Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 94.072 | EURUSD 1.29664 | EURJPY 121.985 | AUDUSD 1.02348 | NZDUSD 0.82826 | USDCAD 1.03205 | EURCHF 1.23017 | USDCHF 0.94881 | GBPUSD 1.50178 | EURGBP 0.86341 |

 

Harry Hindsight

·         EUR: Euro opened around the 1.3050 area and remained fairly static throughout the Asian session with the market waiting for tomorrow’s meeting to see what sort of slant Draghi will put on the rate announcement, the market seems to believe that it’s likely to be a dovish set of comments, Asia saw the market rise to the 1.3070 slowly however, once we moved into the grey area before the London opening we started to see fresh selling coming in from early risers and once London opened we’d already dipped to the opening levels and although we didn’t see immediate selling it was not long into the session that we started to see the move starting as Eurozone GDP came in as expected underlining the markets expectations for future comments from Draghi, we moved down to below 1.3030 after the release and struggled into the NYK session just off the lows, with a decent ADP number hitting the wires we saw the USD begin to rally and the Euro started to break lower triggering minor stops both in the straight and crosses pushing to below 1.3000 before holding for several hours into the beginning of the Sydney market where we began to see some Pacific Rim sellers pushing the Euro further taking us down into the 1.2960’s into the close on weak liquidity.

·         GBP: While the Cable rose slightly from its opening levels in Asia 1.5125 pushing above 1.5155 into the Tokyo session it struggled to make any more headway in a quiet market holding around the 1.5140 level into the hour before London opening, with weakness in the Euro beginning to show we saw the market starting to drift lower in a steep channel and was declining steadily as London opened and the move was continued into the first couple of hours of the session touching below 1.5070 before finding any respite and one has to say it was brief as early NYK guys began selling in the same manner once they sat down taking the market from above 1.5100 to 1.5020 in the same pattern before we found support appearing, with no real news in the market apart from Princess Kate letting out she’s having a D. we remained on the weak side into the close again dipping to the lows.

·         JPY: As the USD rose against all comers it was happy days for the JPY with the USDJPY rising steadily after opening around 93.30 and pushing to the 93.00 during Asia, we saw the market starting to rally in the second half of Asia and by London opening we had regained the opening and rose in a steady channel with no particular news to inspire the market to sharp moves just a steady rise of perceptions, we topped out above the 94.10 level and held it into the close.

·         AUD: The Oz did all its upside work during Asia with a GDP in line with expectations the recovery from early week losses continued and having opened around the 1.0260 level we moved up in legs to touch briefly through the 1.0300 level after the GDP release however, that was as far as we got and we saw some light AUDJPY selling entering the market which seemed to contain any further moves higher although the cross saw higher levels throughout the day, as USDJPY rose the Oz came under pressure from a steady rise in the USD and AUDJPY levels capping it and then pushing it lower, some options strategies seemed to impact the market during the NYK session through the IMM floor and again just before the close of the session in the futures, and we saw the market drop away from the 1.0290 areas in two legs lower hitting 1.0255 and then again to push it to the 1.0235 level into the close for the day.

Yesterday’s premiership results

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

GBP       BRC Shop Price Index Y/Y Feb A 1.10% | P 0.60%               

AUD       GDP Q/Q Q4 A 0.60% | C 0.60% | P 0.50% | R 0.70%         

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

USD       ADP Employment Change Feb A 198K | C 168K | P 192K  

CAD       BoC Rate Decision A 1.00% | C 1.00% | P 1.00%      

CAD       Ivey PMI Feb A 51.1 | C 56.2 | P 58.9       

USD       Factory Orders Jan A -2.00% | C-2.10% | P 1.80%   

USD       Crude Oil Inventories A 3.8M | P 1.1M     

For today

USDJPY 
Topside: 94.20-94.50 decent offers  94.60-94.90 light offers  95.00-95.30 decent buy stops 
Downside: 93.70-93.90 light bids 93.20-93.50 light bids 92.80-93.10 medium bids 

EURUSD 
Topside: 1.2980-1.3010 light offers  1.3020-1.3050 light offers  1.3060-1.3090 light offers 
Downside: 1.2930-1.2960 light mix 1.2890-1.2920 medium sell stops 1.2850-1.2880 light sell stops 

EURJPY 
Topside: 122.20-122.50 light offers  122.60-122.90 light buy stops 
Downside: 121.20-121.50 medium sell stops 120.80-121.10 light sell stops  AUDUSD 
Topside: 1.0240-1.0270 light offers  1.0280-1.0310 light buy stops 
Downside: 1.0200-1.0230 light sell stops 1.0160-1.0190 light sell stops

 

EUR:

Portugal Credit Outlook Revised to Stable From Negative by S&P

JPY:

BOJ Keeps Policy on Asset-Purchase Program Unchanged Ahead Of New Leadership

Japan to nominate FX tsar Nakao to be ADB head after Kuroda

Nissan Plans to Become Biggest Japanese Carmaker in Europe: FT

AUD:

Australia January Trade Deficit A$1.06B Vs. A$0.5B Consensus

CNY: China to expand foreign investment choices under RQFII

China New Loans May Exceed 9t Yuan This Year, Securities Says

CNY/JPY:

Yen Devaluation May Impact China Exports, PBOC Nanjing Head Says

USD:

Fed’s Fisher Blasts Both Political Parties for Slow Economy

NZD:

NZ CB sets up internal group for major policy decisions

 

·         EUR: Having triggered stops in late NYK we saw the market open around the 1.2967 area and steadily move up throughout the session with futures seemingly leading the way, with several opportunities in the crosses to benefit from the arbitrages available, the movement was helped with the S&P announcement that it saw Portugal as stable from the previous negative outlook however, we struggled with the 1.3000 level and a lack of impetus in front of todays announcements left us banging against the upper 1.2990’s for several hours.

·         GBP: Cable followed the Euro into the close in NYK so moved into Asia below the 1.5000 level after some dubious EURGBP movements, from the opening around the 1.4985 level we saw Cable slowly grind back to above the 1.5000 level holding in a tight 1.5000/05 range for several hours with the same reasoning as the Euro. Its maybe worth noting that the lead story in the FT is an article on the new BoE governor receiving further powers to stimulate the economy, it remains to be seen however, seen as the departure of King went by with comments about breaking up RBS sounds to me like a grab for cash and burying the debt. Short term fix at best.

·         JPY: USDJPY opened below 94.00 so slightly off from the close in NYK as some EURJPY stops were triggered into the close, from there it held its levels around the 93.95 into the Tokyo opening before moving up to 94.12 on fixing demand, but as we waited for the inevitable no change on interest rates the market dipped to just below 93.80 before moving back into the 93.90’s as the market stalls and waits for Europe’s announcements. It’s all going to end in tears.

·         AUD: The Oz opened around the 1.0235 level dipping as the market front run the data expectations and they weren’t too far from the mark however, with all the other currencies side lined we saw fresh buying in AUDJPY and EURAUD selling to help move the Oz higher for the day pushing to the 1.0250 area, however, it’s worth noting that the market was so quiet and thin that having reached there and failed one order of about 50 AUD was enough to chase the market quickly down to the 1.0240 level where we currently hold moving to London.

 

Today’s data

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

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

AUD       Trade Balance (AUD) Jan A -1.06B | C -0.51B | P -0.43B  

JPY         Leading Index Jan (P) A 96.3 | C 96.2 | P 93.4      

06:45     CHF        Unemployment Rate Feb C 3.10% | P 3.10%       

08:00     CHF        Foreign Currency Reserves Feb P 427.0B              

11:00     EUR        German Factory Orders M/M Jan C 0.60% | P 0.80%       

12:00     GBP       BoE Rate Decision C 0.50% | P 0.50%      

12:00     GBP       BoE Asset Purchase Target Mar C 375B | P 375B

12:30     USD       Challenger Job Cuts Y/Y Feb P -24.40%  

12:45     EUR        ECB Rate Decision C 0.75% | P 0.75%      

13:30     EUR        ECB Press Conference                                                  

13:30     USD       Trade Balance Jan C -42.8B | P -$38.5B   

13:30     USD       Non-Farm Productivity Q4 (F) C -1.50% | P -2.00%            

13:30     USD       Unit Labour Costs Q4 (F) C 4.20% | P 4.50%         

13:30     USD       Initial Jobless Claims (MAR 3) C 356K | P 344K     

13:30     CAD       Trade Balance (CAD) Jan C -0.6B | P -0.90B          

13:30     CAD       Building Permits M/M Jan P -11.20%      

15:30     USD       Natural Gas Storage P -171B       

           

 

Interbank Ranges as of 6am London time

                                Highs    Lows

USD/JPY               94.13 | 93.79

EUR/USD             1.2997 | 1.2970

EUR/JPY               122.15 | 121.83

AUD/USD            1.0255 | 1.0219

NZD/USD             0.8286 | 0.8261

USD/CAD             1.0329 | 1.0312

EUR/CHF              1.2324 | 1.2305

USD/CHF             0.9488 | 0.9480

GBP/USD             1.5018 | 1.4965

EUR/GBP             0.8672 | 0.8637

 

Good luck

Andy