Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 104.224 | EURUSD 1.36281 | EURJPY 142.039 | AUDUSD 0.89675 | NZDUSD 0.8299 | USDCAD 1.06546 | EURCHF 1.23212 | USDCHF 0.90405 | GBPUSD 1.64042 | EURGBP 0.83072 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               104.63 | 104.17

EUR/USD             1.36345 | 1.36205

EUR/JPY               142.52 | 141.95

AUD/USD            0.8971 | 0.8912

NZD/USD             0.8300 | 0.8254

USD/CAD             1.0685 | 1.0654

EUR/CHF              1.2341 | 1.2319

USD/CHF             0.9058 | 0.9038

GBP/USD             1.6420 | 1.6387

EUR/GBP             0.8313 | 0.8302

 

For today

  • EUR: A quiet day in the Far East, with little more than 15 pips in it, opening around the 1.3630 area we ran a little higher with light offers sitting in front of light stops above the 1.3650 levels, with offers running back to 1.3700 any real push will sail through to reach weak stops above there and then we start to see a more liberal spread of offers thickening as you approach 1.3800. Again we have light bids to the 1.3600 level from the current 1.3620 areas which for the moment have been holding the market beyond that the bids seemed to be scaled every 5-10 pips on the way down to the 1.3500 however, there is nothing special as with the topside and one suspects that either is vulnerable as you’d expect for a mid-range. As we move to the grey hour’s market holds just off the lows.
  • GBP: The market has slowly drifted from the opening 1.6405 area running to 1.6420 in early trading to set an immediate large range than the Euro only to drift once Tokyo opened. For the moment there seems little in it and we’ve drifted to below the 1.6390 in light trading and currently hold just above the level. Given yesterday’s action the market seems for the moment to be caught between the 1.6350-1.6450 levels and a bit of news could push it either way with weak stops probably parked behind each level.
  • JPY: Moved higher from the opening around the 104.25 levels trading to just short of the 104.50 level before we the market was hit with light fixing supply to take it to the lows just below 104.20, with light interest to the 103.80 levels where bids thicken, below those levels light bids continue with no real stops appearing until a break below 103.50 and then only light with macro types looking to enter the market. Topside has light offers running up to the 105.00 level before some larger offers start to make an appearance into the mid-levels however, the 106.00 level still looks to be well protected for the time being. Saying that we move into the London session only just short of the highs, the market has been stuck in a 104.50-60 range for several hours.
  • AUD: You’d have thought with a better than expected trade balance the price action would have been a little more firm, the market opened around the 0.8965 levels and moved quietly into the Tokyo session dropping quickly in the first hour to the 0.8930 area before holding for a good proportion of the session before a second leg down broke through the light bids and we sit on the lows as we move into London around the 0.8915 areas. With light bids from here to the figure and some better ones down to 0.8880 the market still looks open in either direction with the only real offers on the topside coming in around the 0.9050 levels.

Overnight News

GBP:

UK Firms report strong growth in fourth quarter: BCC survey

USD:

US business bankruptcies dropped 24% in 2013


Today’s data

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

JPY         Monetary Base Y/Y Dec A 46.60% | P 52.50%

AUD       Trade Balance (AUD) Nov A -118M | C -250M | P -529M

08:00     CHF        Foreign Currency Reserves Dec C 435.0B | P 435.7B

08:55     EUR        German Unemployment Change Dec C -2K | P 10K

08:55     EUR        German Unemployment Rate Dec C 6.90% | P 6.90%

10:00     EUR        Eurozone PPI M/M Nov C -0.10% | P -0.50%

10:00     EUR        Eurozone PPI Y/Y Nov P -1.40%

10:00     EUR        Eurozone CPI Estimate Y/Y Dec C 0.90% | P 0.90%

13:30     CAD       International Merchandise Trade (CAD) Nov C -0.15B | P 0.08B

13:30     USD       Trade Balance Nov C -$40.0B | P -$40.6B

15:00     CAD       Ivey PMI Dec C 55 | P 53.7

 

Harry Hindsight

  • EUR: After a weak start in Asia following the fall backs from Friday the market struggled to rise falling back below the 1.3580 levels after flirting with the 1.3600 area, once we moved into the London session the market started to push higher with early data nothing to write home about apart from the Spanish PMI reading which showed the best since 2007 thus moving steadily through the highs to touch above the 1.3620 area before slowing as German numbers entered the market with the same results as earlier in the session. NYK were generally sellers of USD’s today and the Euro again moved to new highs in a steady continuous rise to above the 1.3650 before a slow end to the day dropping back to settle around the 1.3630 levels.
  • GBP: News that Carney is set to move the goalposts with no likely interest rate rises until 6.5% unemployment instead of the 7% previously stated set the Cable back early in the session moving from the opening 1.6410 levels to trade down to below the 1.6350 area during Asia. London opened with similar thoughts, and what recovery we had seen disappeared as we moved back to the base line of 1.6350. A poor PMI number dropped the market to its lows of 1.6340 areas before the Euro rally started to drag the GBP with it and we moved steadily higher in the same manner as the Euro to top above the 1.6430 levels before slipping back to the opening levels for the close. EURGBP had a mixed day and ended only slightly worse for wear, moving off the opening levels to rise steadily to above the 0.8330 levels where good selling appeared in the market to keep a lid on it, it then slipped back to the 0.8310 area where the market had been holding pre London’s opening.
  • JPY: With cross selling appearing in the Market again USDJPY struggled from the point Tokyo opened with less happening pre that, we peaked just above the 104.90 levels and then never saw the levels again with a sharp selloff to below 104.20. Then Asia went quiet and the market limped along into the London session, early bottom pickers moved into the market and we moved steadily to the 104.60 level before holding the levels for several hours deep into the session and only at the NYK option cut did we start to see any reaction in the pair to the days USD weakness. From the NYK cut it was all one way with talk of Gamma and Delta players lifting hedges and sending the USDJPY to below the 104.00 for the day and trading just above the 103.90 levels with some respectable cross bid buying entering the market against the Yen. We finished the day off the lows having ground out the last few hours to the 104.30 area and settling just below there.
  • AUD: A dull day for the AUD with really nothing happening of note. Stuck in a range between 0.8940-80 for the most part with the market rallying initially as the USDJPY dropped, allowing the AUD to rise as AUDJPY stayed steady. The Market then moved to the base line as USDJPY losses. So although we set allow close to 0.8935 the market remained in the 0.8940-70 region from that point until the 0.8965 close as the market had little appetite in selling in a market only 60 or 70 pips off its lows, even if that is the recommendation of most of the banks.

Yesterday’s premiership results

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

EUR        Italian PMI Services Dec A 47.9 | C 48.9 | P 47.2

EUR        Eurozone PMI Services Dec (F) A 51 | C 51 | P 51

GBP       PMI Services Dec A 58.8 | C 60.3 | P 60

EUR        Eurozone Sentix Investor Confidence Jan A 11.9 | C 9.3 | P 8

EUR        German CPI M/M Dec (P) A 0.40% | C 0.30% | P 0.20%

EUR        German CPI Y/Y Dec (P) A 1.40% | C 1.40% | P 1.30%

CAD       Industrial Product Price M/M Nov A 0.10% | C 0.00% | P -0.30%

CAD       Raw Materials Price Index M/M Nov A -4.10% | C -1.10% | P -2.30%

USD       ISM Non-Manufacturing Composite Dec A 53 | C 54.5 | P 53.9

USD       Factory Orders Nov A 1.80% | C 1.70% | P -0.90%
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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