Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 104.211 | EURUSD 1.3678 | EURJPY 142.552 | AUDUSD 0.89661 | NZDUSD 0.83907 | USDCAD 1.09466 | EURCHF 1.23455 | USDCHF 0.90259 | GBPUSD 1.64392 | EURGBP 0.83204 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               104.475 | 104.09

EUR/USD             1.36795 | 1.3627

EUR/JPY               142.58 | 142.265

AUD/USD            0.8971 | 0.8911

NZD/USD             0.8420 | 0.8334

USD/CAD             1.0977 | 1.0948

EUR/CHF              1.2358 | 1.2342

USD/CHF             0.9067 | 0.9025

GBP/USD             1.6443 | 1.6412

EUR/GBP             0.8321 | 0.8300

 

For today

  • EUR: A mixture of cross EUR selling seemed to be behind the fall today with the market opening around the 1.3680 and slowly drifting into the Tokyo opening. With profit taking showing across the boards we saw Euro sold reasonably aggressively moving from the 1.3675 area down quickly to the 1.3635 levels. With news items on the rise of short term interest rates in the Eurozone leading the way for the selloff with the market unable to move off its lows and pushing through the 1.3630 level after a period. The market still remains mired on the downside. With the topside still showing offers around the 1.3700 level and nothing in the way of stops the topside still remains the tough option. Downside bids have been cleared to the current levels and although there is a light mix supposedly to 1.3600 we hold for the moment around this 1.3630 area and below the figure some weak bids.
  • GBP: Cable maintained its grasp above the 1.6400 level with a steady drift lower initially from the opening 1.6440 area to the 1.6430 however, once the Euro made its move lower the Cable dipped to the 1.6420 level and has held around that point since touching just above the 1.6410 level at one stage the market saw plenty of EURGBP longs unwinding as pressure after the FT item played on the Euro. For the moment Cable looks to be in no man’s with the market stuck for the moment around this 1.6400 level. Bids of any size don’t really appear until the low 1.6300 levels with offers a plenty stretching from the 1.6500 levels to 1.6600.
  • JPY: Fixing demand meets profit taking and Euro selling, the USDJPY started the day moving off from the 104.30 area just above the opening to trade to its lows around the 104.10 area as early profit taking moved into the market however, once the market moved into Tokyo the demand increased and with the Euro on the defensive USDJPY was forced higher to trade above the 104.45 levels and holding just off its highs for a good portion of the day. With topside offers beginning to build around the 104.80-105.00 levels the market seems to be mixed until then however, those offers are increasing in size the closer you move to the figure and once that level is cleared there seems to be even more increasing in size back to the 105.50 levels which seem to be exporter linked. With the downside cleared to the 103.00 levels the market is rather patchy to say the lease with only light weak stops below 104.00 and then light bids down to the 103.00 levels showing.
  • AUD: USDJPY goes up AUDUSD comes down as the carry trade remains mired around the 93.00 levels, moving from the opening 0.8960 areas the market peaked above the 0.8970 before slowly slipping to the lows below 0.8920 in quiet trading overall. With the market to the topside wide open to 0.9030-60 before light offers are seen and only thin bids from the lows to 0.8880 either side could be vulnerable to a move dominated by JPY, EUR or BRL for that matter it looks that open.

Overnight News

World Bank:

World Bank Raises Growth Forecasts as Richest Nations Strengthen

JPY:

Japan says it will approve Fukushima operator’s revival plan

BOJ Considers Lengthening Settlement System Operating Hours

Suga Says Japan Self-Defence Ship Accident Extremely Regrettable

CNY:

China’s yuan snaps rising streak, offshore-onshore gap widens

China Dec bank lending, money supply growth miss forecasts

GBP:

Osborne to Say U.K. Needs to Renegotiate Position within EU

NZD:

New Zealand Housing Loan Approvals Decline Most Since Feb 2011

EUR:

Recovery hopes hit as Eurozone short term rates stoke fears of the fragile recovery stalling FT
Today’s data

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

JPY         Japan Money Stock M2+CD Y/Y Dec A 4.20% | C 4.50% | P 4.30%

JPY         Machine Tool Orders Y/Y Dec (P) A 28.00% | P 15.40%

08:15     CHF        Retail Sales (Real) Y/Y Nov C 2.30% | P 1.20%

10:00     EUR        Eurozone Trade Balance (EUR) Nov C 16.7B | P 14.5B

13:30     USD       Empire State Manufacturing Jan C 4.5 | P 0.98

13:30     USD       PPI M/M Dec C 0.40% | P -0.10%

13:30     USD       PPI Y/Y Dec C 0.80% | P 0.70%

13:30     USD       PPI Core M/M Dec C 0.10% | P 0.10%

13:30     USD       PPI Core Y/Y Dec C 1.30% | P 1.30%

15:30     USD       Crude Oil Inventories P -2.7M

 

Harry Hindsight

  • EUR: The Euro struggled today, having hung on to the gains from last week the topside still remain resilient to further moves higher. Of note was ECB member to be Lautenshclaeger former BUBA member who unlike the rest casts doubt on the sensibility of negative deposit rates and low interest rates in line with Germany’s stance on the matter. The market opened around the 1.3675 areas and slowly slipped lower in quiet trading for the most part in the Euro trading to the upper 1.3650’s in Asia before moving into the grey hours and setting new lows for the day just below 1.3650. The movement in JPY seemed to be the catalyst for the second day and the Euro’s rode out the storm comfortably.  The Euro moved off the lows into the London opening and quickly targeted the 1.3700 levels in early trading but failed to capitalize on the move and drifted back into the opening areas. Even with the decent IP numbers released early in the session the market was playing second fiddle to yesterday’s movers again. The market ended the day with very little in the way of gains and with the 1.3700 still intact and looking key to a move higher.
  • GBP: Cable eventually got going but only once the inflationary numbers had been released. We opened the day trading around the 1.6390 levels with flirtations with the topside and contained for the most part by the 1.6380 levels during Asia, the grey hours saw some speculative selling taking the market to below 1.6370 levels however, as we approached the London opening the early sellers were removed and the market moved to above the 1.6420 on the release, with leading numbers showing inflation slipping back and headline numbers holding steady, the market moved with the premise that pressure was easing for an early rate movement to the topside so allowing the economy to tick along with its recovery for the time being. This led to Cable continuing to rise albeit slowly and the EURGBP to dip back towards the 0.8300 levels. Having peaked above the 1.6460 level and placed the day as an inside movement the Technical guys will be on hold. The market then drifted during the NYK session moving to between the 1.6440-50 areas in slow trading to finish the day.
  • JPY: After the previous day’s clear out a hangover from the US numbers on Friday combined with a limited market in Japan saw margins squeezed and a little over indulgence, the market opened around the 103.00 and spent very little time on the lows rising steadily through the Asia session to above the 103.50 levels which to some extent was a sticking point on the way down, the fact that the current account deficit grew for Nov forced the Yen lower against most pairs and although we stalled at the first hurdle the opening in London renewed the move higher. The push above the 103.70 level stalled until the market reached the NYK option cut where the market again started to rise in a tight channel to the 104.20 levels and the market holds into the close around the highs.
  • AUD: The AUD struggled with USDJPY rising the AUD was forced back with offers limiting the market in the carry trade as the pair continues to trade in a tight bad for the day. Limited EURAUD selling and GBPAUD selling helped to move the AUD and we slowly moved  down from the opening levels above 0.9060 in a big figure day move to hover around the 0.8960 levels in a steady but unexciting day.

 

Yesterday’s premiership results

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

JPY         Current Account Total (JPY) Nov A -0.05T | C -0.02T | P -0.06T

JPY         Eco Watchers Survey: Current Dec A 55.7 | C 54.2 | P 53.5

GBP       PPI Input M/M Dec A 0.10% | C -0.20% | P -0.70%

GBP       PPI Input Y/Y Dec A -1.20% | C -1.50% | P -1.00%

GBP       PPI Output M/M Dec A 0.00% | C 0.20% | P -0.20%

GBP       PPI Output Y/Y Dec A 1.00% | C 1.00% | P 0.80%

GBP       PPI Output Core M/M Dec A 0.10% | C 0.00% | P -0.10%

GBP       PPI Output Core Y/Y Dec A 1.00% | C 0.90% | P 0.70%

GBP       CPI M/M Dec A 0.40% | C 0.50% | P 0.10%

GBP       CPI Y/Y Dec A 2.00% | C 2.10% | P 2.10%

GBP       Core CPI Y/Y Dec A 1.70% | C 1.80% | P 1.80%

GBP       RPI M/M Dec A 0.50% | C 0.50% | P 0.10%

GBP       RPI Y/Y Dec A 2.70% | C 2.70% | P 2.60%

EUR        Eurozone Industrial Production M/M Nov A 1.80% | C 1.60% | P -1.10% | R -0.80%

USD       Advance Retail Sales Dec A 0.20% | C 0.30% | P 0.70%

USD       Retail Sales Less Autos Dec A 0.70% | C 0.40% | P 0.40%

USD       Import Price Index M/M Dec A 0.00% | C 0.50% | P -0.60%

USD       Business Inventories Nov A 0.40% | C 0.30% | P 0.70%
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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