Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 100.963| EURUSD 1.35256 | EURJPY 136.561 | AUDUSD 0.87543 | NZDUSD 0.81083 | USDCAD 1.11167 | EURCHF 1.21866 | USDCHF 0.90087 | GBPUSD 1.6308 | EURGBP 0.82946 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               101.38 | 100.755

EUR/USD             1.3539 | 1.3504

EUR/JPY               137.00 | 136.25

AUD/USD            0.8894 | 0.8730

NZD/USD             0.8128 | 0.8052

USD/CAD             1.1120 | 1.1062

EUR/CHF              1.2206 | 1.2188

USD/CHF             0.90365 | 0.9008

GBP/USD             1.6315 | 1.6257

EUR/GBP             0.8327 | 0.82835

 

For today

  • EUR: The Euro came under pressure through USDJPY buying and Cable selling, moving from the opening levels around the 1.3525 area to steadily move lower in a tight channel to the 1.3505, the market moved off the lows as the AUD slowed to the upside and EURAUD selling abated, we look to be heading into the grey hours around the 1.3515 levels. With stops above the 1.3580 levels a little too far for the Asian market the downside has been more attractive, saying that the stops above the 1.3600 are more substantial and any move will be a little frantic. Light bids appear through the 1.3450 area and the market still has appetite for a cheap buy.
  • GBP: Initially Cable was holding its own with light bids around the 1.6300 levels holding the market however, having pushed above the 1.6315 levels from the 1.6305 opening, the market found itself caught up in the rise in Oz with GBPAUD selling hitting the market and the support too light to hold the market, we quickly dropped to the 1.6285 areas before the market managed to stabilize however, this seems to be in reaction to the Euro’s halt and nothing more than a breather. For the moment the market holds just below the 1.6300 area and 1.6250 now looks to be the key level dating back to mid Dec, with support likely around the area. Topside light offers appear to the 1.6350 levels then a mixture before some weak stops above 1.6400, 1.6450 levels offers better support and a breach of this level negates the whole move down. However, having run out of steam to the topside and cleared out the market there is now nothing stopping another attempt higher with a little more impetus?
  • JPY: The world buys JPY the Japanese retail market sells it or so it seems recently and today was no different moving from the opening 101.00 area to above 101.35 before finding the market to the topside tough going, the market held to the topside for a good portion of the day and although there was significant movement in the AUD the market continued to hold until just before the grey hours began when the Nikkei dropped quickly and savagely by around the 4.5% level having broken firmly through the 14,100 level, taking the USDJPY quickly lower pushing through the lows into the grey hours to 100.85 areas as I leave this. With light offers running back from the highs there is nothing of note until you pass through 101.80 where stop losses make the first appearance closely followed by some more light offers. The downside sees some light bids until the mid 100.60’s where stops appear before a mixture of decent orders down to the 100.00 levels with suspected barriers.
  • AUD: There were a few sellers from the opening taking the market from the 0.8750 area to touch the 0.8730 in early trading, probably not helped by the push in USDJPY however; today was about the RBA announcement, while the market expected no change and got no change there was a knee jerk reaction to the shift in tone to more neutral suggesting that a return to higher rates, if you believe that. We moved from the 0.8760 areas the market had moved to just pre the number and quickly moved to above the 0.8840 level taking out what offers where available and continuing at a slower pace to trade above the 0.8890 level before holding. With topside offers limited over old ground we have some light offers around the 89cent area and then nothing really shows until a mixture towards the 90cent area. Downside now has bids around the 0.8750/30 area with a mixed bag below that.

Overnight News

AUD:

Australia central bank keeps rates steady, drops easing bias

Sinodinos: Lower A$ Important to Ease Pressure on Manufacturing

Australia Appoints Former Treasurer to Head Sovereign Fund

JPY:

BOJ Kuroda: Japan to eye 2% inflation in latter half of FY2014

Kuroda: Need to Consider International Financial Conditions in Charting Exit Strategy

Japan’s EconMin: financial markets overreacting to U.S. economic data

Japan’s Amari Says Various Reasons for Nation’s Trade Deficit

Japan PM: Important for government, BOJ to share common understanding

Abe: Commenting on Monetary Policy Infringes on BOJ Independence

USD:

Fed study suggests U.S. labour market rosier than thought

NZD:

English Says N.Z. Economy Can Handle Increase in Interest Rates

NZ commodity prices hit record high in January – ANZ survey

THB/CNY:

China cancels deal to buy Thai rice due to graft probe – Thai minister
Today’s data

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

JPY         Monetary Base Y/Y Jan A 51.90% | C 47.20% | P 46.60%

AUD       RBA Rate Decision A 2.50% | C 2.50% | P 2.50%

09:30     GBP       PMI Construction Jan C 61.6 | P 62.1

10:00     EUR        Eurozone PPI M/M Dec C 0.10% | P -0.10%

10:00     EUR        Eurozone PPI Y/Y Dec C -0.90% | P -1.20%

15:00     USD       Factory Orders Dec C 0.70% | P 1.80%

Harry Hindsight

  • EUR: With CNY, TWD, MYR and several other far east countries out for the day the Asian session was a dull affair although volumes were respectable. Opening in line with Friday’s close the market moved in a tight 1.3480/90 band for much of the session and only tried the upside on a couple of occasions failing both times to push beyond the 1.3495 levels. London saw a little more movement with the band widening somewhat and a breach of both top and bottom but only just. The release of the PMI numbers helped the Euro move through the 1.3500 fully to push into the 1.3515 areas however, selling renewed from the levels and we were soon back below as we moved into early NYK. ISM release dropped USD’s back sharply with the Euro gapping some 10 pips higher on the release before moving to above the 1.3535 levels, the end of the session was a little more sedate finishing the day on the highs.
  • GBP: Cable looked tired during Asia having failed repeatedly to break the 1.6500 level; Asia was dead in the water with the market unable to move out of a tight range holding from the opening 1.6430 areas with a brief move above 1.6440 then a steady drop to 1.6420 into the grey hours to set the range. The grey hours saw selling from day traders setting the tone and we broke through the 1.6400 easily enough then struggled to push through the 1.6380 levels until the release of the PMI manufacturing number disappointing the market and the market moved steadily down to the 1.6340 areas where the day traders took their positions back, as it was they could have waited a little longer as movement around the NYK option cut had the market dipping further to the stronger 1.6300 support level where the market remained into the close.
  • JPY: USDJPY moved higher from the opening as retail Japan bought from the opening taking the market steadily to the 102.40 levels. While some of the market remains out safe haven buying of Yen started to dominate the market, the fact that the offers held the market to the 102.40 level for several hours before breaking lower as the Tokyo market went for lunch, the grey hours saw the market move down to the opening levels, London came in selling with both GBPJPY and EURJPY sliding as the USDJPY slid through the 101.80 level. NYK and the ISM number put paid for any recovery the USDJPY gapped on the figure to move some 5 pips lower, which is not the easiest thing to do normally. It moved to the 101.30 areas and then drove slowly lower through the bids resting in front of the 101.00 levels. It broke easily through the level eventually touching to the 100.80 area as decent stops were triggered before slowly pushing back to the 101.00 areas into the close.
  • AUD: The Oz was quiet during Asia, opening around the 0.8760 levels and trading around that level until deep into the session, the market dipped a little after before holding the 0.8740 level with the market expected to be quiet for the most part with RBA announcement the following day. The move into London saw speculators buying and setting positions for that announcement. The market climbed to the 88cent area and triggered some weak stops above which then ran into profit taking causing a steady decline back to the 0.8740 areas into the close.

Yesterday’s premiership results

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% | R -0.30%

CNY        Non-manufacturing PMI Jan A 53.4 | P 54.6

CHF        SVME PMI Jan A 56.1 | C 55.1 | P 53.9 | R 55

EUR        Italian PMI Manufacturing Jan A 53.1 | C 54.2 | P 53.3

EUR        Eurozone PMI Manufacturing Jan (F) A 54 | C 53.9 | P 53.9

GBP       PMI Manufacturing Jan A 56.7 | C 57.1 | P 57.3

CAD       Industrial Product Price M/M Dec A 0.70% | C 0.40% | P 0.10% | R 0.20%

CAD       Raw Materials Price Index M/M Dec A 1.90% | C 2.10% | P -4.10% | R -4.20%

USD       ISM Manufacturing Jan A 51.3 | C 56.4 | P 57

USD       ISM Prices Paid Jan A 60.5 | C 53.9 | P 53.5

USD       Construction Spending M/M Dec A 0.10% | C 0.40% | P 1.00%
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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