Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 103.286 | EURUSD 1.36957 | EURJPY 141.462 | AUDUSD 0.87684 | NZDUSD 0.8282 | USDCAD 1.11004 | EURCHF 1.22892 | USDCHF 0.8973 | GBPUSD 1.66379 | EURGBP 0.82316 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               103.58 | 103.08

EUR/USD             1.36975 | 1.3679

EUR/JPY               141.77 | 141.15

AUD/USD            0.8775 | 0.8689

NZD/USD             0.8311 | 0.8247

USD/CAD             1.1128 | 1.1095

EUR/CHF              1.2301 | 1.2278

USD/CHF             0.8991 | 0.8966

GBP/USD             1.6640 | 1.6623

EUR/GBP             0.82345 | 0.8225

 

For today

  • EUR: EURJPY selling into a USDJPY rally seems to be a foregone conclusion as with every day this week although the movements were not as strong as we’ve seen over the last few days. Euro’s moved from a strong finish around the 1.3694 area and moved steadily down to the 1.3680 levels before the supply ran out and we started to reverse the losses the market since has slowly made its way back and is holding in the mid 1.3690’s again for an early attempt above 1.3700 one imagines. Some decent size stops are now waiting just above yesterday’s highs and although there is a light mixture the stops seem to run back to around the 1.3750 level with offers running from there to the 1.3800 levels and likely option barriers. With very light bids down to below 1.3650 the downside looks a little weak with the stops now below 1.3600 behind the support. However, bids appear quickly below the level.
  • GBP: Cable has been moving around with the Euro for the most part with a lack of news and yesterday’s data not worth the paper it was written on. Having dipped with the Euro and gained a little ground against it in early trading the market has been reasonably static with little more than a 15 pip range on the day so far. With the 1.6600 level now removed and the technical guys now looking for another pattern to follow the next level to the topside is the 1.6740 areas dating back to the 2011 period however, so probably a lot of wood to chop however, the downside remains the weakest point, having broken out and stayed reasonably strong the question is can the impetus continue. Only truly noteworthy levels is the 1.6580/90 levels that we struggled with and likely weak stops below.
  • JPY: A quiet day overall for the USDJPY with early buying sending the market from the 103.15 levels to above the 103.55 area before running out of steam and dropping back to trigger some weak stops through the opening levels. With the first level of stops cleared there’s very little in the way of the 103.80 stops from yesterday’s sellers. With real money offers rumoured to have moved lower from the 105.20-50 levels it’s difficult to see the market doing much on a Friday with little data. Downside has some light bids around the 103.00 still which has been a sticking point in other attempts lower. However, a clear break of the 102.80 will open up a deeper move once the stops are triggered and only a mix down below there around the 102.00 area.
  • AUD: The Oz opened around the 0.8770 area and struggled with AUDJPY sellers before in pre Tokyo moving the market in the Oz to below the 0.8760 levels before recovering a little later in the session to the starting levels. Comments from RBA’s Ridout set the market back further as he stated he wanted the Oz to fall further and the market took it literally and sold the pair straight through the 87cent level for the market to bounce like a soggy cat to just above. With very little showing near the market the 88cent area shows some mix around it, with weak stops just above followed by larger stops focused on the 89cent levels. Below today’s lows are a few light bids, not as thick as they were pre-comment however, I’d have to guess that there will be some to appear after the first selloff of the day if we have one.

 

Overnight News

AUD:

RBA’s Ridout Wants Australian Dollar to Fall Further

JPY:

Japan firms cautiously positive on capex in 2014/15 -Reuters poll

Aso: Competitive Corp. Tax Cuts Could Become Like Currency War

Aso Says Important to Maintain Japan’s Fiscal Credibility

Amari: Must Study Link Between Japan Corp-Tax Cut, Sales-Tax Rise

Japan May Admit Foreign Workers Ahead of 2020 Olympics: Suga

KRW/JPY:

BOK Kim Says Further Yen Fall Would Cause Pain to S. Korea: WSJ

CNY:

China faces pressures from net capital inflows-SAFE

China’s ICBC says will help repay investors in troubled shadow-banking scheme

China unemployment rate 4.05% at end Q4 2013 -labour min

EUR:

Germany AAA Credit Rating Affirmed at Fitch; Outlook Stable
Today’s data

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

09:30     GBP       BBA Mortgage Approvals Dec C 47.2K | P 45.0K

13:30     CAD       CPI M/M Dec C -0.20% | P 0.00%

13:30     CAD       CPI Y/Y Dec C 1.40% | P 0.90%

13:30     CAD       BoC CPI Core M/M Dec C -0.50% | P -0.10%

13:30     CAD       BoC CPI Core Y/Y Dec C 1.30% | P 1.10%

 

Harry Hindsight

  • EUR: A fairly quiet day in Asia with the market opening around the 1.3550 area and dipping in early trading as the EURJPY sellers appeared just for a change, once the EURJPY profit taking had been dealt with the market quickly recover from the lows around the 1.3535 levels to push back into the mid 1.3550’s into the grey hours, the market started to pick up before the numbers were released moving from the 1.3550 area and once the numbers were released the market moved past the 1.3580 level which had been a sticking point early comments from Draghi may have had a little bearing on the matter however, the comments were made earlier than the move that followed. Moving quickly to the 1.3640 level, and running into sufficient resistance to hold the market in place. With good numbers the USD buyers overnight retreated with rumours of decent sized medium term players shaving some of the risk, which if correct would help to explain the follow through later in the NYK session with the Euro heading reasonably close to the 1.3700 level, the market again stalled and we closed only just shy of the highs after a busy day with plenty of volume seen in most of the G10 pairs.
  • GBP: Cable benefitted from the wisdom of Draghi who’s ability to stimulate the market with comments reminiscent of Greenspan was the story of the day. By stating that the ECB was ready to act against deflation or inflation whichever it may be had me giggling in my tea. Cable’s supposed difficult according to me was breaking through the 1.6600 level and while it went through easy enough given the amount of Euro buying that was occurring it wasn’t surprising. Having breached the level though it wasn’t all plain sailing and we spent several hours into the NYK session struggling to maintain the 1.6600 level however, with a less than inspiring set of US numbers the market slowly started to grind higher to top above the 1.6640 to confirm the break. EURGBP did a lot of work with the pair reversing all its losses over the session moving from the 0.8180 levels we’d seen holding overnight to move quickly to above 0.8215 and then further rises to the 0.8250 level into the NYK session. As with others not completely easy as there was a lot of profit taking in the pair from bottom pickers around the 0.8220 area and again around the 0.8235. Cable in the end though finished the day only just short of its highs and negating the pattern that had been forming on the charts.
  • JPY: USDJPY peaked in early trading above the 104.80 level and briefly looked like it may even make the 105.00 however; early USDJPY buying was met with cross selling particularly in EURJPY and AUDJPY sellers. Having peaked it was a steady decline and the market move to the 104.20 areas into the grey hours, the market held the levels while Euro’s and Cable went bid and only started to move lower as we moved into the NYK influence and dropping through the 104.00 level just after the opening. With a non plus set of numbers and rumoured medium term sellers selling USD across the board the market dropped in two moves to trade a couple of times just through the 103.00 level before starting a little bit of a recovery into the close around the 103.30 levels.
  • AUD: The Oz opened above the 0.8850 levels and was in a steady decline from the start, with the China numbers inflicting the worst move dropping from the 0.8840 level to below the 88cent area. Oz was the only one to buck the USD selling trend throughout the day with the Oz weakening steadily after the early falloff, while the range was insignificant in the light of what else was going on in the market the steady move to below the 0.8740 saw plenty of volume going through as sellers matched off against the weak bids. The day finished with a weak recovery to the 0.8770 areas but continues to look vulnerable.

Yesterday’s premiership results

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

NZD       Business NZ Manufacturing Index Dec A 56.4 | C 56.7 | P 57

AUD       Consumer Inflation Expectation Jan A 2.30% | P 2.10%

CNY        HSBC/Markit Flash Manufacturing PMI Jan A 49.6 | C 50.4 | P 50.5

CNY        Conference Board Leading Index Dec A 0.4 | P 1.4

EUR        French PMI Manufacturing Jan (P) A 48.8 | C 47.6 | P 47

EUR        French PMI Services Jan (P) A 48.6 | C 48.2 | P 47.8

EUR        German PMI Manufacturing Jan (A) A 56.3 | C 54.4 | P 54.3

EUR        German PMI Services Jan (A) A 53.6 | C 53.9 | P 53.5

EUR        Eurozone Current Account (EUR) Nov A 23.5B | C 19.2B | P 21.8B

EUR        Eurozone PMI Manufacturing Jan (A) A 53.9 | C 53 | P 52.7

EUR        Eurozone PMI Services Jan (A) A 51.9 | C 51.4 | P 51

EUR        Eurozone PMI Composite Jan (A) A 53.2 | C 52.4 | P 52.1

GBP       CBI Reported Sales Jan A 14 | C 28 | P 34

CAD       Retail Sales M/M Nov A 0.60% | C 0.30% | P -0.10%

CAD       Retail Sales Less Autos M/M Nov A 0.40% | C 0.40% | P 0.40%

USD       Initial Jobless Claims (JAN 18) A 326K | C 331K | P 325K

USD       House Price Index M/M Nov A 0.10% | C 0.30% | P 0.50%

USD       Existing Home Sales Dec A 4.87M | C 4.95M | P 4.90M

USD       Leading Indicators Dec A 0.10% | C 0.10% | P 0.80%

USD       Crude Oil Inventories A 1.0M | C 0.7M | P -7.7M
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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