Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 104.825 | EURUSD 1.36066 | EURJPY 142.632 | AUDUSD 0.88987 | NZDUSD 0.82455 | USDCAD 1.08424 | EURCHF 1.2342 | USDCHF 0.90703 | GBPUSD 1.64801 | EURGBP 0.82562 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               104.985 | 104.77

EUR/USD             1.3619 | 1.36015

EUR/JPY               142.96 | 142.58

AUD/USD            0.8912 | 0.8876

NZD/USD             0.8260 | 0.8232

USD/CAD             1.0857 | 1.0836

EUR/CHF              1.2347 | 1.2338

USD/CHF             0.9074 | 0.9061

GBP/USD             1.6483 | 1.6472

EUR/GBP             0.8262 | 0.8254

 

For today

  • EUR: As you’d expect in front of a NFP number, very quiet. Opening around the 1.3605 areas we’ve managed a steady rise to above the 1.3615 and that is all she wrote. Light offers running to the 1.3650 area with some light stops behind there, offers start to thicken as we approach the 1.3700 levels with medium term stops just above.  Down side is a mixture to the 1.3500 level however, technically a break down through the 1.3550 level properly will see calls going out, with only light bids to the 1.3500 levels.
  • GBP: No real difference to the Euro, the market moved low after the retail sales number however, this had already been muted by several over the week and was not a real surprise as it’s not each year. Everyone buys my prezzie in Oct then they’re skint for December (I wish). The market made its largest move down from the 1.6487 level to just above the 1.6472 level and then spent the rest of the session moving back to the 1.6480 level. Yesterday’s view stand and downside increasingly looks risky in my opinion.
  • JPY: Everything was on hold even the USDJPY which over the past 12months you could rely on moving didn’t moving from the opening 104.80 we have failed to move above 105.00 stalling in the mid 104.90’s. With offers immediately above the 105.00 level and only light stops through the 105.15-20 levels there for the moment seems little news without momentum to push through, however there are offers beginning to thicken from the 105.40 areas going back to 105.80, no real talk of the 106.00 barriers and given yesterday’s movements around the NYK cut in USDJPY they may have been thinned out a little if they remain. Moving the other way has even less of a market with 104.40-104.00 providing some support with a light mix to the 103.80 levels and some reasonable size below there even if it remains mixed and no real definition.
  • AUD: Early players again started to sell the Oz from the beginning taking it from the 89 cent area to just below the 0.8880 levels into early Tokyo however, with the release of the China data still showing good demand for their goods the market turned and headed back to hover around the opening levels with a 0.8910 high. With light offers around the 0.8930 level and stops now beginning to appear above 0.8950 from weak shorts that side seems vulnerable if it wasn’t for all the major banks talking it down. The 90cent area is also beginning to pick up interest just above for short term breakouts. To the downside seems a little mixed and 0.8850 seems to be the level with support running to the 0.8820 level.

Overnight News

CNY:
China’s trade surplus for 2013 was up 12.8% over the previous year.

GBP:

UK construction firms see record growth in workload. Rics

UK retail growth slows in December.
Today’s data

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

GBP       BRC Sales Like-For-Like Y/Y Dec A 0.40% | P 0.60%

JPY         Leading Index Nov (P) A 110.8 | C 110.8 | P 109.8

06:45     CHF        Unemployment Rate Dec C 3.20% | P 3.20%

08:00     CHF        CPI M/M Dec C -0.10% | P 0.00%

08:00     CHF        CPI Y/Y Dec C 0.20% | P 0.10%

09:30     GBP       Industrial Production M/M Nov C 0.20% | P 0.40%

09:30     GBP       Industrial Production Y/Y Nov C 2.80% | P 3.20%

09:30     GBP       Manufacturing Production Y/Y Nov C 3.20% | P 2.70%

09:30     GBP       Manufacturing Production M/M Nov C 0.30% | P 0.40%

13:30     USD       Change in Nonfarm Payrolls Dec C 193K | P 203K

13:30     USD       Unemployment Rate Dec C 7.00% | P 7.00%

13:30     CAD       Net Change in Employment Dec C 13.1K | P 21.6K

13:30     CAD       Unemployment Rate Dec C 6.90% | P 6.90%

15:00     GBP       NIESR GDP Estimate Dec P 0.80%

15:00     USD       Wholesale Inventories Nov C 0.40% | P 1.40%

 

Harry Hindsight

  • EUR: A very quiet Asian session opening around the 1.3580 levels and gradually creeping higher as we moved towards the London session. First Middle Eastern players lifted it out of the range pushing to the 1.3590 and then once London opened the market was again pushed too the 1.3610-20 levels, with a mixed review of the confidence numbers for the Eurozone area the market barely hung on to the 1.3600 level. German industrial production had little impact as everyone waited for the ECB announcement. So when it arrived as no change the market spiked first higher to trade above the 1.3630 area again, before dropping back quickly as Draghi started to speak reiterating previous comments about negative rates blah blah blah, to be honest having seen in the past how quick they are to react to situations, you are more likely to find the US intervening on their behalf with printed Euro’s with the Obama’s head on the €100 bill. The general talk is if inflation reach’s 0.50% then they will do something about it maybe. Apart from the ECB being a toothless pussycat, it also has the added pressure that some countries such as Germany are beginning to come under pressure from its voters and/or savers, so it’s becoming a little too personal for them. The market therefore dropped on the threat that isn’t to below the 1.3550 level where the technical support level is/was, before bouncing and maintaining the 1.3590 levels. Post IMM saw the market move quickly higher again and we reached back to the 1.3610 levels as we negated the move lower altogether. With tech buyers buying off the bottom and then weak stops triggered back through the 1.3600 the market closed just below the levels. Volumes were brisk once the news was out having suffered prior.
  • GBP: While all eyes focused on the Euro the GBP also had there rate announcement, although this one barely went past with a murmur, with the expected no change to policy and no further announcements for the moment. Cable opened in Asia around the 1.6450 levels and managed to move above the 1.6490 levels during NYK with the market dropping back a little after the initial claims number in the US. Otherwise a quiet day with the Cable finishing the day only just short of the highs and EURGBP reversing early gains for the Euro.
  • JPY: USDJPY opened around the 104.85 levels and drifted for the most part in Asia, dipping to below the 104.75 and moving just above 104.95 in an early attempt on the 105.00 area again. With little appetite before the ECB and the following day’s NFP numbers the market was restricted to a very narrow band for the majority of the day, London eventually pushed the market through the 105.00 levels but only as far as the 105.05 areas and although we held deep into the London session first the ECB set the pair lower with EURJPY kicking in to the downside and then again as we moved towards the NYK option cut triggered another selloff down to below 104.60 before a steady recovery over the remainder of the session to finish just short of the opening levels around 104.80.
  • AUD: The Oz opened around the 0.8905 area and saw early sellers in front of the numbers, moving the market to the 0.8885 levels only for the numbers to come in better than expected and the market to rally to above 0.8910 triggering weak stops and spoiling the fun. Then to add to the fun inflation numbers below expectations for the CNY market turned the Oz on its head again and we dropped quickly to the 0.8865 levels, then the tedium set in with no one really playing and the market drifting over the course of the day higher to again breach the 89cent area late into the session. Market movement from the numbers was pretty non-existent and the whole day was contained in those first few hours in Asia.

Yesterday’s premiership results

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

NZD       Building Permits M/M Nov A 11.10% | C -0.60% | P 0.30%

AUD       Retail Sales M/M Nov A 0.70% | C 0.40% | P 0.50%

AUD       Building Approvals M/M Nov A -1.50% | C -3.00% | P -1.80% | R -1.60%

CNY        CPI Y/Y Dec A 2.50% | C 2.70% | P 3.00%

CNY        PPI Y/Y Dec A -1.40% | C -1.30% | P -1.40%

GBP       Visible Trade Balance (GBP) Nov A -9.4B | C -9.4B | P -9.7B

EUR        Eurozone Economic Confidence Dec A 100 | C 99 | P 98.5 | R 98.4

EUR        Eurozone Industrial Confidence Dec A -3.4 | C -3.3 | P -3.9

EUR        Eurozone Consumer Confidence Dec (F) A -13.6 | C -13.6 | P -13.6

EUR        German Industrial Production M/M Nov A 1.90% | C 1.50% | P -1.20%

GBP       BoE Rate Decision A 0.50% | C 0.50% | P 0.50%

GBP       BoE Asset Purchase Target Jan A 375B | C 375B | P 375B

USD       Challenger Job Cuts Y/Y Dec A -5.90% | P -20.60%

EUR        ECB Rate Decision A 0.25% | C 0.25% | P 0.25%

CAD       Housing Starts Dec A 190K | C 196K | P 192.2K | R 198K

CAD       Building Permits M/M Nov A -6.70% | C -2.30% | P 7.40%

CAD       New Housing Price Index M/M Nov A 0.00% | C 0.20% | P 0.10%

USD       Initial Jobless Claims (JAN 4) A 330K | C 337K | P 339K | R 345K
Good Luck

Andy

 

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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