Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 91.826 | EURUSD 1.30615 | EURJPY 119.938 | AUDUSD 1.02586 | NZDUSD 0.83869 | USDCAD 1.02602 | EURCHF 1.21768 | USDCHF 0.93225 | GBPUSD 1.51619 | EURGBP 0.86144 |

Harry Hindsight

·         EUR: The Euro began the day slightly higher than the NYK close on Friday with news that the UK had been downgraded late in the NYK session this has been the first opportunity for some to get involved and pre-opening in the thin markets of Sydney seemed really not the ideal time however, involved they got with both that news and the speculative news that former MoF Chairman Kuroda had been asked to take over at the BoJ, Euro opened above the 1.3200 mark and while it looked possible that we could see some fireworks it wasn’t in the Euro which stayed around the 1.3200 level for most of the Asian session, only beginning to turn higher in late trading in the grey hours before London moving above 1.3220, which seemed more to do with the rise in GBP than the Euro itself, once London opened with no data for the day we continued moving higher through London peaking just below 1.3320, with EURGBP rising continually as flows moved away from the UK to the safe hands of the Europeans, ahhh the best laid plans of men and mice, as we approached the NYK session news started to filter out (after rumours were ignored) that the Italian senate was hung (no not literally) the market was not expecting this and thought the centre left coalition would sweep to power. The Euro started to drop as soon as exit polls started to point out things were going wrong and while it was a steep decline we didn’t stop for passengers dropping from the highs over the next 8hours to below 1.3060 for the run in to the close. EURGBP tipped over with the Euro and we moved from above the years highs above 0.8800 to just above 0.8600 in a very large turnaround in the cross, and triggering other stops and runs lower in most Euro based crosses.

·         GBP: Cable opened around a big figure lower from the NYK Friday close with pre-market trading doing the damage before we opened, we traded 1.5074 area before beginning a steady rise through the day pushing to above 1.5140 in the Asian market on steady buying however, for the move into London it was all Euro cross led with the Euro rising and GBP just moving sedately along, EURGBP cross made a new high for the year above 0.8800, but it was short lived as Italian election news started to impact on the Euro, GBP found itself in the strange position of becoming a safe haven just hours after a downgrade with the flows starting to reverse and while Euro’s dropped in the second half of the day the GBP remained bid only dropping to the 1.5100 before finding support and slowly pushing higher as EURGBP was forced lower with the Euro, Cable pushed to the 1.5200 briefly running to the close before finishing the day just above the 1.5160 levels.

·         JPY: News that Kuroda was asked to take the mantle of BoJ Governor had the market happy to sell JPY in the Sydney premarket, at one point the USDJPY showed 94.77 before the market officially opened around the 94.30 area dropping to just below 94.00 but generally holding above in a quiet session once it got going, while London seemed happy to sell into the rallies as were the exporters in Japan the market remained not too far from the 94.00 level until the Euro started to drop clearing EURJPY of orders to the downside, we started to see stops being triggered in the USDJPY as the weak longs took a battering and retail Japan hit margin levels as liquidity started to disappear on the run lower, with several dips ultimately moving to below 91.00 before rallying a little into the close on profit taking from day traders to above the 92.00 areas. 

·         AUD: The Oz opened lower as USDJPY moved to the highs in premarket trading in Sydney opening around the 1.0285 areas and holding steady during the early session, the Chinese Manufacturing PMI number scared the market and although it’s no reflection of what is happening in China for the moment it had the Oz running lower to below 1.0265 once or twice but holding, as the USDJPY began to fall back from its highs we saw the Oz rising in the same manner to peak above 1.0325 however, Eurozone problems took over the market and we found the Oz attached somewhat to what was happing in the Euro trading back to the starting levels and NYK taking it lower still into the close around 1.0250.

Yesterday’s premiership results

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

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

GBP       BBA Loans for House Purchase Jan A 32.3K | C 34.2K | P 33.6K | R 33.4K

 

For today

USDJPY:
Topside: 92.80-93.00 light offers 93.50-93.80 light offers
Downside: 91.20-91.50 Light bids90.70-91.00 decent bids 90.30-90.65 light bids

EURUSD:
Topside: 1.3120-50 light stops 
Downside: 1.3020-1.0340 light bids 1.2980-1.3010 medium sell stops 1.2950-1.2980 medium sized bids 

AUDUSD:
Topside: 1.0290-1.0300 light buy stops 1.0320-1.0340 light offers
Downside: 1.0220-1.0250 light bids 1.0220 and 1.0170 medium to light stops

 

JPY:

Japan Govt to Submit BOJ Chief Candidates Thurs. Or Fri – Nikkei

Japan’s Amari: no comment on what level of yen deemed appropriate

Amari: Italy Elections Having Effect on Euro vs. Other Currencies

FinMin Aso: MOF Nakao One Potential Candidate for ADB Chief Post

Diet Votes on BOJ Head Nominees to Be Held March 14-15: Kyodo

Nissan’s Ghosn Says Yen ‘Still far from neutral territory’

SGD/JPY:

GIC confirms block sale of GLP, Japan’s biggest industrial properties company

SGD:

Singapore’s Prudent Budget Supports AAA Rating: S&P

Singapore Jan Industrial Production -0.4% On-Year; +5.8% Expected

CNY:

China’s Loose Monetary Policy Drawing to a Close – Report

China May Allow Foreign Banks to Distribute Local Fund Managers’ Products – Source

USD:

Fed’s Lockhart: Central Bank Should Continue Bond Buying

NZD:

NZ inflation expectations ease further – RBNZ survey

N.Z.’s Key Says Asset Sale Proceeds May Still Be NZ$5b – NZ$7b

AUD:

Australia’s top iron ore port braces for direct cyclone hit

EUR:

Italy braced for political deadlock – FT

·         EUR: Euro opened quietly moving sideways as the market waits nervously for more information from Italy but whatever, one assumes it’s not likely to be in the Euro’s favour. We hovered around the 1.3070 mark roughly were we opened and once we moved into Tokyo we saw fresh buying of EURJPY from the start taking USDJPY higher and moving the Euro to trade just above 1.3080 we remained in that area for several hours before the first announcements started to hit, with speculation in the FT and the Euro began to sag quickly dropping the 1.3050 level and stop being triggered in EURGBP through 0.8600, we currently hold around the 1.3050 areas as we start to think about the London opening and thoughts of an Italy in political deadlock, one could reminisce about the 80’s

·         GBP: Cable continues to recover from Friday’s announcement again with very little data to go on the Italian elections have taken centre stage and the downgrade is limited to national papers and media moaning and meddling as usual, which the market is ignoring as more important issues. Cable opened around the 1.5160 area and moved 15 tics higher in the run in to Tokyo, we stayed in a reasonably tight range touching below 1.5155 as we waited for news from Italy, an article in the FT seemed to spark the firsts moves and we saw stops triggered in the EURGBP as it broke down through 0.8600 and Cable pushed up steadily to above the 1.5200 level with minor stops going there as we touched just below the 1.5220 level since then we’ve flirted with the 1.5200 downside but for the moment remain the safe haven currency it was on Thursday.

·         JPY: The dip in NYK towards the end of the day were we saw Euro dropping triggering stops in most crosses particularly the JPY, left the market waiting for the bounce and we saw it from the start with the market opening around the 91.60 area and continuing to move higher in the first few hours, running to above 92.60 before Tokyo opened and then a touch higher into the mid 92.70’s once they moved into the market, alas it was short lived and we saw the Euro dropping triggering weak stops which were formed from the short squeeze higher to take the market back below 92.00 as we move towards London.

·         AUD: The Oz stayed side-lined for the greater part of the day with some AUDJPY and AUDNZD buying early in the session and the Oz pushed off from its lows below 1.0250 to move sloly up to above the 1.0290 area, not quiet having the impetus to push on through the 1.0300 level and still seems vulnerable to the vagaries of the other currencies, it suffered with the Euro when that faced a selloff during the mid-session once the FT had left the printers but managed to hang on to a greater portion of its gains, with retail Japan showing significantly for the day.

Today’s data

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

02:00     NZD       RBNZ 2-Year Inflation Expectation Q1 A 2.20% | P 2.30%               

11:00     GBP       CBI Reported Sales Feb C 16 | P 17          

14:00     USD       S&P/Case-Shiller Composite-20 Y/Y Dec C 6.70% | P 5.50%           

14:00     USD       House Price Index M/M Dec C 0.60% | P 0.60% 

15:00     USD       Consumer Confidence Feb C 59.8 | P 58.6            

15:00     USD       Fed Bernanke Testifies at Senate Banking Committee                                                   

15:00     USD       New Home Sales Jan C 385K | P 369K     

Interbank Ranges as of 6am London time

                                Highs    Lows

USD/JPY               92.75 | 91.88

EUR/USD             1.3089 | 1.3039

EUR/JPY               121.35 | 119.81

AUD/USD            1.0292 | 1.0248

NZD/USD             0.8353 | 0.8323

USD/CAD             1.0269 | 1.0242

EUR/CHF              1.2197 | 1.2118

USD/CHF             0.9328 | 0.9286

GBP/USD             1.5219 | 1.5153

EUR/GBP             0.8633 | 0.8576

Good luck

Andy