Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close Wellington open

USDJPY 102.366 10235-40 | EURUSD 1.36352 1.3628-40 | EURJPY 139.583 139.48-67 | AUDUSD 0.89585 0.8958-69 | NZDUSD 0.82943 0.8270-97 | USDCAD 1.10341 1.1023-44 | EURCHF 1.22426 1.2231-48 | USDCHF 0.89792 0.8970-0.9000 | GBPUSD 1.64074 1.6397-1.6418 | EURGBP 0.83103 0.8298-0.8315 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.65 | 102.32

EUR/USD             1.3635 | 1.36095

EUR/JPY               139.80 | 139.39

AUD/USD            0.8962 | 0.8927

NZD/USD             0.8292 | 0.8272

USD/CAD             1.1045 | 1.1026

EUR/CHF              1.2252 | 1.2235

USD/CHF             0.8998 | 0.8980

GBP/USD             1.6417 | 1.6399

EUR/GBP             0.8304 | 0.8298

 

Overnight News

JPY:

Japan ruling party candidate elected Tokyo governor, aiding PM Abe

Japan logs record current account deficit in December

Suga: Anticipates Improvement in Japanese Exports on Weak Yen

Japan Govt debt reaches record 1,017 trillion yen – MOF

Japan Jan bank loans rise 2.3% vs. year ago

Eleven dead in Japan after worst snowfall in decades hits capital

Japan consumer mood worsens in January

CNY:

Shanghai Banks Credit Card Bad-Loan Ratio 1.15% at End-2013

EUR:

France’s Montebourg Calls on Europe to Seek Lower Euro: Echos

 

For today

  • EUR: The market opened slightly lower than Fridays close as the market works out Asia tries to work out exactly what the weekend news is all about, early reports stated that the German court called OMT beyond the ECB’s remit however, this however, now seems to be for Draghi to decide that’s if no other country minds. Opening below the 1.3620 level the market attempted early on to cover the gap but fell way short topping just above the 1.3630 levels before drifting back towards the opening levels as we move towards the grey hours. It has to be said though that the market saw plenty of two way action from the opening. With light offers from the 1.3650 areas increasing in size around the 1.3680-1.3700 levels stops really don’t show until deeper into the 1.37 handle around the 1.3740-60 levels. Downside is fairly open now with the 1.3500 levels well trampled over the past week or so, weak stops below 1.3580 and then light bids from the 1.3540 levels with larger stops below 1.3480.
  • GBP: Cable looks pretty much unchanged from Friday’s close holding around the 1.6410 levels for most of the session visiting just above the 1.6420 levels but failing to move below 1.6405 in quiet trading. Nothing changes on the Cable with some light offers around the 1.6450 level and stops above 1.6500, followed sharply by offers all the way to 1.6600. Downside 1.6250 is still in play and remains the downside key support level with range players standing in that 1.6250/1.6300 channel for the time being and one suspects stops below 1.6250.
  • JPY: With USD stronger across the board from the opening the USDJPY was little different moving from the opening 102.45 levels to just short of 102.65 into the Tokyo session as C/A deficit increases to the largest ever in December. The move into Tokyo saw supply for the fix and the market filled the gap on the charts and has sit just of the 102.35 lows since with very little movement. With offers now around the 102.70-103.00 followed by a larger set from 103.30-50 levels topside seems to be a little difficult. To the downside there are some weak stops below the 102.00 levels and then another batch around the 101.40-60 areas before support shows at the 101.00-100.80 levels.
  • AUD: A tight day for the Oz reversing some of the gains from Friday. Opening around the 0.8955 levels the market has been slowly drifting lower with the movement of the USDJPY, trading to 0.8930 in the run to Tokyo lunch the market now hangs just above the lows. With offers showing from the 0.9000-0.9020 and then stops follow on their tails. Downside is wide open below 0.8900 with only light profit taking in the area and then stops immediately behind but the operative word is light and very little is suspected on the 0.8800 levels.

 

Today’s data

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

JPY         Current Account (JPY) Dec A -0.20T | C -0.06T | P -0.05T

JPY         Consumer Confidence Jan A 40.5 | C 43.9 | P 41.3

JPY         Eco Watchers Survey: Current Jan A 54.7 | C 55.5 | P 55.7

06:45     CHF        Unemployment Rate Jan C 3.20% | P 3.20%

09:30     EUR        Eurozone Sentix Investor Confidence Feb C 10.1 | P 11.9

13:15     CAD       Housing Starts Jan C 185.0K | P 189.7K                   

 

Weekend News

JPY:

Abe-Backed Candidate Masuzoe Leads as Tokyo Votes for Governor
Tokyo Has Heaviest Snow in Decades as Voters Choose Governor
JPY/IDR:

Japan May Sue Indonesia for Tariff Overcharges: Nikkei
CNY:

China Must Tolerate Money-Market Rate Volatility, PBOC Says
China PBOC Sees ‘Uncertainties’ in U.S. Fed’s Tapering Process
PBOC Reiterates It Will Maintain Liquidity at Appropriate Level
China to Cut Electric Vehicle Subsidies by Less Than Planned
CNY/USD:

U.S. Should Stop ‘Irresponsible’ Remarks on Defence Zone: China
EUR:

Merkel Says ‘We Must Exit Crisis Stronger Than We Entered It’
German Court Defers to Draghi as Euro’s Judge and Jury for Now
Bank of Italy Doesn’t Rule Out Setting Up Bad Bank, Visco Says
AUD:

Australian Opposition Claims Victory in Vote for Rudd’s Old Seat

 

Harry Hindsight

  • EUR: Through the Asian session the market was very quiet, moving around the 1.3590 level for most of the session, only when we moved into the London session did we see any movement and it was down towards the 1.3550 level, with range players selling in size. The market then drifted through the European numbers and even a poor German IP number did nothing as the market focused on the NFP to come. With the NFP being worse than expected while better than the previous months the headline against consensus ruled the day and USD moved sharply lower as the Euro quickly pushed through the 1.3640 level in a spike caused by weak stops from those that sold early in the morning, the market settled almost immediately after the stop run holding for a couple of hours after the numbers in the 1.3590 levels again before pushing higher as the session wore on to move back to the highs as perceptions on any movement in US rates faded, it’s worth noting though that although the number was less than expected it was sufficient to edge the unemployment number lower. So while Europe manages to continue with unemployment at record rates and the currency buoyant the USD continues to be on the back foot (I wonder who that favours).
  • GBP: Cable for the most part remains the second fiddle with the Euro doing most of the work this week, as numbers disappoint when measured against consensus but continue to look better than across the channel. GBP opened around the 1.6328 areas and dipped in the early session to the minor support area of 1.6300/10 before rising as we moved towards London topping around the 1.6360 into the London opening and falling quickly back as the numbers where released, overall the numbers remain fairly strong considering they were for December. The market dipped triggering weak stops below the 1.6320 level from the early buyers and then bouncing back to the 1.6330-40 range for several hours into the NFP. Non Farms sent Cable scampering higher as with the Euro. Cable soon found itself against the 1.6400 levels and struggled for a few hours before breaking through to just below 1.6420 before settling back a little to the 1.6410 areas.
  • JPY: Maybe the USD rally that the news channels are telling me about is that dip just after NFP but hey who I’m I to criticize, a reasonably slow trading session in Tokyo with the market opening around the 102.10 level and dipping to the figure pre-Tokyo, Tokyo made little difference to the pricing overall with some light gains going towards the grey hours and buying in the grey hours to above the 102.20 quickly reversed on the opening of the main session. The market slowly traded back upwards peaking at 102.30 before the number which caused the USD to crash quickly lower, before the real players read the data and reversed the black box move from below 101.50 taking the market to its highs around the 102.55 as the short squeeze took out the weak sellers. The market then spent the session rising from the opening levels again to the 102.30 areas into the close.
  • AUD: The Oz spent the early point drifting lower from the 0.8955 area openings to 0.8945 as we moved into the Tokyo session and the RBA monetary policy statement, this caused some movement in the market with Oz quickly spiking higher before dropping back just as quickly from the highs above 0.8970, the lows where then set as the market dropped to the support areas around the 0.8920-00 area. The money policy saw revisions in the GDP and CPI numbers and the markets are not the forgiving types, however, it has to be pointed that since the Oz has dropped a significant amount over the last 6 months a certain amount of inflationary pressure has to have built. From the lows the market slowly clawed its way back towards the opening levels trading around the 0.8945 levels for a great proportion of the London session only moving once the NFP were released triggering a move to just below the 0.9000 levels before falling back to the 0.8950 and a slow climb into the close around the 0.8960 levels.

Friday’s premiership results

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

EUR        German Trade Balance (EUR) Dec A 18.5B | C 17.3B | P 17.8B

CHF        Foreign Currency Reserves Jan A 437.7B | P 435.2B

CHF        Retail Sales (Real) Y/Y Dec A 2.30% | C 3.90% | P 4.20%

GBP       Visible Trade Balance (GBP) Dec A -7.7B | C -9.3B | P -9.4B

GBP       Industrial Production M/M Dec A 0.40% | C 0.60% | P 0.00%

GBP       Industrial Production Y/Y Dec A 1.80% | C 2.30% | P 2.50% | R 2.10%

GBP       Manufacturing Production M/M Dec A 0.30% | C 0.60% | P 0.00%

GBP       Manufacturing Production Y/Y Dec A 1.50% | C 2.30% | P 2.80% | R 2.20%

EUR        German Industrial Production M/M Dec A -0.60% | C 0.50% | P 1.90% | R 2.40%

USD       Change in Non-farm Payrolls Jan A 113K | C 175K | P 74K | R 75K

USD       Unemployment Rate Jan A 6.60% | C 6.70% | P 6.70%

CAD       Net Change in Employment Jan A 29.4K | C 17.5K | P -45.9K

CAD       Unemployment Rate Jan A 7.00% | C 7.10% | P 7.20%

GBP       NIESR GDP Estimate Jan A 0.80% | P 0.70%

 

Stay lucky

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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