Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 104.605 | EURUSD 1.36156 | EURJPY 142.43 | AUDUSD 0.89287 | NZDUSD 0.82882 | USDCAD 1.07667 | EURCHF 1.23786 | USDCHF 0.90914 | GBPUSD 1.64022 | EURGBP 0.8301 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               105.01 | 104.595

EUR/USD             1.3635 | 1.3605

EUR/JPY               143.16 | 142.43

AUD/USD            0.8938 | 0.8903

NZD/USD             0.8302 | 0.8268

USD/CAD             1.0810 | 1.0762

EUR/CHF              1.2385 | 1.2374

USD/CHF             0.9103 | 0.90795

GBP/USD             1.6420 | 1.6377

EUR/GBP             0.83165 | 0.83025

 

For today

  • EUR: Having opened around the 1.3615 area the market struggled into the early Tokyo market before catching a move higher for the USDJPY, with EURJPY rising the Euro moved to above the 1.3630 and has remained close to the level peaking just above the 1.3635 levels in late trading and holds the areas as we move into the grey hours. Volumes were not particularly bright and there was a bit of wood to chop on the topside however, with light stops on the topside not far from the market and then a mixture all the way from the 1.3660 area to 1.3700 it maybe a steady grind higher. With some light offers standing in the way on the downside today is all about the German numbers.
  • GBP: Cable struggled in the early part of the session opening around the 1.6405 area and dropping to below the 1.6380 levels as Tokyo opened and cross selling in GBPJPY (profit taking) and EURGBP buying kicked in. The market eventually stabilized around the 1.6395 level and as USDJPY moved towards the 105.00 levels the trend we’d seen earlier with GBPJPY switched and Cable moved higher to trade above the 1.6420 levels before holding the 1.6410-15 levels into the grey hours.
  • JPY: A tight channel of buying throughout the session opening around the 104.60 levels and driving through reasonable offers all the way to the 105.00 level where the market has held, with plenty of two way trading around that area the market moves into the grey hours on the 104.98/105.00 levels. With offers increasing in size from the 105.00 level onwards it is likely to be a hard slog higher until we move through 105.50 at least however, beyond that the same barrier type offers appear and what stops there are may have a limited impact. Downside remains a mixed bag of bids and stop offers with no real definition below the 103.80 however, to that point the bids seem to dominate.
  • AUD: As the USDJPY rose early profit takers appeared to sell the carry moving the Oz from the opening 0.8925 areas down to close to the 89cent area before Tokyo started to appear and repeat the same process that we saw in the GBPJPY. The Oz then to struggle higher peaking above the 0.8935 levels in a less than convincing manner, before heading into the grey hours just off those highs. The market for the moment seems to be defined by the 0.8880/0.9050 levels and struggles in the middle with little direction.

Overnight News

AUD:
Australia job vacancies slip on government cutbacks to the lowest levels in 15yrs

GBP:
UK retailers cut prices by record amount in December

USD/CNY:

Chinese investment in US doubled in 2013: Study

EUR:

Not happy with upsetting just a few Hollende now slates French state machinery too costly and slow

CNY:

China to allow fully private banks this year

To allow foreign Telco’s offer some services from Shanghai zone

USD:

Jobless benefits bill clears Senate hurdle

 
Today’s data

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

GBP       BRC Shop Price Index Y/Y Dec A -0.80% | P -0.30%

EUR        German Trade Balance (EUR) Nov C 18.9B | P 16.8B

EUR        Eurozone Retail Sales M/M Nov C 0.10% | P -0.20%

EUR        Eurozone Unemployment Rate Nov C 12.10% | P 12.10%

EUR        German Factory Orders M/M Nov C 1.30% | P -2.20%

USD       ADP Employment Change Dec C 195K | P 215K

USD       Crude Oil Inventories P -7.0M

USD       FOMC Minutes

 

Harry Hindsight

  • EUR: Asia traded lower over the course of the session having opened around the 1.3630 level the market dropped back to the 1.3610 areas as we moved into the grey hours. Unemployment figures in Germany did very little to inspire the market and we remained around the 1.3620 level for a couple of hours until the macroeconomic figures hit, with numbers continuing to decline and very little room for interest rates to move, despite what the ECB members say the market lifted from the low end of the range and moved to above 1.3650 and held the levels into the NYK session. A better than expected trade balance pushed the USD to the forefront however, it’s still a negative number so little to glean from it really.  The day finished with the market moving off the lows below 1.3600 to finish the day just the other side of the figure around 1.3615
  • GBP: With very little in the way of news the Cable drifted along in the wake of the Euro with the cross almost unchanged from the previous days movements. Opening around the 1.6400 area the market in Asia rose initially before beginning a long slow slide to below 1.6380 into the early part of London. The Cable then followed the Euro for the rest of the day making its way to just short of the 1.6440 levels before dropping back to below the previous lows to around 1.6375 as the US data impacted the market before finishing the day almost unchanged around the 1.6400 levels in light trading.
  • JPY: USDJPY pushed higher from the opening and while there was plenty of two way flow in the early pre Tokyo period once the market in Tokyo opened we quickly pushed from the 104.20 levels to the 104.50 area. A weak supply for the fix chased the market back to the starting levels. Then the market saw steady gains with only minor setbacks moving through the 104.60 levels in Asia and then pushing to above 104.70 on good two way trading, Macro types were the main buyers throughout however, the sellers were for the most part involved in the crosses. We settled only short of the highs around the 104.60’s.
  • AUD: The Asian session set the tone with a sharp drop just into the Tokyo session with China news not looking to good and AUDJPY selling however, once the market had drifted to the lows the ship steadied and the market for the most part played in the 0.8915-35 areas for the remainder of the day with only brief sojourns to create the lows below 0.8895, having seen the highs just after the opening above 0.8970 it would seem Japanese retail did the damage for the most part early on and the rest of the day seemed pretty quiet overall, the market eventually settled around the 0.8930 levels.

Yesterday’s premiership results

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

JPY         Monetary Base Y/Y Dec A 46.60% | C 55.20% | P 52.50%

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

CHF        Foreign Currency Reserves Dec A 435.2B | C 435.0B | P 435.7B | R 435.9B

EUR        German Unemployment Change Dec A -15K | C -2K | P 10K | R 9K

EUR        German Unemployment Rate Dec A 6.90% | C 6.90% | R 6.90%

EUR        Eurozone PPI M/M Nov A -0.10% | C -0.10% | P -0.50%

EUR        Eurozone PPI Y/Y Nov A -1.20% | P -1.40% | R -1.30%

EUR        Eurozone CPI Estimate Y/Y Dec A 0.80% | C 0.90% | P 0.90%

CAD       International Merchandise Trade (CAD) Nov A -0.9B | C -0.15B | P 0.08B

USD       Trade Balance Nov A -34.3B | C -$40.0B | P -$40.6B

CAD       Ivey PMI Dec A 46.3 | C 55 | P 53.7
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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