Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 102.272 | EURUSD 1.36645 | EURJPY 139.74 | AUDUSD 0.8740 | NZDUSD 0.8275 | USDCAD 1.11694 | EURCHF 1.22214 | USDCHF 0.89439 | GBPUSD 1.65646 | EURGBP 0.82488 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.54 | 102.03

EUR/USD             1.3666 | 1.36435

EUR/JPY               139.94 | 139.40

AUD/USD            0.8749 | 0.8710

NZD/USD             0.8218 | 0.8171

USD/CAD             1.1199 | 1.1168

EUR/CHF              1.2238 | 1.2220

USD/CHF             0.8967 | 0.89435

GBP/USD             1.6565 | 1.6546

EUR/GBP             0.8253 | 0.8243

 

For today

  • EUR: A quiet session after a busy day yesterday, the market opened around the 1.3665 area and while the movement has been steady throughout the session it has slowly moved lower to trade to 1.3645 areas where we currently hold into the grey hours. With bids just below yesterday’s lows stops still remain scarce to the downside on the 1.36 handle with a light mixture showing to the 1.3580 levels one suspect some medium sized stops below that level with bids returning around the 1.3520-40 areas. Moves the topside will be a mixture of breakout and range players around the 1.3710-40 levels with better offers weighing in just above there. Offers continue to build from that point on as you get nearer 1.3800.
  • GBP:  Cable has played a steady range moving between 1.6550 and close to the 1.6565 levels early in the session, for the moment as we move towards the grey hours both the Euro and Cable are under slight pressure and resting on their lows. The 1.6610 seems to be a respected level at the moment however, for the moment 1.6700 seems a step to far. The downside for the moment seems to be the weak side however, the market is more about the EURGBP and a push through 0.8300 should push the Cable lower however, we’ve been to the downside already and 0.8180 looks to be support.
  • JPY: USDJPY had a very quiet day, with the last day of trading for the Chinese before the New Year/Golden week holidays begin. The market struggled to make any really meaningful moves. The market opened around the 102.30 area and moved between 102.10/30 for most of the session before finally moving up as we moved into the last half of the session, the USDJPY rose to above the 102.50 and currently holds in the region. With offers from this area back to 103.00, nothing large but spread around the market one suspects. Light stops through the 103.20 area and then more offers suspected. Bids from the 102.00 to 101.70 area in response to yesterday’s support and likely importer bids make up the downside a push through the level will see light stops appearing from margin calls and then 101.00-30 likely to be the next support area with relevant barriers.
  • AUD: The Oz held up in early trading although the range was very tight with the market holding around the 0.8740 levels until the import price index showed a big drop for the 4th quarter sending the Oz to the 0.8710 area lows. Having dropped it then spent the rest of the session moving steadily up towards the 0.8740 area in a very quiet market. As we head to London the market is currently holding in the 0.8730 area. This is where support begins stretching to the 0.8690 area before the first sniff of stops however, it’s not far before small bids appear down to mid 86cent. The topside seems to be the weaker as the first thing there is stops around the 0.8780 levels through the 88cent level with weaker stops 0.8820 onwards however, 0.8850 is likely to be the resistance.

Overnight News

CNY:

China January HSBC Final Manufacturing PMI 49.5 vs. 50.5 in December

JPY: Amari: Need to Remember Fed Tapers Because US Econ Strong

Japan Coalition Partner Chief: Excessive Yen Strength Corrected

Japan Auto Association Sees Demand Down 9.8% This Year

Japan Dec retail sales up 2.6% YoY

NZD:

NZ Central Bank Keeps Rates on Hold But Says Expect Increases ‘Soon’

English Says N.Z. Should Expect Higher Rates in Coming Months

New Zealand new housing consents push higher in December

AUD:

Australia new homes sales up strongly for 2013-survey
Today’s data

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

NZD       RBNZ Rate Decision A 2.50% | C 2.50% | P 2.50%

NZD       Building Permits M/M Dec A 7.60% | P 11.10% | R 12.50%

JPY         Retail Trade Y/Y Dec A 2.60% | C 3.90% | P 4.00% | R 4.10%

AUD       Import Price Index Q/Q Q4 A -0.60% | C 2.10% | P 6.10%

CNY        HSBC/Markit Manufacturing PMI Jan (F) A 49.5 | C 49.6 | P 49.6

08:00     CHF        KOF Leading Indicator Jan C 2.02 | P 1.95

08:55     EUR        German Unemployment Change Jan C -5K | P -15K

08:55     EUR        German Unemployment Rate Jan C 6.90% | P 6.90%

09:30     GBP       Mortgage Approvals Dec C 73K | P 70.8K

09:30     GBP       M4 Money Supply M/M Dec C 0.30% | P 0.00%

10:00     EUR        Eurozone Industrial Confidence Jan C -3 | P -3.4

10:00     EUR        Eurozone Economic Confidence Jan C 101 | P 100

10:00     EUR        Eurozone Consumer Confidence Jan (F) C -13 | P -13.5

10:00     EUR        Eurozone Services Confidence Jan C 0.8 | P 0.2

13:00     EUR        German CPI M/M Jan (P) C -0.40% | P 0.40%

13:00     EUR        German CPI Y/Y Jan (P) C 1.50% | P 1.40%

13:30     USD       GDP (Annualized) Q4 (A) C 3.60% | P 4.10%

13:30     USD       GDP Price Index Q4 (A) C 1.30% | P 2.00%

13:30     USD       Initial Jobless Claims (JAN 25) C 331K | P 326K

15:00     USD       Pending Home Sales M/M Dec C -0.10% | P 0.20%

 

Harry Hindsight

  • EUR: While EM currencies where all over the place the Euro plodded along, with initial selling in light of the TRY news on overnight rates, Euro dropped from the closing prices around the 1.3670 levels to just below the 1.3650 shortly after the announcement. There was a weak attempt to move higher in mid Tokyo however, it was weak and we ended up on the lows around the support level of 1.3650. From there we gradually rose into the grey hours and further into the London session as some profit taking from those that had prepositioned themselves for the hike took back their positions. The move into NYK saw a large move in front of the FOMC meeting and comments from ECB’s Noyer with comments that rises in the Euro would have a negative impact, this dropped the Euro to below 1.3605 in a strong move as the markets appetite for risk disappeared altogether to flow into the USD, JPY and CHF. Before bouncing as BoE’s Carney made comments to spin the EURGBP back higher. Euro’s though could not get back to those early highs just after the London open around the 1.3685 and attempted a couple of times to move to the highs of 1.3675 before holding in a slightly choppy 25 pip range into the close.
  • GBP: Cable swung around as much as the Euro and while the Cable is associated with safe haven flows usually, it would seem that it wasn’t today. We opened a little lower than the close in NYK and dropped into the mid 1.6560’s before holding and gradually moving to the closing levels during the Asian session, the move into London saw the market rally to above the 1.6600 level briefly as EURGBP selling moved into the market however the movement overall was similar to the Euro and contained between 1.6530/1.6605 on the whole. The move into the NYK session saw the EURGBP drop from off the highs around 0.8260 to 0.8220 and while there was strong cross selling both currencies fell during the period. With Cable on its lows the market started to find the market supported from the lows and finding its way to the 1.6560 levels after a brief flirtation with 1.6590 for a steady and quiet close and none of the drama usually associated with safe haven flows.
  • JPY: Initially I think the retail market took over as a carry trade as USDJPY opened higher from the announcement, and the market pushed to above the 103.40 levels and stayed above the 103.00 level throughout the Asian session, sell JPY buy TRY with a 12% ticket on it can’t be bad just one problem Turkey is not the only one that is trying to support its currency and the general EM problem translates differently once the market moved into the London session and the safe haven flows started to appear in earnest as the EM’s were converted into Yen as well as others, the net effect was that USDJPY dropped over the course of the morning session falling from above the 103.20 area to trade to the 102.00 where weak support was seen. The market held in NYK as USD buyers balanced out the JPY buyers and we traded in a tight range around the 102.20 levels with one brief attempt lower to set the low below 101.90.
  • AUD: The market opened slightly higher than the close and traded to above the 88cent level peaking around the 0.8827 levels before holding above the figure for the Asian session as AUDJPY carry trades were back on the map however, with plans of men and mice it all started to go wrong as the market started to lose appetite with risk into the London market and the AUD was dragged lower as USDJPY dropped forcing the early buyers in AUDJPY out of the market and the Oz initially to 0.8750 on the first run in London. Open NYK and the tone was very little different however, the Oz now found support around the 0.8730 level and the early margin related AUDJPY selling was almost over with. The Oz never really recovered and remained close to the support levels into the close with some movement towards the NZD rate decision and the Wellington opening.

 

Yesterday’s premiership results

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

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

EUR        German GfK Consumer Sentiment Feb A 8.2 | C 7.8 | P 7.6 | R 7.7

CHF        UBS Consumption Indicator Dec A 1.81 | P 1.43 | R 1.4

EUR        Eurozone M3 Y/Y Dec A 1.00% | C 1.70% | P 1.50%

USD       Crude Oil Inventories A 6.4M | C 2.2M | P 1.0M

USD       FOMC Rate Decision A 0.25% | C 0.25% | P 0.25%
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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