Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 101.923 | EURUSD 1.37065 | EURJPY 139.70 | AUDUSD 0.90317 | NZDUSD 0.83588 | USDCAD 1.09649 | EURCHF 1.22189 | USDCHF 0.89149 | GBPUSD 1.67138 | EURGBP 0.82007 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.745 | 101.76

EUR/USD             1.3718 | 1.3695

EUR/JPY               140.84 | 139.50

AUD/USD            0.9081 | 0.9015

NZD/USD             0.8381 | 0.8339

USD/CAD             1.0966 | 1.0946

EUR/CHF              1.2238 | 1.2216

USD/CHF             0.8929 | 0.8910

GBP/USD             1.6736 | 1.6710

EUR/GBP             0.8200 | 0.8192

 

For today

  • EUR: With a slow opening and a gradual drift lower the market seemed set on breaking down through the 1.3690 areas however, the strength of buying against the Yen surprised the market a little and Euro’s rose off the lows around 1.3695 to move steadily to above the 1.3717 level for the highs on the days, while the USDJPY has started to back off from its highs at the moment light EURJPY profit taking has kicked in and the Euro is starting to drift again. With offers from the 1.3720 areas moving to 1.3750 on the topside still holding the market the light stops above those levels run into some stronger offers building above through to 1.3800 with very little in the way of stops showing above there. Downside is a little mixed now through the 1.3680 levels with some light stops mixed with some larger bids down to the 1.3630 area where bids are of a better size.
  • GBP: Having opened quietly one has to say its not changed that much with a steady rise from the 1.6715 area to around the 1.6735 levels helped by Yen weakening, the market has slipped back into the mid 1.6720’s and there is not a lot to write about. Offers above 1.6820/30 seem to be in the heavens now and whether a lack of impetus yesterday has stalled the market or whether liquidity questions on the initial rush higher overinflated the move remains to be seen however, a move higher is likely to be on lower volumes and the market maybe best suited to a clear to the downside before another push higher. Downside has bids remaining just below the 1.6700 levels with light bids back to the 1.6650 area before we see any significant stops with weak ones making an appearance just below.
  • JPY: USDJPY opened quietly in Asia however; it moved on the Tokyo opening and managed to move back through the 102.00 from 101.90 reaching into the mid-teens before stalling and then falling back to the Asian opening levels. The BoJ announcement when it arrived was on the face of it little changed from previous with the market dipping to below 101.80 but the BoJ did mention doubling the main growth funding facility which is slightly different, sparking a recovery and a quick push to above the 102.30 area. The market has not stopped rising since that point and we have seen successive buying against the Yen across the board with EURJPY aggressively bought sufficient to move the Euro from its lows. As we head towards the grey hours the market is trading around the 102.70 levels with a lot of the offers now cleared and we are back to the 102.70-103.00 light offers with better offers behind the 103.20 area. Stops make a brief appearance through the figure but they are light. Downside sees light bids from the 102.20 area with stops below 101.90-80 areas, then a mix of light bids and stops from the 101.70 areas stretching to the 101.30 levels where stops seem to dominate, with 100.70-90 being the support area.
  • AUD: The Oz rose slowly in early trading before the RBA minutes were released, moving from the opening 0.9035 to above the 0.9040 levels. With an unchanged report reading neutral, positive data over the past month continues, sustained lower A$ would assist balancing the economy about sums it up and the move from 0.9035 was typical of an RBA release down to 0.9015 and then a rush higher squeezing out the initial sellers as algo’s get caught again. The market pushed to the 0.9080 level before running into some strong offers and January’s highs remain intact. A surprise repo operation in China helped cool the mood and the market moved off from the highs pushing back through the 0.9060 area and triggering minor stops to the opening levels. With a mixture to the topside offers seem to have the edge and 0.9100 looks for the moment to be a difficult nut to crack however, parked behind the level we do see some breakout stops building and into the 0.9150 area. Downside sees some light bids from the opening areas of today, with weak stops below 0.9000 and then nothing of note until the 0.8900-0.8930 support area with bids.

Overnight News

JPY:

Bank of Japan Expands Special Loan Programs

Amari Says Japan Won’t Make Unilateral Concessions in TPP Talks

Japan’s Aso: GDP shows moderate recovery, will watch external demand

AUD:

RBA Saw More Signs Low Rates Boosting Economy Amid CPI `Puzzle’

RBA Say Sustained Lower A$ Would Assist Balanced Economic Growth

Alcoa to Close Australian Smelter, Mills on Excess Capacity

CNY:

China PBOC to Sell Repo Contracts for 1st Time since June

China Jan. Export Growth Reasonable, Mofcom Says

China January Foreign Direct Investment +16.1% on Year at $10.76 Bln

KRW/CNY:

South Korea Will Support Direct Won-Yuan Trade if Needed: Choo

NZD:

English Says Kiwi Too High, Rejects Ireland Comment: Interest.co
Today’s data

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

09:00     EUR        Eurozone Current Account (EUR) Dec C 19.8B | P 23.5B

09:30     GBP       CPI M/M Jan C -0.60% | P 0.40%

09:30     GBP       CPI Y/Y Jan C 2.00% | P 2.00%

09:30     GBP       Core CPI Y/Y Jan C 1.90% | P 1.70%

09:30     GBP       RPI M/M Jan C -0.50% | P 0.50%

09:30     GBP       RPI Y/Y Jan C 2.70% | P 2.70%

09:30     GBP       PPI Input M/M Jan C -0.20% | P 0.10%

09:30     GBP       PPI Input Y/Y Jan C -2.90% | -1.20%

09:30     GBP       PPI Output M/M Jan C 0.10% | P 0.00%

09:30     GBP       PPI Output Y/Y Jan C 0.80% | P 1.00%

09:30     GBP       PPI Output Core M/M Jan C 0.10% | P 0.10%

09:30     GBP       PPI Output Core Y/Y Jan C 0.80% | P 1.00%

09:30     GBP       DCLG UK House Prices Y/Y Dec C 5.80% | P 5.40%

10:00     EUR        German ZEW (Economic Sentiment) Feb C 61.7 | P 61.7

10:00     EUR        German ZEW (Current Situation) Feb C 44 | P 41.2

10:00     EUR        Eurozone ZEW (Economic Sentiment) Feb C 73.9 | P 73.3

13:30     CAD       International Securities Transactions (CAD) Dec C 9.97B | P 8.66B

13:30     USD       Empire Manufacturing Feb C 9.5 | P 12.51

14:00     USD       Net Long-term TIC Flows Dec C -24.7B | P -$29.3B

15:00     USD       NAHB Housing Market Index Feb P 57

 

Harry Hindsight

  • EUR: The market opened slightly high from Friday’s close helped by a run in the Cable as stops were triggered through the 1.6700 levels however, having touched above the 1.3720’s early in the Tokyo session the market stalled with plenty of offers now resting above the level. The day from the highs has been a lacklustre one with Presidents day removing liquidity from that side of the pond and leaving the market with less impetus to either break up or reject the levels. Again what movement we saw was dominated by Cable as GBP fell from its highs dragging on the Euro even though it gained in the cross. Euro’s pushed to below the 1.3700 level and the market was then caught between 1.3690 and 1.3715 for the rest of the day with NYK only playing a minor part in the affair.
  • GBP: With the Cable making early gains to hit highs not seen in nearly 5yrs the rise left the market a little vulnerable to a pullback over the course of a bank holiday with liquidity likely to be insubstantial at times. The market opened above the 1.6760 levels above the 1.6750 area close on Friday and although we filled in the gap Tokyo latched on to the Cable and drove it quickly higher to above the 1.6820 levels on little more than the House price number which one would suspect in the right mind is counterproductive for the economy. Having hit the highs though the market started to slip back over the rest of the day, holding just below the 1.6800 levels for the balance of the Asian session only for the grey hour players to sell through to the 1.6770 levels and from there the market slowly slipped back on EURGBP buying and Cable selling as the market for the moment rejects the area. By the time the market came to the end of the day the gains seen over the day were gone as was a substantial part of Fridays with the market holding just above the 1.6700 levels.
  • JPY: USDJPY opened lower as the general USD selloff from Friday tipped into the early session in Tokyo, the market initially opened below Friday’s close around 101.70 filled the gap then dropped from the opening in Tokyo to below 101.40 in the first hour. The market stabilised somewhat and after a faltering hour or so slowly started to push higher as the retail sector started to pick up USD’s. By the time we reached the grey hours the market had pushed to just below the opening levels and grey hour players joined in to take the market into the London opening unchanged on the day. A mini short squeeze finished the day off running the market back towards the offers waiting around the 102.00 area and the day ended with several hours of play around the 101.90 levels and never quiet touching the 102.00.
  • AUD: The Oz had a very quiet day with little news to affect the rates and only minor AUDJPY trading lifting the market to its highs early in the session. The market opened above the 0.9055 level some 20 pips above the Friday’s close as the USD weakness spilled over into the new session, the market made a brief attempt to fill the gap however, once into the Tokyo session AUDJPY buying was seen taking advantage of the strength in Yen taking the Oz to its highs just short of the 0.9070 levels similar to the moves last week only to run into the same offers. Having rejected the levels again the market then held around the opening levels as we ran towards London, early grey hour players took the opportunity to sell as the USDJPY start to rise and the market filled the gap in the charts and moved into the closing range from Friday and held around the 0.9030 levels for the rest of the day.

Yesterday’s premiership results

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

NZD       Retail Sales Ex Inflation Q/Q Q4 A 1.20% | C 1.70% | P 0.30% | R 0.20%

JPY         GDP Q/Q Q4 (P) A 0.30% | C 0.70% | P 0.30%

JPY         GDP Deflator Y/Y Q4 (P) A -0.40% | C -0.20% | P -0.30%

GBP       Rightmove House Prices M/M Feb A 3.30% | P   1.00%

JPY         Industrial Production M/M Dec (F) A | C 1.10% | P 1.10%

 

Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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