Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close Wellington open

USDJPY 104.854 1.0483-88 | EURUSD 1.35886 1.3588-93 | EURJPY 142.468 141.50-142.65 | AUDUSD 0.89468 0.8950-55 | NZDUSD 0.82739 0.8272-0.8285 | USDCAD 1.06356 1.0627-45 | EURCHF 1.2304 1.2302-06 | USDCHF 0.90546 0.9027-60 | GBPUSD 1.64162 1.6405-18 | EURGBP 0.82774 0.8272-0.83075 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               104.955 | 104.15

EUR/USD             1.3603 | 1.3578

EUR/JPY               142.65 | 141.50

AUD/USD            0.8983 | 0.8943

NZD/USD             0.8285 | 0.8252

USD/CAD             1.0642 | 1.0611

EUR/CHF              1.23115 | 1.2298

USD/CHF             0.9067 | 0.9044

GBP/USD             1.6420 | 1.6348

EUR/GBP             0.8307 | 0.828

 

Overnight News

CNY:

HSBC PMI fell to 50.9 in December from a previous 52.5 with the lowest growth in 2yrs.

ASIA:
Almost all the indices’ across the region fell from the opening.

EUR:

EU will not seek to separate banking activities FT

 

 

For today

  • EUR: Euro’s again drifted lower from the over the session moving initially higher to above the 1.3600 levels in early trading before succumbing to the successive rounds of EURJPY selling entering the market, for the most part though there was a minor collapse in the Cable which dragged a little after the HSBC figure for China and the Euro has spent the session resting on the 1.3580 levels. We dip through the level as we approach the London session with light bids scaled down to the 1.3500 area and a similar story to the topside although a little more mixed.
  • GBP: Strong cross dealing pushed an illiquid Cable from the 1.6410 levels down to the 1.6350 areas in a quick move post the CNY numbers, with the EURGBP rising to above the 0.8300 levels the GBP struggled across the board, holding on its lows as we head to the London session. Levels now coinciding with congestion from Decembers trading, the key holding area is still a bit away around the 1.6250 levels. However, it does look as if we’ve rejected the topside for the moment and less likely to push to the 1.6600 levels any time soon.
  • JPY: The market opened in line with Fridays close around the 104.85 levels before heading into the Tokyo session having attempted to push above the 105.00. However, once Tokyo opened it was all one-way traffic in the first 2hrs with the USDJPY, EURJPY, GBPJPY and AUDJPY featuring for the second day in strong selling and stops being triggered all the way down, USDJPY eventually touching the 104.15 area before finding some support in what looks like a repeat of Friday. With sporadic bids down the 103.80 levels it does look fairly light and nothing showing to hold the market if the impetus was to continue however it did look like this on Friday. Topside now sees weak stops through 105.00 however, the option barriers remain in place with the 106.00 level finding plenty in front, and stops through the level.
  • AUD: The Oz opened a little higher from the Friday close around 0.8965 and early trading saw the pair move to above the 0.8980 levels before the carry trade selling really appeared and forced the Oz lower to fill the gap on the charts, this was all it did in some quiet trading for the pair and we hold the 0.8945 levels as we head to London with nothing showing in the market really until light offers around Fridays highs and better bids around the 0.8880/0.8900 levels.

Today’s data

Actual = A | Consensus = C | Previous = P | Revised = R All timings GMT

08:45     EUR        Italian PMI Services Dec P 47.2

09:00     EUR        Eurozone PMI Services Dec (F) C 51 | P 51

09:30     GBP       PMI Services Dec C 60.3 | P 60

09:30     EUR        Eurozone Sentix Investor Confidence Jan C 9.3 | P 8

13:00     EUR        German CPI M/M Dec (P) C 0.30% | P 0.20%

13:00     EUR        German CPI Y/Y Dec (P) C 1.40% | P 1.30%

13:30     CAD       Industrial Product Price M/M Nov C 0.00% | -0.30%

13:30     CAD       Raw Materials Price Index M/M Nov C -1.10% | P -2.30%

15:00     USD       ISM Non-Manufacturing Composite Dec C 54.5 | P 53.9

15:00     USD       Factory Orders Nov C 1.70% | P -0.90%

 

Harry Hindsight

  • EUR: The Euro lost its shine over the course of the day with the market dropping from the opening 1.3665 areas in Asia and slipping back to only the 1.3650 area, this then continued in the London session with a lack of data to hold the market it continued to drift to below 1.3630 before the NYK session opened. Reasonable numbers out of the UK added to the pressure on the Euro as the cross EURGBP was sold from the previous 24hrs move higher. By the time the market came to a close we had made the lows below 1.3600 touching in the mid 1.3580’s before a close around the 1.3590 area. It has to be said that volumes were below your average day and we were still suffering from the holiday hangovers.
  • GBP: A steady day for the Cable with the market staying in touch with the 1.6450 level for a good portion of the session. Opening around that level and then trading 1.6430/50 in a quiet session in Asia. London bought from the grey hours onwards to push us above the 1.6470 levels with a decent PMI number helping it along, The Euro in retreat dragged on the Cable a little with the EURGBP drifting for much of the day from the opening 0.8308 levels to touch below 0.8285 into the London session, pre NYK saw early fund buying enter in the cross and EURGBP was quickly bid through 0.8315 before succumbing to the pressure and moving steadily to new lows below the 0.8280 levels which seem to be attracting attention from the bottom picker, Cable eventually drifted to range around the 1.6410 levels and held into a 1.6420 close. Over all it looks as if the market is seeing early signs of USD buying in light of tapering.
  • JPY: With a Japanese holiday still in play it was only reasonable to assume that any movement was likely to be overdone, and we saw the market open around the 104.85 areas and hold for a few hours before dropping quickly as mainly stops were triggered in an illiquid market. USDJPY traded to below the 104.10 levels as we moved towards the grey hours. With most of the damage done by cross trading the market saw a succession of stops in EURJPY, GBPJPY, AUDJPY being hit and causing continual pressure on the USDJPY. Once the market moved into London it began slowly to recover pushing in a tight channel to the 104.60 levels into early NYK before a small short squeeze occurred in the latter part of the session to finish the day flat overall.
  • AUD: Initially the Oz was forced from the opening 0.8910 to a low in the mid 0.8885 area on AUDJPY selling which started the tumbling in USDJPY however, it then moved to other pairs and the Oz was able to move higher as the USDJPY weakened and it quickly moved to above the 0.8990 level before settling into a tight range in London. Unlike everything else the Oz then held its own for much of the session peaking above the 90cent level in NYK before beginning a steady drift towards the close around 0.8980. Late buying in USDJPY reversed the Oz fortunes with the whole day being exaggerated by a lack of interest to some extent and we finishing the day around mid-range 0.8950.

Friday’s premiership results

Actual = A | Consensus = C | Previous = P | Revised = R All timings GMT

CHF        KOF Leading Indicator Dec A 1.95 | C 1.91 | P 1.85

CHF        SVME PMIs Dec A 53.9 | C 56.2 | P 56.5

EUR        Eurozone M3 Y/Y Nov A 1.50% | C 1.50% | P 1.40%

GBP       PMI Construction Dec A 62.1 | C 62 | P 62.6

GBP       Mortgage Approvals Nov A 71K | C 69.7K | P 67.7K

GBP       M4 Money Supply M/M Nov A 0.00% | P 0.10%

USD       Crude Oil Inventories A -7.0M | C -2.8M | P -4.7M

 

Stay lucky

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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