very little news on the home front the HSBC Flash PMI for China caught the market by surprise leading the market down quickly to the 1.0265 areas where we held in front of light bids spread around the market, its moved off its lows as AUDJPY buying appeared on the dip with USDJPY falling back from the highs and we move to London around the 1.0280 levels for the moment.

 

Today’s data

Actual = A Consensus = C  Previous = P Timings GMT

JPY         Corporate Service Price Y/Y Jan A -0.20% | C -0.20% | P -0.40%  

CNY        HSBC Flash Manufacturing PMI Feb A 50.4 | C 52.2 | P 51.9 | R 52.3          

09:30     GBP       BBA Loans for House Purchase Jan C 34.2K | P 33.6K       

 

Ranges as of 6am London time including Sydney open

                                Highs    Lows

USD/JPY               94.77 | 93.60

EUR/USD             1.3240 | 1.3175

EUR/JPY               125.36 | 123.77

AUD/USD            1.0332 | 1.0262

NZD/USD             0.8380 | 0.8345

USD/CAD             1.0240 | 1.0206

EUR/CHF              1.2288 | 1.22635

USD/CHF             0.9318 | 0.9280

GBP/USD             1.5165 | 1.5073

EUR/GBP             0.8775 | 0.8700

 

 Stay lucky

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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