Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 102.118 | EURUSD 1.35898 | EURJPY 138.771 | AUDUSD 0.89586 | NZDUSD 0.8276 | USDCAD 1.10707 | EURCHF 1.22443 | USDCHF 0.9010 | GBPUSD 1.63217 | EURGBP 0.83267 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.115 | 101.93

EUR/USD             1.3595 | 1.3587

EUR/JPY               138.755 | 138.55

AUD/USD            0.8973 | 0.8923

NZD/USD             0.8248 | 0.8212

USD/CAD             1.1080 | 1.1059

EUR/CHF              1.2245 | 1.2239

USD/CHF             0.90115 | 0.9005

GBP/USD             1.6331 | 1.6311

EUR/GBP             0.8335 | 0.8323

 

For today

  • EUR: The market from the close of NYK has been in a very tight range with very little going through on the Euro holding the 1.3585 on the downside and 1.3595 to the top. Mostly cross selling has been the focus however, it has been very light and the market looks to be resting until the NFP numbers later today. As you would expect the market seems to be a little short of orders out there, with the topside rather mixed through 1.3600 until the 1.3650 area with offers evenly balanced with the stops, we don’t really see much until through 1.3670 where stops from break out players rest for the moment with every little on the downside with sporadic bids down to the 1.3540 areas weak stops below this level and then bid thickening from 1.3510-1.3480.
  • GBP: Cable rose marginally over the session as EURGBP dipped smalls however, we still remain trapped for the moment in the 1.6350-1.6250 range with the market balanced and looking for a better set of numbers today. For the moment those are the levels to watch with range players at both ends and breakout merchants above on stops. NFP may have some bearing on the whole day but for me it will be the UK numbers as I believe the NFP are likely to disappoint. Unless you are looking for work in a warehouse.
  • JPY: I’d like to say there was better movement in the USDJPY however; it would seem the market has gone asleep it being NFP day. The market opened around the 102.00 levels and has around those areas all day, dipping from the opening 102.08 to make the lows into early Tokyo around the 101.93 levels only to rise after a few hours back to the opening levels with only the retail market showing any signs of life. With some offers stretching from just above the highs back to 102.80 level and suspected better offers beyond there until 103.00 weak stops behind and then another batch of offers a little stronger from then on. Downside is wide open with the 101.80 level the key point on the day and stops starting just below until 101.30 and 100.80 were some bids appear.
  • AUD: The market had been in a constant decline from roughly the opening of Sydney late in NYK and the move spilled over into the early part of Asia opening around the 0.8960 level and drifting to 0.8945 into Tokyo, with RBA monetary policy statement causing the movement. With GDP and CPI revised, the markets didn’t really expect the amount of adjustment and the higher yields triggered some movement with the market initially going to above the 0.8970 levels as you’d expect before dropping back to 0.8925 levels, the concern for me from here is the level of the Oz beginning to impact inflation as the drops so far are estimated to increase inflation by around 0.5%, as the market woke to the idea of higher inflation the market started to recover and we moved steadily to the 0.8950 levels. Topside is almost empty as players wrap up for the weekend and balance there positions for NFP however, one suspects that again the 0.8980 level will be initial resistance to any light moves higher with weak stops from range players behind 90cent and then more selling around the 0.9050 levels and above breakouts. Downside still has light bids to the 0.8900 levels and then weak stops below extending to the 0.8860 levels before bids start to make an appearance.

 

Overnight News

AUD:

RBA Raises GDP Growth, Inflation Forecasts after Aussie Slide

JPY:

NISA accounts attract 300 billion yen in first month

Japan Dec coincident indicator index rises 1.0 point

CNY:

China’s Jan HSBC services PMI falls to 50.7, lowest in 2.5 yrs.

China 2013 current account surplus at $188.6 bln SAFE
Today’s data

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

JPY         Leading Index Dec (P) A 112.1 | C 111.9 | P 111.1

07:00     EUR        German Trade Balance (EUR) Dec C 17.3B | P 17.8B

08:00     CHF        Foreign Currency Reserves Jan P 435.2B

08:15     CHF        Retail Sales (Real) Y/Y Dec C 3.90% | P 4.20%

09:30     GBP       Visible Trade Balance (GBP) Dec C -9.3B | P -9.4B

09:30     GBP       Industrial Production M/M Dec C 0.60% | P 0.00%

09:30     GBP       Industrial Production Y/Y Dec C 2.30% | P 2.50%

09:30     GBP       Manufacturing Production M/M Dec C 0.60% | P 0.00%

09:30     GBP       Manufacturing Production Y/Y Dec C 2.30% | P 2.80%

11:00     EUR        German Industrial Production M/M Dec C 0.50% | P 1.90%

13:30     USD       Change in Non-farm Payrolls Jan C 175K | P 74K

13:30     USD       Unemployment Rate Jan C 6.70% | P 6.70%

13:30     CAD       Net Change in Employment Jan C 17.5K | P -45.9K

13:30     CAD       Unemployment Rate Jan C 7.10% | P 7.20%

15:00     GBP       NIESR GDP Estimate Jan  P 0.70%

Harry Hindsight

  • EUR: Asia saw the market drifting lower as positions were cut and the market struggled to find a direction in front of the day’s rate announcement. Opening just above the 1.3530 area the market peaked to 1.3540 before drifting slowly lower to below the 1.3520 levels into the grey hours, the absence of early players was noticeable and the market didn’t move until London opened with a slight uptick to the opening levels. The market held the levels deep into the session with early NYK entering the market and selling into the numbers to push the market below the 1.3490 levels. As the market expected there was no change however, what the market did not expect was a lack of anything other than rhetoric from Draghi, this caused an unwind of those speculating that there would have been more accommodative announcements rather than the bland comments on what they can do. The market moved sharply off its lows and ran quickly to just short of the 1.3620 levels with stops trampling over the offers. The market stalled and then slowly drifted to the 1.3600 level and then another few tics to rest on the 1.3590 level and with any anti-climax stayed around that range for a few hours into the close.
  • GBP: Cable was fairly tight over the whole day losing ground against the Euro as would be expected but not losing touch. Rising from the opening 1.6310 to just below 1.6330 it made early gains against both the USD and Euro before slipping back into the Tokyo session and trading in a similar fashion to the Euro moving to base around the 1.6300 levels. The move into London was the market chasing dreams as it broke firmly through the 1.6300 level and moved to 1.6290 and then a quick dash into the 1.6270’s before spiking back to 1.6310 once the no change was signalled from the BoE, and the Quarterly inflation report should see Carney making any adjustments to targets or cut outs. The market was a little choppy into the ECB announcement with Cable again moving to the lows before bouncing strongly and pushing to above the 1.6345 areas as Euro’s rallied away dragging GBP with it. EURGBP strengthened over the course of the day with early trading being negligible trading in the 0.8280/0.8305 range until the ECB and running from the lows to touch above the 0.8350 levels before settling back to hover around the 0.8325 levels for several hours into the close.
  • JPY: The USDJPY opened around the 101.40 levels before lifting to above the 101.60 levels on the opening in Tokyo although the market fell back again to below the 101.40 levels as fixing supply dented the pair we did have another go higher later in the session to push to the mid 101.60’s however, that was about all she wrote for the USDJPY as the action was limited on both sides of the market until the ECB numbers were released spurring the USDJPY higher as EURJPY buying went through the market. USDJPY rallied at this point to the 101.90 and into light offers which held the market in the region for several hours before it finally gave way and we triggered minor stops above the 102.00 levels running into the mid-teens before settling just above the 102.10 levels.
  • AUD: The Oz opened around the 0.8910 area and was slowly bid through the Sydney session and into Tokyo around the 0.8930 levels, a good trade balance number saw the Oz rally quickly to above the 0.8980 levels and into the resistance levels before slowly drifting back to the 0.8960 area  through Asia. London opened and immediately sold it lower with a mixture of EURAUD buying and general Oz selling from the 90 cent level. The market failed to move much beyond the 0.8945 before finding bids appearing in mid-range and we slowly rose back towards the highs. However, all through the session it was unable to break the 0.8980 levels trying several times during NYK before we moved to the close and the Sydney market opening, who it has to be said were willing to take profit and sell from those highs for a close around the 0.8955 areas.

Yesterday’s premiership results

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 | C 3 | P 5

CHF        SECO Consumer Confidence Jan A 2 | C 1 | P -5

CHF        Trade Balance (CHF) Dec A 0.50B | C 2.41B | P 2.11B | R 2.03B

EUR        German Factory Orders M/M Dec A -0.50% | C 0.30% | P 2.10% | R 2.40%

GBP       BoE Rate Decision A 0.50% | C 0.50% | P 0.50%

GBP       BoE Asset Purchase Target A 375B | C 375B | P 375B

USD       Challenger Job Cuts Y/Y Jan A 11.60% | P -5.90%

EUR        ECB Rate Decision A 0.25% | C 0.25% | P 0.25%

CAD       International Merchandise Trade (CAD) Dec A -1.7B | C -0.7B | P -0.94B

USD       Trade Balance Dec A -38.7B | C -$35.8B | P -$34.3B

USD       Non-Farm Productivity Q4 (P) A 3.20% | C 2.50% | P 3.00%

USD       Unit Labour Costs Q4 (P) A -1.60% | C -0.50% | P -1.40%

USD       Initial Jobless Claims (FEB 1) A 331K | C 334K | P 348K | R 351K

CAD       Ivey PMI SA Jan A 56.8 | C 50 | P 46.3
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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