Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 101.456 | EURUSD 1.35328 | EURJPY 137.30 | AUDUSD 0.89101 | NZDUSD 0.82055 | USDCAD 1.10832 | EURCHF 1.22292 | USDCHF 0.90367 | GBPUSD 1.63097 | EURGBP 0.82975 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               101.67 | 101.32

EUR/USD             1.35395 | 1.3515

EUR/JPY               137.58 | 137.065

AUD/USD            0.8981 | 0.8910

NZD/USD             0.8250 | 0.8216

USD/CAD             1.1083 | 1.1059

EUR/CHF              1.2237 | 1.2231

USD/CHF             0.9049 | 0.90365

GBP/USD             1.6330 | 1.6295

EUR/GBP             0.82985 | 0.8290

 

For today

  • EUR: Euro’s held its levels in pre Tokyo around the 1.3535 areas touching just below the 1.3540 levels and into the Oz numbers, the market saw several rounds of EURAUD selling as the Oz rallied and although the Euro held for the most part there was little in it and the market moved to its current levels around the 1.3520’s and sitting. With offers dominating a mix to the topside from the highs back to the 1.3570 level a move through there sees the market vulnerable with stops showing around the 1.3600 area however, I’d take that with a pinch of salt and expect early range players to be sat in front until the rate decision is over with. Downside seems light but all bids from what I see however, a break below the 1.3480 level should see some stops appearing before bids make an appearance below 1.3450.
  • GBP: Cable has been contained in a narrow band for the most part with a brief move higher crossing from Sydney into Tokyo before failing at the 1.6330 levels and slipping back quietly to the 1.6310 areas. The market was happy to sit just above the bids in a lacklustre market and only as we edge towards the grey hours have we seen some Middle Eastern selling to push at the 1.6300 levels. With very little change from yesterday the market respects the 1.6250 levels for the moment and with only two hopes of a rate change and one of those is Bob, the market will see fresh daily bids in front of the level with tight/weak stops behind. Topside sees some limitation above the 1.6340 levels with offers moving in around the 1.6340 areas and back to 1.6370 with only light appearance of stops.
  • JPY: A quiet day for USDJPY with early buyers on the opening in Tokyo taking the market from the opening 101.50 levels to around the 101.65 area, fixing supply supressed the market and set the low below 101.35 and that is really all we’ve seen as the market moved back to above the highs but was unable to hold the levels and currently holds in the opening area again. With offers just above the highs stretching back to the 101.80 level the topside remains open with weak stops building above 102.00 and a similar story above there with only light offers closely followed by stops. Some bids showing on the lows while light they seemed to be spread around the market and weak stops below 100.50 and increasing in size to the 100.20 level, with suspected option barriers.
  • AUD: A steady rise from the opening around the 0.8910 level saw the market enter into Tokyo just above the 0.8930 area and into the numbers, a good trade balance figure drove the Oz higher quickly to the 0.8970 levels and a peak over the next hour above 0.8980 as the market ran into the offers left in the market. The market has drifted since then and holds around the 0.8960 levels, with the near stops all triggered a break above 90 cent will see the next set with offers now resting in and around the 0.9050 levels. With the market riding so high what was the stop area around the 0.8850-20 areas have closed up for the most part to just below 89 cent with very little in the way of bids showing until closer to the 88 cent level.

 

Overnight News

AUD:

Australia Posts December Trade Surplus

Australian Retail Sales Rise in December

JPY:

GPIF’s $709 Billion in Bonds a Lost Opportunity, Utsumi Says

BOJ Iwata: Japan can withstand tax hike pain

BOJ can stick to current policy as risks relatively small-Iwata

BOJ Iwata: Length of Easing After 2% Reached Depends on Economy

BOJ Nakaso says may adjust policy if risks threaten price goal

CNY:

China criticises Japan over comments doubting Nanjing massacre

EUR:

QE calls grow as ECB faces deflationary pressure similar to the Japanese – FT
Today’s data

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

AUD       Trade Balance (AUD) Dec A 468M | C -300M | P -118M

AUD       Retail Sales M/M Dec A 0.50% | C 1.20% | P 0.70%

AUD       NAB Business Confidence Q4 A 8 | P 3 | R 5

06:45     CHF        SECO Consumer Confidence Jan C 1 | P -5

07:00     CHF        Trade Balance (CHF) Dec C 2.41B | P 2.11B

11:00     EUR        German Factory Orders M/M Dec C 0.30% | P 2.10%

12:00     GBP       BoE Rate Decision C 0.50% | P 0.50%

12:00     GBP       BoE Asset Purchase Target C 375B | P 375B

12:30     USD       Challenger Job Cuts Y/Y Jan P -5.90%

12:45     EUR        ECB Rate Decision C 0.25% | P 0.25%

13:30     EUR        ECB Press Conference

13:30     CAD       International Merchandise Trade (CAD) Dec C -0.7B | P -0.94B

13:30     USD       Trade Balance Dec C -$35.8B | P -$34.3B

13:30     USD       Non-Farm Productivity Q4 (P) C 2.50% | P 3.00%

13:30     USD       Unit Labour Costs Q4 (P) C -0.50% | P -1.40%

13:30     USD       Initial Jobless Claims (FEB 1) C 334K | P 348K

15:00     CAD       Ivey PMI SA Jan C 50 | P 46.3

Harry Hindsight

  • EUR: Ranges again remain in a tight range over the course of the day with players jostling for position in front of the rate decision however, this caused some choppy moments. Opening around the 1.3518 areas the market initially traded higher with strengthening of JPY, before EURJPY selling appeared in the market and the Euro’s slowly started to drift lower as the market started clearing out positions before the rate announcement due on Thursday. The market held the 1.3510 areas having peaked above 1.3525 before moving into the grey hours with early Europeans selling the market to the 1.3500 levels. London gyrated around the 1.3515 levels in a 20 pip range with little interest in the PMI figures with some like Spain and Italy showing improvement however, the main Eurozone numbers disappointed and the market remained stuck, even the retail sales numbers were off and had no impact. The move into early NYK saw the market move quickly higher to above the 1.3555 levels to make the highs for the day, the spike higher was reversed just as quickly with the market dropping towards the lows and halting just the other side of 1.3505. An ISM number while above expectations still left the USD struggling and again the Euro rallied however, it could only get to the mid 1.3540’s before drifting again, the market then moved over the course of the next four hours in a tight range around the 1.3535 levels. With disappointing European numbers overall and only slightly better headline numbers in the US you can see why it turned out quiet but then it usually is for this week as we await Rate Decisions and Non-Farm Payrolls.
  • GBP: Having seen the Cable move back above the 1.6300 levels one half expected the move to continue however, BRC shop prices while not that important show a trend that is usually limited by seasonal sales, again this may be offset by online sales but they don’t produce both at the same time. PMI services were worse than expected and this led to the larger sell off. The market opened around the 1.6328 areas and touched above the 1.6340 level several times but running it to offers the market was unable to make any headway and so once the market reached the grey hours we saw early Europeans selling fairly aggressively to push the market to the light bids above 1.6300 and into the numbers PMI services usually the stronger of the PMI readings hit lower than expected and slightly worse than the previous months, initially as the market moved lower and I suspect that real money was behind the quick spike higher before continuing downwards trading just through the 1.6260 levels to make new lows for the year but finding support sufficient to hold the market from the 1.6250 key level. The market bounced on the back of the US numbers and we found the Cable touching back above the 1.6330 levels before dipping back to the 1.6310 level as light profit taking from range players moved in on the close.
  • JPY: USDJPY traded lower over the first half of the day with safe haven flows starting from the opening of Tokyo, the market opened around the 101.65 levels and topped around the 101.75 areas in early trading before Tokyo opened and started a general sale of USD’s pushing the market to the 101.50 levels and then to 101.30 area in two steps lower. The market spent a couple of hours around the lows but the bids held the market into the Tokyo lunch period taking the market back to the 101.40/50 area and then the grey hours. With early players joining the move lower and Tokyo coming back from lunch the market was again sold through the bids to the 101.20 level and eventually dropping through the London period slowly as it stripped the bids for NYK to enter and take the market to 100.80 in a quick move lower. While numbers didn’t work for the USD against other majors the USDJPY managed to begin to rally back higher as Asian bids stopped the rout and range players moved in the rise for the most part was steady with some movement around the NYK cut however, by the time we reached the close the market had regained a good portion of its losses.
  • AUD: The Oz moved lower as the euphoria from the rate decision waned and decent numbers out of NZD caused some AUDNZD cross selling in the market. Opening around the 0.8930 level the market moved lower from the start trading steadily to set the low just below 0.8880 in the mid portion of Tokyo, with AUDJPY selling kicking in as USDJPY declined. Having touched the lows and unable to move any further down with bids resting in the area the market started to turn and although the grey hours saw the market back above 89cent the market had to wait for the London opening before it started to move higher pushing to just below the 0.8940 level and in line with the opening for the most part. Having seen good volumes over the course of the session once the market moved into the NYK session there was very little in the way of ideas or impetus to move either way and we slowly drifted around the 0.8910 level and into the close.

Yesterday’s premiership results

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

NZD       Unemployment Rate Q4 A 6.00% | C 6.00% | P 6.20%

NZD       Employment Change Q/Q Q4 A 1.10% | C 0.60% | P 1.20%

GBP       BRC Shop Price Index Y/Y Jan A -1.00% | P -0.80%

EUR        Italian PMI Services Jan A 49.4 | C 48.6 | P 47.9

EUR        Eurozone PMI Services Jan (F) A 51.6 | C 51.9 | P 51.9 | R 51

EUR        Eurozone PMI Composite Jan (F) A 52.9 | C 53.2 | P 53.2 | R 52.1

GBP       PMI Services Jan A 58.3 | C 59 | P 58.8

EUR        Eurozone Retail Sales M/M Dec A -1.60% | C 1.50% | P 1.40%

USD       ADP Employment Change Jan A 175K | C 195K | P 238K | R 227K

CAD       Building Permits M/M Dec A -4.10% | C 2.50% | P -6.70%

USD       ISM Non-Manufacturing Composite Jan A 54 | C 53.9 | P 53

USD       Crude Oil Inventories A 0.4M | C 2.2M | P 6.4M
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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