Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 102.053 101.97-102.02 | EURUSD 1.34888 1.3485-90 | EURJPY 137.654 137.53-58 | AUDUSD 0.8753 0.8753-58 | NZDUSD 0.80846 0.8082-87 | USDCAD 1.11311 1.1125-30 | EURCHF 1.22236 1.2225-30 | USDCHF 0.90627 0.9063-68 | GBPUSD 1.64402 1.6435-40 | EURGBP 0.82052 0.8203-08 |

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.41 | 101.915

EUR/USD             1.3496 | 1.3479

EUR/JPY               138.10 | 137.38

AUD/USD            0.8778 | 0.8730

NZD/USD             0.8123 | 0.8074

USD/CAD             1.1135 | 1.1102

EUR/CHF              1.22425 | 1.2224

USD/CHF             0.90825 | 0.90645

GBP/USD             1.6449 | 1.6415

EUR/GBP             0.8213 | 0.8199

Overnight News

EM:

Moody’s Says There Is No Uniform Emerging Market Crisis

AUD:

Australia inflation gauge rises slightly in Jan; annual pace slows

Australia home prices climb further in Jan-RPData

Australia job advertisements dip 0.3% in Jan-ANZ

Australian Home-Building Approvals Fell 2.9% in December

JPY:

Japan’s Domestic Auto Sales +27.5% On Year In Jan

CNY:

China Non-Manufacturing PMI Falls to 53.4 in January

NZD:

NZ Treasury Says RBNZ Widely Expected to Raise Rates in March

EUR:

Magnitude 6.1 earthquake strikes off western Greece -USGS

For today

• EUR: Nice comments from Van Rompuy, obviously he didn’t pay that much attention to the price action over the past few days. Surely someone should explain that if you are a safe haven currency the movement is generally higher and not off 2 big figures. So is the EM a larger or smaller version of the problems in Europe, as one weekend broad sheet notes that Germany is already putting together another rescue package for Greece. However, the various bits of news had little effect on the markets from the opening as the Euro opened in line with Fridays close and stuck to a narrow range sticking to the 1.3480/90 levels for the most part with only a brief move above 1.3490 later into the session. With light mix to the 1.3500 levels the market then sees some weak offers making an appearance to the 1.3540 levels before an open market to the 1.3600 levels. Some light bids appear around the sentimental area of 1.3450 however, they are not much in the way of protection and the downside sees medium term stops through the 1.3400 level before running into some better bids.
• GBP: With only the news that Scottish first minister would abandon UK debt, I’d have been surprised if this was behind the slightly lower opening, in fact not to be too blunt, it would probably be just nice if they went there way so the UK economy incurred less debt. The market opened only slightly lower just below the 1.6430 level and immediately closed the gap on the charts and traded to 1.6440 and holding into the Tokyo session. Since then the market has been very quiet and drifted to the mid 1.6420’s before holding just off the lows. Several failures in the past few days at the 1.6500 leaves the market a little jaded with insufficient impetus remaining for the topside. A break through the 1.6400 level clears some of the congestion from early in January and opens a test of 1.6300 with some light bids showing around that area.
• JPY: With much of Asia out celebrating the New Year etc, the USDJPY has had little to do much like the rest of the market, moving from the opening 102.10 we have steadily climbed back into the 102.30/40 holding area and unable to break out of the 102.10/40 from Friday. With light offers around the 102.80 levels and building in size to the 103.00 the market is likely to struggle to the topside however, even the 103.00 is not too large. Light stops don’t really appear until the 103.40 area and a bit vague. Downside sees light bids from 102.00 to the 101.80 levels with some light stops below that before the bids start to thicken moving down to the 101.60 and a mixed bag thereafter.
• AUD: The Oz had almost the widest range however, 25 pips does not make it exciting, the market has moved around on fresh air for the most part moving from a high opening above the 0.8760 levels and filling the gap on the charts to the downside before rallying to the highs above the 0.8770 levels. Late selling took the market to lows in the 0.8750’s however we hold for the moment just above those levels. Vague levels now that we’ve been there and back again however, offers appear to be around the 0.8850 levels with stops above 90 cents, and 87cent has weak stops with bids quickly coming in below.

Today’s data

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

AUD       TD Securities Inflation M/M Jan A 0.10% | P 0.70%

AUD       Building Approvals M/M Dec A -2.90% | C -0.30% | P -1.50%

CNY        Non-manufacturing PMI Jan A 53.4 | P 54.6

08:30     CHF        SVME PMI Jan C 55.1 | P 53.9

08:45     EUR        Italian PMI Manufacturing Jan C 54.2 | P 53.3

09:00     EUR        Eurozone PMI Manufacturing Jan (F) C 53.9 | P 53.9

09:30     GBP       PMI Manufacturing Jan C 57.1 | P 57.3

13:30     CAD       Industrial Product Price M/M Dec C 0.40% | P 0.10%

13:30     CAD       Raw Materials Price Index M/M Dec C 2.10% | P -4.10%

15:00     USD       ISM Manufacturing Jan C 56.4 | P 57

15:00     USD       ISM Prices Paid Jan C 53.9 | P 53.5

15:00     USD       Construction Spending M/M Dec C 0.40% | P 1.00%

23:50     JPY         Monetary Base Y/Y Jan C 47.20% | P 46.60%                       

Weekend News

CNY:

China Manufacturing Gauge Falls to Lowest Level Since July
China Manufacturing Industry Will Keep ‘Good’ Trend: NBS’s Zhao
China-Japan Relations at Low Point, People’s Congress Aide Says
China Dismisses Reports of Plans for Southern Defence Zone
China Reports Seven More Bird Flu Cases, One Death: WHO
USD:

Detroit Bankruptcy Exit Plan Threatens Munis as Pensions Favoured
JPY:

Survey Shows 30% Japan Companies Plan to Raise Base Pay: Nikkei
Japan Says 3 Chinese Vessels Entered Territorial Waters
CHF:

SNB’s Danthine Says Rate Increase Currently Not an Option: Blick
Danthine Says Swiss Property Market Is in ‘Danger Zone:’ Blick
EUR:

EU’s Van Rompuy Says ‘Euro Is Now a Safe Haven for Investors’
Bundesbank Said to Support Ending ECB Absorption of Bond Buys
EUR: Schaeuble Plans EU10b-EU20b Additional Greek Aid, Spiegel Says
EUR: Schaeuble Sees Low Risk Related to Greece Financial Aid: WiWo
EUR: Italy Risks EU Fine of EU4b for Late Payments to Cos: Messaggero
GBP: Salmond Says Scotland Could Abandon U.K. Debt on BoE Debate: FT
INR/USD: India Safety-Rating Cut Prompts United to Pare Jet Airways Ties

Harry Hindsight

• EUR: Asia was reasonably quiet with the market moving off from the opening 1.3555 areas to move to the mid 1.3535 areas into the grey hours, with China starting a week of celebrations the liquidity was missed during Asia. Some light buying into the London opening took the market back towards the opening levels before European numbers started to hit the wires. The market moved on the back of the CPI figure showing another shortfall from the expected and the market moved from the 1.3560 levels to the lows below 1.3520 and some minor support. Early NYK like the London session were early buyers of risk, with comments out of India keeping the run on EM markets bubbling. Having reached to above the 1.3570 levels the official opening saw the market start to move lower trading down through the lows to push lightly through the 1.3500 area triggering some minor stops before a slight bounce and then the US figures appeared. An increase in personal spending was the key figure and set the market moving lower again and into the middle of the session the Chicago and then Michigan numbers helped take the market to its lows and touch better support around the 1.3480 levels. The market slowly moved to the close and although we moved through the 1.3500 level over back end of the session profit taking into the closing period sent it back to finish between the 1.3480/90 levels.
• GBP: Cable was very little different from the Euro, the market moved up from the opening to make the highs just short of the 1.6500 level, a slow decline throughout the Asian session saw the market moving from the 1.6480 levels into the pushing down to a similar 20 pip drop as the Euro. The grey hours saw nothing of note and it slowly moved lower with the drag of the Euro again. EURGBP saw some light buying move into the market from the NYK session and this held the Cable up for a limited period, with the cross dropping to below the 0.8190 level before holding just above the 0.8205 levels for most of the session. Cable made its lows on the bounce of EURGBP back above the figure with Cable touching below 1.6430 and while there was a bounce 35pips higher it was short lived and the market closed only just off its lows.
• JPY: USDJPY was all about safe haven flows, with the market opening around the 102.70 levels, it did initially look as if the EM run and seen the worst of it, comments from India tipped the USDJPY lower again and although the London market was not deterred and took the market from its lows back to the opening range the drop in Euro’s started some limited EURJPY selling to add to the USDJPY. The market held around the 102.20 level in some light choppy plays between the 102.10/40 areas before dropping quickly into the NYK option cut and making the low just below the 102.00 levels, strange that. Moving off the lows we moved back to the 10/40 range but the market saw renewed selling into the close to push it back towards the lows into the close.
• AUD: The Oz opened with a little run higher as the Tokyo market bought  a little AUDJPY taking the market off the 0.9030 level to just short of 0.9080, the rally was short lived as the EM market dominated affairs particularly with the Oz taking it steadily to the 0.8960 levels before stabilizing. London initially tried buying as they triggered weak stops after the break lower through 0.9000 however, the move higher was limited and we soon returned to the selling with the market dropping off into early NYK and trading below the next handle of 0.8900, again the market held these levels into the NYK option cut before starting to rally to above the 0.8960 suggesting the play in options was AUDJPY related. The market finished the day in the 0.8930 area with some profit taking into the closing couple of hours doing the damage in a quiet evening.

Friday’s premiership results

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%

EUR        Italian Unemployment Rate Dec (P) A 12.70% | C 12.70% | P 12.70% | R 12.80%

EUR        Eurozone Unemployment Rate Dec A 12.00% | C 12.10% | P 12.10% | R 12.00%

EUR        Eurozone CPI Estimate Y/Y Jan A 0.70% | C 0.80% | P 0.80%

CAD       GDP M/M Nov A 0.20% | C 0.20% | P 0.30%

USD       Employment Cost Index Q4 A 0.50% | C 0.40% | P 0.40%

USD       Personal Income Dec A 0.00% | C 0.20% | P 0.20%

USD       Personal Spending Dec A 0.40% | C 0.30% | P 0.50%

USD       PCE Core M/M Dec A 0.10% | C 0.10% | P 0.10%

USD       PCE Core Y/Y Dec A 1.20% | P 1.10%

USD       Chicago PMI Jan A 59.6 | C 58 | P 59.1

USD       U. of Michigan Confidence Jan (F) A 81.2 | C 81 | P 80.4

Stay lucky

Andy