Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close Wellington open

USDJPY 104.171 104.00-20 | EURUSD 1.36684 1.3665-75 | EURJPY 142.389 1421.116-494 | AUDUSD 0.89952 0.9004-9007| NZDUSD 0.83021 0.8270-0.8308 | USDCAD 1.08956 1.0887-95 | EURCHF 1.23398 1.2340-445 | USDCHF 0.90276 0.9005-0.9035 | GBPUSD 1.64811 1.6460-99 | EURGBP 0.82925 0.82955-0.8301 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               104.13 | 103.26

EUR/USD             1.3685 | 1.3662

EUR/JPY               142.22 | 141.24

AUD/USD            0.9042 | 0.8985

NZD/USD             0.8337 | 0.8284

USD/CAD             1.0917 | 1.0887

EUR/CHF              1.2340 | 1.2325

USD/CHF             0.90285 | 0.9007

GBP/USD             1.6508 | 1.6475

EUR/GBP             0.8299 | 0.82855

 

Overnight News

CNY:

PBOC fixes yuan mid-point at record 6.0950/dollar

China Securities Regulator Steps Up Supervision of IPO

ADB’s Nakao Says He is “Optimistic” About China’s Economy

JPY:

Japan Abe Support Rating Increases to 62%: Yomiuri Survey

Japan May Draft Collective Self-Defence View in April: Asahi

AUD:

Australian Home-Loan Approvals Rise

Australia job advertisements dip 0.7% in Dec-ANZ

 

For today

  • EUR: While numbers have not been exactly poor the market in Euro’s has struggled for the most part having opened around the close on Friday, we spent the best part of the session barely holding the levels and only in the latter stages moved to above the 1.3680 levels, where the market currently holds. The market still has offers to the topside from the 1.3700 levels however, there are a few light stops mixed into the levels back to 1.3750 area and then some better resistance is seen building in front of the 1.3800 levels. Any reversal to the downside below 1.3600 is likely to trigger some weak stops from Friday’s longs and these continue into the 1.3550 level area.
  • GBP: Cable has steadily climbed higher from the opening moving from the 1.6480 levels to push above the 1.6500 level to peak around the 1.6507 levels with strong buying, limited GBPJPY buying through the session as the USDJPY continued to weaken led to the move higher and the EURGBP was a balancing act holding steady around the 0.8290 levels. For the moment there seems to be some weak offers on the topside however, 1.6600 remains to be the point to be broken and the technical traders are all watching for the H+S pattern to be confirmed on the daily’s. Downside see’s light bids down around the 1.6400 levels with stops appearing below the 1.6350 areas.
  • JPY: USDJPY moved down from the opening 104.20 levels in early trading to breach the 104.00 levels. Once Tokyo opened fixing supply added to the downward movement the push through the 103.80 levels was expected to be the support area however, the bids seem to have evaporated from Friday and the market moved quickly through the level to hold in the mid 103.20’s with a small bounce to above the 103.40 levels. Light bids are seen running down to the 103.00 levels with stops beginning to build below that level however, 102.80 sees some light bids. The market having moved quickly off those 105.00 areas means that level is the topside resistance for the moment with left overs from Friday still abound.
  • AUD: With the movement in USDJPY the AUD was allowed to rise as the carry trade dipped some 30-40 pips lower, AUD rallied strongly once the fixing supply in Tokyo entered the market and moved from the lows around the 0.8985 area to push firmly above the 0.9030 and peaking above the 0.9040 levels late in the session, for the moment we have slipped back a little however, hold on to the greater part of the gains as we head towards the London session. With the topside still showing a mixture of orders to the 0.9060 levels and some weak offers above the 0.9080 levels the movement to the topside now depends on the general USDJPY movement. Downside has light bids every 20 pips or so however, they are light and the market remains open to the 0.8880 levels for the time being.

Today’s data

AUD       Home Loans Nov A 1.10% | C 1.10% | P 1.00%

15:30     CAD       BoC Business Outlook Survey

19:00     USD       Monthly Budget Statement Dec C $0.0B | P -$135.2B

 

Weekend News

JPY/INR:

Japan to Set Up Fund to Help Firms Invest in India, Nikkei Says
JPY:

Toyota Union to Seek Basic Wage Increase of 1%: Nikkei
Japan’s Amari Says Best to Decide Consumption Tax Hike in Dec.
Japan May Increase Order for F-35 Jet Fighters, Nikkei Says
JPY/CNY:

Infiniti Says It Expects to Repeat Last Year’s 50% China Growth
CNY:

China to speed up yuan convertibility under capital account
China to Loosen Rules on Shanghai Free-Trade Zone Investment
China to Push Economical, Intense Land Use: Premier Li
China Coal Energy to Invest $2.8 Billion to Meet Power Demand
KRW/USD:

South Korea, U.S. Reach Agreement on Defence Cost Sharing
EUR:

Rehn Says Europe Needs to Strengthen Economic Recovery This Year
GBP:

Gordon Brown Seeks Strong Scottish Parliament Within U.K.: FT

 

Harry Hindsight

  • EUR: The market opened around the 1.3605-10 areas and climbed over the Asian session to the 1.3620 levels in a quiet pre NFP session, the move into London changed the direction as weak positions were cut and the market dropped from the highs to touch into the mid 1.3580’s before the release. On the release there was a little flurry to the downside as the Unemployment rate for Dec showed a 0.30% better than expected however, the NFP were massively away from the expected number and while there was a revision for Nov it still failed to balance the Dec number. The market initially dropped to below 1.3570 before rallying quickly to above the 1.3660 level before hitting limited offers and spent a time around the 1.3640’s before again pushing higher when the inventory number again came in stronger than expected, Euro’s pushed above the 1.3680 area however, was unable to push through the 1.3690-1.3700 offers left in the market. Good volumes were seen changing hands around the topside however, the market wilted and dropped back to the 1.3660 level and struggled for several hours into a close around those levels.
  • GBP: The Cable started the day quieter than the Euro opening around the 1.6480 levels and doing very little throughout the Asian session, holding the level until we moved into the official London session where we saw EURGBP being bought after the release of worse than expected IP numbers, EURGBP rose from the 0.8265 early London levels to just short of 0.8295 in a quick move, before settling down to trade around the 0.8280-85 levels into the US figures, Cable dropped to the 1.6410 level on the data and held in the regions. Release of the US figures sent Cable initially to below the 1.6390 levels before it bounced back in the same fashion as the Euro rallying to just short of 1.6500 levels and then moving to above 1.6510 on the back of the inventories before slipping back for a finish around the 1.6480 areas in a quiet evening session.
  • JPY: USDJPY rose slowly over the course of the Asian session moving off the 104.80 opening levels to move into London touching the 105.00 area after steady buying was absorbed by resting offers. Having breached the 105.00 area it was little changed moving into the US numbers and the market spiked on the first number to just short of 105.40 before dropping quickly to 104.20 in a big figure move that caught the weak longs by surprise, while the market stalled until the inventory number the market dropped again to push through the 104.00 levels however, with support in the area to 103.80 the market struggled from that point and finished the day around the 104.20 levels.
  • AUD: The Oz flat lined through the Asian session dipping from the 89cent area to below 0.8880 levels before reverting to the opening levels and trading in a tight range from that point until the US figures, The market was a little jittery pre-release however the move higher once the figures were released was less exaggerated in movement than the other pairs and we climbed steadily to above the 0.8990 levels moving through some reasonable resistance to eventually push above the 90 cent level late into the NYK session before finishing the day just off its highs.

 

Friday’s premiership results

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

CHF        Unemployment Rate Dec A 3.20% | C 3.20% | P 3.20%

CHF        CPI M/M Dec A -0.20% | C -0.10% | P 0.00%

CHF        CPI Y/Y Dec A 0.10% | C 0.20% | P 0.10%

GBP       Industrial Production M/M Nov A 0.00% | C 0.20% | P 0.40% | R 0.30%

GBP       Industrial Production Y/Y Nov A 2.50% | C 2.80% | P 3.20%

GBP       Manufacturing Production Y/Y Nov A 2.80% | C 3.20% | P 2.70% | R 2.60%

GBP       Manufacturing Production M/M Nov A 0.00% | C 0.30% | P 0.40% | R 0.20%

USD       Change in Nonfarm Payrolls Dec  A 74K | C 193K | P 203K | R 241K

USD       Unemployment Rate Dec A 6.70% | C 7.00% | P 7.00%

CAD       Net Change in Employment Dec A -45.9K | C 13.1K | P 21.6K

CAD       Unemployment Rate Dec A 7.20% | C 6.90% | P 6.90%

GBP       NIESR GDP Estimate Dec A 0.70% | P 0.80%

USD       Wholesale Inventories Nov A 0.50% | C 0.40% | P 1.40%

 

Stay lucky

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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