Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 104.338 | EURUSD 1.36202 | EURJPY 142.115 | AUDUSD 0.88219 | NZDUSD 0.83383 | USDCAD 1.9309 | EURCHF 1.23241 | USDCHF 0.90483 | GBPUSD 1.63548 | EURGBP 0.83279 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               104.42 | 104.20

EUR/USD             1.3620 | 1.3610

EUR/JPY               142.15 | 141.85

AUD/USD            0.8830 | 0.8801

NZD/USD             0.8358 | 0.8285

USD/CAD             1.0940 | 1.0926

EUR/CHF              1.23305 | 1.23185

USD/CHF             0.9059 | 0.9046

GBP/USD             1.6358 | 1.6324

EUR/GBP             0.8337 | 0.83255

 

For today

  • EUR: A very limited day with very little news or data to move the market, opening around the 1.3618 area the market moved into the Tokyo session towards its lows of 1.3610 before rebounding on the fix to above 1.3620 to set an uneventful range. With some limited offers towards the 1.3650 levels the 1.3680 area has weak stops with the 1.3700 areas showing again limited offers. Light bids contained the downside range and a move through yesterday’s 1.3580 area will see weak stops triggered however, it remains a mix below there.
  • GBP: While the market was deadly quiet the Cable continued to drift having opened around the 1.3650 levels the market moved steadily lower and fixing supply for GBPJPY sent the Cable to its lows of 1.6325 before recovering a little to hold in the 1.6330 areas. EURGBP was a little better bid over the course of the session but that is little. For the moment limited bids from this level to just below 1.6300 however, some reasonable stops are likely below the 1.6250 areas and a break below 1.6210 will see the 1.6000 levels opened up technically. Topside has offers around the 1.6380 level and that is likely to contain the market unless something dramatic appears.
  • JPY: While the range may a little wider, it was nothing to write home about. Obviously after yesterday’s affairs the market has seen limited volume passing through and this is reflected across the board in the ranges we’ve seen so far. USDJPY opened around the 104.32 areas and drifted lower in the pre-Tokyo market before moving off the lows just in Tokyo around the 104.20 levels to push back higher, the market was limited in action and only late in the session was the highs above 104.40 made before slipping back to the opening ranges. With offers again showing around the 104.70-105.00 level from macro leveraged types and then getting larger as you move through the figure the market on the volumes so far has limited upside potential, Downside sees a mix to the 104.00 level and better bids just below there, and nothing in the way of stops until beyond the 103.50 areas.
  • AUD: Opening around the 0.8825 area and pretty much setting the topside of the range the market was very quiet until some limited cross JPY selling entered the market and AUD was one of those sold, taking the market to its lows just above the 0.8800 levels in a limited action, for the moment the market holds in mid-range around the 0.8815 levels.  Offers remain to the 0.8850 areas with some weak stops through that level with offers increasing in size towards the 0.8900 levels and medium term stops left behind that level. Downside sees light mixture to the 0.8780 levels but suspect stronger bids just below and back to the 0.8750 levels.

 

Overnight News

JPY:

Japan Govt Says Economy “Recovering” for 1st Time Since 2008

Japan EconMin Amari: can expect capex to expand from now on

Ex-BOJ Board Member Sees Yen at 115 as Kuroda Eyes More Stimulus

Japan Companies to Keep Up Foreign M&A Even After Yen Drop: JBIC

Japanese Sold Net 740.6 Billion Yen Overseas Debt Last Week

Japan consumer mood worsens in December

CNY:

PBOC Official Calls for More Flexibility in Yuan: China Finance

AUD/IDR:

Australia Admits Navy Encroached Indonesian Waters
Today’s data

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

JPY         Consumer Confidence Index Dec A 41.3 | C 43.4 | P 42.5

08:15     CHF        Producer & Import Prices M/M Dec C 0.20% | P -0.10%

08:15     CHF        Producer & Import Prices Y/Y Dec P -0.40%

09:30     GBP       Retail Sales M/M Dec C 0.50% | P 0.30%

13:30     USD       Housing Starts Dec C 0.99M | P 1.09M

13:30     USD       Building Permits Dec C 1.01M | P 1.01M

14:15     USD       Industrial Production Dec C 0.20% | P 1.10%

14:55     USD       U. of Michigan Confidence Jan (P) C 83 | P 82.5

 

Harry Hindsight

  • EUR: Early trading was dominated by movement in the AUD, with the market opening around the 1.3605 areas early sellers appeared in the EURAUD trade after the release of Oz data. The market moved below 1.3590 before reversing as the Oz drove lower. Moving higher and above 1.3615 the market stalled and although we continued a slow rise to the 1.3625 levels during Asia there was less flow and less movement on the pair. The move into London saw a mixture of EURAUD range sellers and a renewal of the Oz selling, this lead the Euro lower during the grey hours and into the London official opening with no change for the final Dec numbers the market quickly moved to its previous highs however, the market remained vulnerable to the limited swings we had seen so far and we soon saw a test below 1.3600 again before moving into the NYK session. Unimposing inflation numbers left the USD a little vulnerable and the Euro again started to rally add to which the tic data which saw a sharp drop from the expected and Euro’s put in the high just below the 1.3650 levels, the market remained nervous into the Philly numbers and the drop on a good number was quick and savage and back to the 1.3600 level with the market at this point looking empty between the two levels. Late selling into the close of the London session sent the market to below 1.3585 however, it held and we’ve slowly moved back to above 1.3620 on light trading over the course of several hours. The events in other currencies over shadowed the by play between Weidmann and Coeure who argued the opposite sides of the coin without really countering each other’s arguments, but both obviously covering the previous comments both by Lautenshclaeger and reports in the FT.
  • GBP: With no real data the market in Cable gyrated in a tight range with the Euro. Opening around the 1.6370 area the Oz data saw an already dipping market touch below 1.6350 before the Euro dragged the GBP with it, while saying that EURGBP was already rising and Cable was unable to break back above the 1.6380/1.6400 levels that seem to be attracting attention. Grey hours saw some fresh EURGBP buying entering the market however, GBP seemed to remain the weak cousin as we moved into the London session proper moving off the 1.6312/14 levels and then holding into NYK around the 1.6340 levels. NYK buyers crept out but the damage was already done and although we pushed against the 1.6380 it was a weak attempt and we soon moved back to the low areas. The Finish was as with the Euro a steady climb to the 1.6350-60 levels closing in the middle in lacklustre trading.
  • JPY: With early trading dominated by the Oz drop USDJPY made a quick move from the opening levels of 104.60 to the 104.85 level before having one attempt at the 105.00 level, the market failed just above the 104.90 levels and then drifted back to trade around the 104.70 levels into the London session. The move into NYK saw a weaker USD undermining the overnight sentiment and the market dropped back to the previous day’s range moving to the 104.15 area lows before holding the 104.35 for much of the evening’s trading.
  • AUD: As we’ve seen in the other currencies a surprise move in the employment data or was it as the underlying participation measure has been on the decrease for several months. The release saw the Oz drop quickly from the opening 0.8915 area to the 0.8820 area, at which point there was a fairly healthy two way battle appear from support likely an option barrier and the sellers, eventually the market dipped below the 0.8800 level, the initial move had all been about AUDUSD however, the secondary selling moved into the market from EURAUD and AUDJPY as the market dumped the Oz positions either through choice or not as the case may have been. There was no bounce and in all likelihood the protection of the 0.8800 level was the topside 0.8815 offers. The next few hours the market was contained between the 0.8800-0.8815 levels. The grey hours saw some limited selling appear and once London officially opened the selling increased to push down through the bids to the 0.8780 levels triggering weak stops and then holding the areas into the NYK session. Even though we entered a new regional session with which USD was weak the recovery if you could call it that was limited and we managed only to claw back to the 0.8820 levels into the close.

Yesterday’s premiership results

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

JPY         Tertiary Industry Index M/M Nov A 0.60% | C 0.80% | P -0.70% | R -0.90%

JPY         Machine Orders M/M Nov A 9.30% | C 1.20% | P 0.60%

JPY         Domestic CGPI Y/Y Dec A 2.50% | C 0.40% | P 2.70% | R 2.60%

GBP       RICS House Price Balance Dec A 56% | C 59% | P 58%

AUD       Employment Change Dec A -22.6K | C 10.3K | P 21.0K | R 15.4K

AUD       Unemployment Rate Dec A 5.80% | C 5.80% | P 5.80%

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

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

EUR        Eurozone CPI M/M Dec A 0.30% | C 0.30% | P -0.10%

EUR        Eurozone CPI Y/Y Dec (F) A 0.80% | C 0.80% | P 0.80%

EUR        Eurozone CPI – Core Y/Y Dec (F) A 0.70% | C 0.90% | P 0.90%

CAD       International Securities Transactions (CAD) Nov A 8.66B | C 7.21B | P 4.41B

USD       Initial Jobless Claims (JAN 11) A 326K | C 327K | P 330K | R 328K

USD       CPI M/M Dec A 0.30% | C 0.30% | P 0.00%

USD       CPI Y/Y Dec A 1.50% | C 1.40% | P 1.20%

USD       CPI Core M/M Dec A 0.10% | C 0.10% | P 0.20%

USD       CPI Core Y/Y Dec A 1.70% | C 1.70% | P 1.70%

USD       Net Long-term TIC Flows Nov A -29.3B | C 42.3B | P $35.4B | R 28.7B

USD       Philly Fed Survey Jan A 9.4 | C 8.8 | P 7

USD       NAHB Housing Market Index Jan A 56 | C 58 | P 58
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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