Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 102.948 | EURUSD 1.36693 | EURJPY 140.723 | AUDUSD 0.87774 | NZDUSD 0.82645 | USDCAD 1.11534 | EURCHF 1.22667 | USDCHF 0.89728 | GBPUSD 1.65784 | EURGBP 0.8245 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               103.45 | 102.92

EUR/USD             1.3670 | 1.3647

EUR/JPY               141.26 | 140.775

AUD/USD            0.8826 | 0.8781

NZD/USD             0.8299 | 0.8260

USD/CAD             1.1160 | 1.1129

EUR/CHF              1.2295 | 1.2260

USD/CHF             0.9007 | 0.8975

GBP/USD             1.6588 | 1.6562

EUR/GBP             0.8248 | 0.82345

 

For today

  • EUR: As the market closed and we moved through the end of day process the Turkish CBRT released its bombshell, a hike of 425bps on the borrowing rate while the market had been expecting a hike the nearest estimates were only half what they did. Most currencies reacted the Euro none the different moving from the opening 1.3670 area straight down to the 1.3650 levels before stabilizing and holding. We moved off the lows as the Yen weakened as again the carry trade became focused on the TRY. Later in the session the Euro recovered a little but could never get back to the opening levels and after a frantic hour or so the market dropped back towards its lows where we currently hold just above. Very light mix above the 1.3720 area, with the offers thickening as we move up towards the 1.3750 levels. Light bids remain to the 1.3600 levels with break out stops appearing below and around the 1.3580 areas
  • GBP: Cable opened slightly lower on the back of the Turkish news before holding around the 1.6565 levels and moving back up into the Tokyo session however, although we made it above the opening levels to touch short of the 1.6590 levels the market has struggled a little in the light of cross TRY continuing to be a factor in the market. With the market pinned quietly in the 1.6565/85 bracket its likely to remain quiet into the FOMC decision later in the day. EURGBP remained in a tight range with that cross not playing much of a part today. With light stops above the 1.6650 levels and some reasonable offers creeping in towards the 1.6700 area the topside is a struggle, the downside we’ve visited before and the market does not look that strong until the 1.6450 area.
  • JPY: The market was caught a little short as it tried to grab some of the action on what is a carry trade with Yen weakening against anything that could be used to sell against the TRY. We opened some 20 pips higher around the 103.15/20 level and quickly peaked above the 103.40 levels before drifting into the Tokyo opening. Since the opening the market has held a quiet 103.10-30 level for the most part in what became fairly staid. The topside is very mixed at the moment with offers only just outweighing the stops however, the 104.00 level is at least better protected than the rest of the 103 handle and will need the FOMC to make people sit up for the rise to continue in the same frame we’ve seen. Downside has weak stops below the 103.00 level and those stops continue for a way maybe not large but there seems to be a few of them. 101.80/102.00 for the moment seems to be the support area.
  • AUD: The Oz caught the bug and rose with the move in USDJPY opening 5 or so pips higher on the reopening peaking initially above the 0.8810 levels before moving a little lower into Tokyo open, once into the session properly the market moved to above the 0.8825 and a congested chart from last week, the market held there only briefly triggering weak stops before drifting back to hold in the 0.8800/10 levels for the rest of the session. A move through 0.8850 opens up the 89 cent level however, there are some range players hanging around the area. Downside has a mix down to the 0.8710 areas and we start to see some weak stops appearing there and through the 87 cent levels.

Overnight News

TRY:

Turkey Raises Key Rate to Bolster Lira

JPY:

Japan’s Abe: Expects BOJ Will Continue to Implement Bold Easing

Abe: Don’t Expect Japan Trade Deficit to Become Permanent

Aso: Improvements Seen in Japan Consumer Sentiment, Production

NZD:

English Says NZ Dollar Gain May Reflect Rate Rise Expectations

RBNZ Says December Low-Deposit Loans 5.6% of Total New Lending
Today’s data

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

AUD       Westpac Leading Index M/M Dec A 0.10% | P -0.10%

07:00     EUR        German GfK Consumer Sentiment Feb C 7.8 | P 7.6

07:00     CHF        UBS Consumption Indicator Dec P 1.43

09:00     EUR        Eurozone M3 Y/Y Dec C 1.70% | P 1.50%

15:30     USD       Crude Oil Inventories P 1.0M

19:00     USD       FOMC Rate Decision C 0.25% | P 0.25%

20:00     NZD       RBNZ Rate Decision C 2.50% | P 2.50%

 

Harry Hindsight

  • EUR: EM was the talk of the day however, with China out most of next week position closing in the region is going to be a little frantic and disturbing however, how bad can it be most are pegged. The Euro moved higher over the course of the Asian session struggling at the start with tight ranges before moving to just short of the 1.3690 levels in the grey hours. Comments early on from analysts at S&P then sent the Euro lower over the early part of London to hit below 1.3630 before finding some strength, while the comments from analysts are nothing new one suspects ECB’s answer would be pot kettle black however, while the market fell back the range was tight overall and the market made its way higher again once the NYK market moved in, with the market closing on slightly lower on some reasonable volume. The main concern for the market in Europe seemed to be the emergency meeting by the Turkish central bank at the end of the day causing some limited position closures.
  • GBP: Cable rallied in the Asian session as a combination of EURGBP selling hit the market and a thing GBP leg had the Cable moving from the opening 1.658 to above the 1.6610 area before spending the rest of the session in that area with a brief spike above the 1.6620 levels. The move into the London session was dominated by the 4Q advanced number which shows a slight dip on expectations to 0.70% for GDP, the market reacted as you would expect it too, dropping quickly to below 1.6540 however, in the light that this is still the best quarter since 2007 the market rebounded off the lows to move again through the 1.6600 levels before drifting into a quiet finish around the 1.6580 level as the market waits hesitantly for the Turkish announcement.  After a couple of movements in the EURGBP that finished the day only slightly lower than where it started.
  • JPY: USDJPY was pinned for the most part of the Asian session, opening around the 102.55 levels and dipping to below 102.50 before spending the rest of the day more or less 102.55/102.75 in quiet trading given the amounts that supposedly went through in the Far East on some of the regional pairs. The move into London saw the USD rising against the Yen as the fall out of regional weakening spread into the USDJPY and the market moved steadily to above the 103.00 level grinding through light offers and triggering weak stops. We peaked in the mid 103.20’s before drifting a little and dropping quickly on a poor durable goods number out of the US. Having hit the old Asian range levels around the 102.60’s the market then meandered quietly higher into the close, finishing just short of the 103.00 levels.
  • AUD: The Oz climbed steadily during the Asian period moving on the back of weakening regional currencies and doing well against the Yen after Friday’s sudden drop in USDJPY and consequently AUDJPY. We opened around the 0.8740 area and although we briefly visited the downside around 0.8730 moved higher on the back of Business confidence and then as a result of carry trade buying continued the move to above 0.8790 in a more leisurely move. Early London were sellers looking for the range player however, with the Euro under pressure the Oz again caught a move higher with a mini short squeeze through the 88cent level to peak around 0.8820. Until the NYK open the market then stayed around the 88cent level and only the US players were willing to sell the Oz enough to set it back a little as the FX met likeminded in the futures market. The market then based around the 0.8770 into the close, finishing just under the 0.8780 levels.

 

Yesterday’s premiership results

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

JPY         CSPI Y/Y Dec A 1.30% | C 1.10% | P 1.00% | R 1.20%

AUD       NAB Business Confidence Dec A 6 | P 5 | R 6

GBP       GDP Q/Q Q4 (A) A 0.70% | C 0.80% | P 0.80%

GBP       Index of Services 3M/3M Nov A 0.80% | C 0.70% | P 0.80%

USD       Durable Goods Orders Dec A -4.30% | C 1.00% | P 3.50%

USD       Durables Ex Transportation Dec A -1.60% | C 0.70% | P 1.20%

USD       S&P/Case-Shiller Composite-20 Y/Y Nov A 13.70% | C 13.70% | P 13.60%

USD       Consumer Confidence Jan A 80.7 | C 80 | P 78.1
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

Any opinions, news, research, analyses, prices or other information ("information") contained on this Blog, constitutes marketing communication and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the information contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. LMAX Group has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

LMAX Group will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the produced information was obtained from sources deemed to be reliable, LMAX Group does not provide any guarantees about the reliability of such sources. Consequently any person acting on it does so entirely at his or her own risk. It is not a place to slander, use unacceptable language or to promote LMAX Group or any other FX and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.