Daily FX Market Commentary

Andy Harrison

Good morning,


LMAX Close

USDJPY 102.717 | EURUSD 1.35546 | EURJPY 139.234 | AUDUSD 0.87937 | NZDUSD 0.81357 | USDCAD 1.11599 | EURCHF 1.2235 | USDCHF 0.9027 | GBPUSD 1.64852 | EURGBP 0.82222 |


Interbank Ranges as of 6am London time

Highs    Lows

USDJPY                 102.94 | 102.33

EURUSD               1.3559 | 1.3540

USDCHF               0.90305 | 0.90205

EURJPY                 138.49 | 139.68

EURCHF                1.22395 | 1.2226

AUDUSD              0.8824 | 0.8753

NZDUSD               0.8182 | 0.8126

CADUSD               1.1181 | 1.1154

EURGBP               0.8227 | 0.82155


For today

  • EUR: A very similar day to yesterday although on a different handle, the market has been very quiet without the Chinese playing (Happy New Year). Opening in the mid 1.3550’s and steadily drifting to the mid 1.3540’s on thin trading. For the moment the market is hovering around the 1.3550’s but looks dead in the water. Downside sees a mixture with bids just winning out until below the 1.3480 level where it starts to appear bearish with a fair bit of congestion seen in this area both on the way up and down. To 1.3600 is open with nothing special appearing and then mixed above the level until mid-way through the 1.3600 levels then technical stops and we suspect stops behind the 1.3650 level before light offers building to 1.3700. For the moment with the Chinese out one suspect we will have to wait until the NYK session for anything earth shattering.
  • GBP: EURGBP has been steadily bought over the session but with very little movement in the Euro, Cable has slipped from close to the 1.6500 level steadily and in a tight channel to below 1.6470. As we move towards London some reasonable lumpy selling of EURGBP has entered the market and moves the market some 15 pips on fresh air. Congestion around the 1.6400 levels suggests the downside for the moment is limited and although the tech guys may be looking at the downside, I’d not want to hedge my bets on which way and would prefer some more fundamental information before second guessing. For the moment support from the 1.6400 levels to 1.6430 with some light stops below, topside has some weak offers around the 1.6500 level however, it is wide open again to 1.6580ish and take the lead from EURGBP which seems to be dominant for the moment.
  • JPY: A busy numbers day for the JPY with the stand out numbers being lower unemployment, and CPI numbers offsetting the poor IP number, however, with all the raft of numbers, the early market was dominated by the fix having opened around the 102.70 area we had a quick surge to the topside but were unable to break through the 103.00 levels which seems to have plenty of offers showing. Having trickled down once the demand disappeared; the market struggled around the opening levels and then dipped triggering weak stops from early buyers and tumbling into the sentimental stops around 102.50 and eventually moving into the supportive 102.30 areas. With bids from 102.30 down to 102.00 the market, there are some stops in the mix but the bids outweigh those stops for the moment, some weak stops beyond that however, having dipped below 102.00 on a couple of occasions for the moment you have to respect the level. Topside sees those offers 102.90/103.20 area before weak stops start to mix in with the offers to 103.40 and then favours neither too 103.80.
  • AUD: The Oz opened quietly around the 0.8795 level and obviously too close to the 88cent level not to have a peak above and it promptly did as soon as Tokyo walked in to touch just above the 0.8820 levels before slumping back and trading parallel to the USDJPY dropping over the course of the session to the mid 0.8750’s which was around the holding area in the NYK session. Topside still has offers running to the mid 88cent area before suspected light stops above however, 89 cent remains protected for the moment. Downside is still loose with 0.8720 seeing mixed interest to the 0.8680 levels and light stops below.

Overnight News


CB governor Rajan criticises the western governments for selfish economic policies


Wheeler reaffirms that rate hike is very likely in March

There will be further upward pressure on rates and inflation over time.
Today’s data

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

NZD       Trade Balance (NZD) Dec A 523M | C 500M | P 183M

JPY         Nomura/JMMA Manufacturing PMI Jan A 55.6 | P 55.2

JPY         Household Spending Y/Y Dec A 0.70% | C 1.30% | P 0.20%

JPY         Unemployment Rate Dec A 3.70% | C 3.90% | P 4.00%

JPY         National CPI Core Y/Y Dec A 1.30% | C 1.20% | P 1.20%

JPY         Tokyo CPI Core Y/Y Jan A 0.70% | C 0.70% | P 0.70%

JPY         Industrial Production M/M Dec (P) A 1.10% | C 1.50% | P -0.10%

GBP       GfK Consumer Sentiment Jan A -7 | C -10 | P -13

JPY         Housing Starts Y/Y Dec A 18.00% | C 13.90% | P 14.10%

09:00     EUR        Italian Unemployment Rate Dec (P) C 12.70% | P 12.70%

10:00     EUR        Eurozone Unemployment Rate Dec C 12.10% | P 12.10%

10:00     EUR        Eurozone CPI Estimate Y/Y Jan C 0.80% | P 0.80%

13:30     CAD       GDP M/M Nov C 0.20% | P 0.30%

13:30     USD       Employment Cost Index Q4 C 0.40% | P 0.40%

13:30     USD       Personal Income Dec C 0.20% | P 0.20%

13:30     USD       Personal Spending Dec C 0.30% | P 0.50%

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

13:30     USD       PCE Core Y/Y Dec P 1.10%

14:45     USD       Chicago PMI Jan C 58 | P 59.1

14:55     USD       U. of Michigan Confidence Jan (F) C 81 | P 80.4


Harry Hindsight

  • EUR: Drogba (sorry meant the other fella) mind you he probably knows as much as the imposter Draghi does, keeps telling us there’s no need to panic, well one supposes there isn’t quite yet however, even negative rates is not getting you out of this and maybe the ECB should take a look at the how to get out of a hole book that Japan is still in the process of writing. The day started around the 1.3655 area and moved to around the 1.3665 level before the rot started to set in. Asia was very quiet with the market drifting lower into the 1.3645 areas; even a blip higher in the grey hours lasted till early traders in London reached their desks and instantly started to sell it. The market had already traded to the 1.3610 when the German employment numbers hit which you would have expected to inspire, it didn’t as the number is a drop in the ocean over the Eurozone sector. So the march continued as we tumbled through each holding area to the next until moving into the NYK session the market was already below the 1.3600 level and cutting through the remaining bids to hold for a few hours around the 1.3570 level with confidence numbers not being confident apart from in Services, which should cheer up most of Europe, the fact Germans according to this measure are not confident of selling 10k’s of cars to the rest of Europe. Sarcasm out of the way the moves lower was a little late in coming really as I did wonder how the Euro managed so well in the previous 24hrs. One suspects this is the balance of closing from the Chinese as they headed off for the long week of celebrations for the New Year/Golden Week. The market again nosed lower triggering stops and ending up just dipping through the 1.3550 levels and into the support around the 1.3520/40 area and then the market petered out ranging in a very tight range around the 1.3550 area into a close short of 1.3560. The fact that advanced US GDP figure was woefully lower than expected, but whose expectations? While the consensus was 3.60% the fact that we’ve seen successive increases in inventories suggested that the GDP numbers were not up to closer inspection now starts to bear fruit. This I would suggest is part of the reason for the market to ignore the number and the USD’s continued to ascend, that and China.
  • GBP: With very little news and data out today, the Cable struggled to do anything meaningful other than track the Euro’s decent lower in the face of broad based USD buying. Holding a tight range during Asia around the 1.6550/60 levels the market didn’t start to move until we moved into the grey hours. Like the Euro it was downward trading over the next four hours to just below the 1.6450 before finding some limited support and pushing back towards the 1.6500 area into the NYK open. NYK may have been more active than the Asian session however the range having pushed above the 1.6520 levels a couple of times rested back to the 1.6480/90 levels for the bulk of NYK and traded quietly for the most part. EURGBP put in some work and to be honest it’s unclear whether Cable lead the move lower or the Euro looking at the cross it would suggest the Cable made the first move and dragged Euro. EURGBP topped just short of the 0.8270 levels before coming off over the next few hours to trade to 0.8215 and range to 0.8225 in the several hours to the close.
  • JPY: USDJPY climbed steadily through the day after a false start in Asia, the market opened around the 102.20 area and struggled for much of the early session before the USD pushed higher, with retail figures much less than expected it was late in the day before the move to the 102.50 levels appeared, even then the move into the London session initially saw the rally falter and drop back into the opening areas before finding mid-morning support and a steady rise from there to just short of the 102.90 levels into mid NYK and then holding around the 102.70 levels into the close.
  • AUD: AUD and in particularly the AUDJPY firmed into the London session have spent the early part of the session dropping on poor import price numbers to the 0.8710 from the 0.8740 opening levels, we struggled throughout the Asian session never moving much from the 0.8730 levels until USDJPY started to move higher and AUD moved higher with it as the carry trade looked good again. The Oz peaked into the NYK session just through the 0.8800 level before reaching the NYK option cut and some greek selling, the market picked itself up again once the option expiries were finished with and slowly moved into striking distance of the 0.8800 level again.

Yesterday’s premiership results

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

CHF        KOF Leading Indicator Jan A 1.98 | C 2.02 | P 1.95

EUR        German Unemployment Change Jan A -28K | C -5K | P -15K | R -19K

EUR        German Unemployment Rate Jan A 6.80% | C 6.90% | P 6.90%

GBP       Mortgage Approvals Dec A 72K | C 73K | P 70.8K

GBP       M4 Money Supply M/M Dec A -1.40% | C 0.30% | P 0.00%

EUR        Eurozone Industrial Confidence Jan A -3.9 | C -3 | P -3.4

EUR        Eurozone Economic Confidence Jan A 100.9 | C 101 | P 100

EUR        Eurozone Consumer Confidence Jan (F) A -11.7 | C -13 | P -13.5

EUR        Eurozone Services Confidence Jan A 2.3 | C 0.8 | P 0.2

EUR        German CPI M/M Jan (P) A -0.60% | C -0.40% | P 0.40%

EUR        German CPI Y/Y Jan (P) A 1.30% | C 1.50% | P 1.40%

USD       GDP (Annualized) Q4 (A) A 3.20% | C 3.60% | P 4.10%

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

USD       Initial Jobless Claims (JAN 25) A 348K | C 331K | P 326K | R 329K
Good Luck


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