Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 102.261 | EURUSD 1.36451 | EURJPY 139.534 | AUDUSD 0.89492 | NZDUSD 0.82698 | USDCAD 1.10584 | EURCHF 1.22376 | USDCHF 0.89688 | GBPUSD 1.64032 | EURGBP 0.83184 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.41 | 102.075

EUR/USD             1.3679 | 1.3640

EUR/JPY               139.935 | 139.40

AUD/USD            0.9016 | 0.8942

NZD/USD             0.8310 | 0.8264

USD/CAD             1.1090 | 1.1052

EUR/CHF              1.22405 | 1.2230

USD/CHF             0.89705 | 0.89385

GBP/USD             1.6434 | 1.6404

EUR/GBP             0.8326 | 0.8317

 

For today

  • EUR: Euro’s drifted into the new session and to be honest never looked like doing anything special until the Oz numbers came out, as the AUD pushed higher Euro’s was dragged with it and through the 1.3650 level firmly triggering weak shorts out of the market as a mini short squeeze occurred moving just short of the 1.3680 and dipping and holding just below the 1.3670 level for the rest of the session. With the discussion going backwards and forwards about the capitulation on the subject of QE by the Germans it may be worth noting one piece I like about the softening of the German economy over the past few weeks, being the cynic that I am it suggests that this will give the German government something to point at when it goes wrong as being the focal point of their own problems. Offers from the highs to the 1.3720 level at the moment are keeping a lid on the market, with some light stops mixed in above the figure there remains interest thereon to fade the market as it rises. Weak stops now appear below the 1.3650 areas were the market broke up and bids into the 1.3630-00 level before lighter bids with even lighter stops mixed below that level.
  • GBP: As with the Euro what was an Oz rally turned into a little bit of a USD selloff as the majors tagged along for the ride, Cable rose from the opening 1.6410 area to above 1.6430 quickly before settling around the 1.6420 for the remainder of a dull session. With very little change from yesterday we still see offers above the 1.6450 levels and the bids holding around the 1.6300 area on what is a wide indication however, the market while untested to the downside has been through the downside and back a number of occasions and one suspects only real money would be tempted to enter.
  • JPY: USDJPY drifted before the Tokyo opening holding around the mid 102.20’s before dropping back and testing the 102.00 levels into the session helped along by the rise in the Oz, as sentiment increased we saw some moderate buying of the AUDJPY carry trade and the USDJPY recovered late in the session pushing quickly to above the 102.40 levels to leave the market on its highs as we head into the grey hours. Light offers that capped the market yesterday remain in play and a move through the 102.80 finds larger offers above the 103.00 area before light buy stops appear some 40 pips higher, the downside shows some light bids building around the 101.80-102.10 levels with some lighter stops below and into more bids from 101.50 down towards the figure.
  • AUD: The market opened around the 0.8950 levels and held steady into the Tokyo session, the data releases sent the market higher triggering some light stops through the 0.8970 levels and the market ran into some light offers above the 0.9010 after clearing some sellers along the way, with house price index having a big gain one suspects that the next interest move is now a forgone conclusion of the direction and although I would suspect the RBA is capable of playing games the will to do so now is likely to have been removed. For the moment the market holds the 90cent level as we move into the grey hours. Light breakout stops above the 0.9050 levels with current sellers willing to fade into the rise above 90cents to probably add to those stops. Downside has light bids through the 0.8960 levels and small bids from the same sellers with more stops around the 0.8930/10 levels with a light mix thereafter.

Overnight News

AUD:

Australia Business Confidence, Conditions Improve in January – NAB Survey

Australia House Price Index Rises

Australian Housing Finance Falls In December

CNY:

China’s Economy Will Be ‘Very Difficult’ This Yr.: Sec. Journal

China Studies Policies to Encourage Cos. to Go Out: Sec. Journal

JPY:

Japan may lift arms export ban for international groups – Kyodo

GBP:

UK retail sales show fastest annual growth since 2011 – BRC

U.K. Economy Set to Grow 2.6% in 2014, Says CBI
Today’s data

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

GBP       BRC Sales Like-For-Like Y/Y Jan A 3.90% | C 0.80% | P 0.40%

AUD       Home Loans Dec A -1.90% | C 0.90% | P 1.10%

AUD       NAB Business Confidence Jan A 8 | P 6

AUD       House Price Index Q/Q Q4 A 3.40% | C 3.00% | P 1.90%

15:00     USD       Fed’s Yellen Testifies to House

15:00     USD       Wholesale Inventories Dec C 0.50% | P 0.50%

21:00     CAD       Finance Minister Flaherty Presents Budget

Harry Hindsight

  • EUR: So the discussions continue over QE and the legality of such a move, it now transpires that Draghi, (reading between the lines) does not have a mandate to push this forward and today backed away with various excuses. The market opened below Friday’s close and spent the Asian session doing very little however; this disguises the exchanges in the early part of the session with good volumes going through from the opening and in the first hour of trading. Even so the market barely scratched the 1.3630 into the Tokyo session and held around the 1.3625 level for a great portion of the session. Once the market moved into the grey hours we saw a slight improvement to the price and we rose to above the 1.3640 levels and attempted to break through 1.3650 into the London session. While French ministers may be calling for a reduction in the Euro the market kept up the pressure on the 1.3650 however, overall no movement equals no volumes and the day was limited in that and movement holding for the most part between the 1.3630-50 levels.
  • GBP: The Cable was little different than the Euro with the market contained in a tight range as the market eyes Wednesdays Quarterly Inflation Report and whether Governor Carney presents any new slant on the knock options to interest rate rises. The market opened in line with Friday’s close and during Asia traded around the 1.6410 level in a very tight range, an early move higher in the grey hours proved fruitless as the market ran into offers around the 1.6430 area and retreated almost immediately to touch the 1.6390 before ranging from here to the 1.6410 level over the course of the day and deep into NYK before a further attempt higher. The market then dropped back to the 1.6400-10 areas into the close as we again failed the topside in a very lacklustre day.
  • JPY: USDJPY opened higher and traded in the early part of the session to above the 102.60 levels however, with reasonable offers to the topside the market was then forced lower as the Tokyo market opened and limited supply for the fix exhausted the buyers. The market filled the gap on the charts dropping to the mid 102.30’s into the middle of Tokyo and then stayed around the 102.45 areas into the grey hours. The London market did very little to change the course with a minor selloff just prior to the opening as retail Japan coming back from Lunch pushed the market to the 102.10 levels and there we sat for the rest of the session in a tight uneventful range to finish around the 102.20’s.
  • AUD: The Oz declined through the Asian session dipping from the opening 0.8960 levels slowly into the lows into early London just below 0.8910 with little news out for the pair for the most part it was driven by real money, bids around the 0.8900 area held the market and we started a steady climb to the 0.8950 area for the finish with again only minimum fluctuations along the way.

Yesterday’s premiership results

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

CHF        Unemployment Rate Jan A 3.20% | C 3.20% | P 3.20%

EUR        Eurozone Sentix Investor Confidence Feb A 13.3 | C 10.1 | P 11.9

CAD       Housing Starts Jan A 180K | C 185.0K | P 189.7K | R 188K
Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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