Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 102.494 | EURUSD 1.37348 | EURJPY 140.766 | AUDUSD 0.90345 | NZDUSD 0.83351 | USDCAD 1.10625 | EURCHF 1.22087 | USDCHF 0.88894 | GBPUSD 1.66533 | EURGBP 0.82472 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.63 | 102.45

EUR/USD             1.3739 | 1.3729

EUR/JPY               140.96 | 140.715

AUD/USD            0.9044 | 0.9015

NZD/USD             0.8345 | 0.8319

USD/CAD             1.1070 | 1.1055

EUR/CHF              1.2212 | 1.22045

USD/CHF             0.88905 | 0.88835

GBP/USD             1.6671 | 1.6646

EUR/GBP             0.82495 | 0.8240

 

For today

  • EUR: Another day in paradise with the market opening around the 1.3735 area and struggling either side, dipping just below the 1.3730 level and never getting that much higher, in very slow and uninteresting markets. For the moment we hold those levels as we move towards the grey hours. With the topside 1.3770-1.3800 levels now showing a mixture with stronger offers from the 1.3770 level into 1.3790, above the figure remains confusing with call levels than solid orders showing. With light bids into the 1.3700 level the market struggles below and best support seems to be around the 1.3630 levels for the moment, with the market uncertain of what comes next, will they cut in March or do something that the ECB can avoid calling it QE, who knows.
  • GBP: Cable seems to be on the back burner now with more focus on the Euro and what the ECB can do to reinvigorate the inflation levels. Cable opened around the 1.6650 and has managed to move higher over the course of the session however, you have to take that tongue in cheek as we are talking less than a 22 pip range touching above 1.6670 and just breaching the 1.6650 level. For the moment the downside still remains with bids from 1.6600 downwards and with the patterns from yesterday day traders are likely to pick those levels to buy, with light stops through 1.6700 and running straight into the offers
    JPY: USDJPY remains range bound for the short term with the market focused on the next few numbers to quantify what improvements Abenomics will have to invent. The market moved from the 102.50 levels steadily higher to peak in the Tokyo fix above the 102.62 levels and again come unstuck afterwards. Since then the market has quietly moved between the 102.50-60 area in very quiet action for the day. Now while there are stops building above the highs of the past couple of days the offers still remain intact however, a push through the 103.00 level is not as unlikely as it was last week and the bulk of the offers now seem to be around the 103.30-50 area with decent stops holding above those levels. The downside sees bids from the 102.30 levels down into the figure however these are light and weak stops rest right behind those levels with a mix towards the 101.80 levels. Beyond that better bids are seen around the 101.00- 30 areas and look comfortable for the moment.
    AUD: From the opening the Oz has underperformed however, the that could be said for the whole market with very little to stir interest, moving from the 0.9035 level the market moved lower as the USDJPY rose and dipped again as the CNY fix came in higher. Moving to the 0.9015 levels the market still seems to be taking direction to the more neutral stance the RBA has shown. With light stops to the topside above 0.9050 and then a run of offers from top pickers the market sees stops starting to appear above the 91 cent levels with very little showing beyond but one suspects some medium term congestion above the  level to 0.9150 before it opens up a little. The downside as always is wide open with stops behind the light bids into 0.9000-0.8980 areas and better bids 0.8930-10 before stops start to really appear for any attempt on the 0.8800 levels.

Overnight News

CNY:

China’s spot yuan drops below guidance rate for first time since 2012

JPY:

BOJ Deputy Governor Nakaso says overseas risks receding

Nakaso: BOJ Will Adjust Policy as Needed If Outlook Changes

Japan PM Abe’s Cabinet Support Rises 0.8 Ppt to 52.9%: Sankei

GPIF Investment Committee Member Opposed Inflation-Linked Bonds

Japan Draft Energy Policy to Say Nuclear Power Important

Japan Megabank Labour Unions to Seek Base Salary Increase: NHK

Japan’s Line Corp denies in talks to sell stake to SoftBank

NZD:

NZ inflation expectations edge higher short term – RBNZ survey

EUR:

Germany’s Schaeuble Not Worried about Deflation: ABC Interview

Germany Considers Giving Greece More Discretion over Aid: Welt
Today’s data

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

JPY         CSPI Y/Y Jan A 0.80% | C 1.20% | P 1.30%

CNY        CB Leading Index Jan A 1.2 | P 0.4 | R 0.8

07:00     EUR        German GDP Q/Q Q4 C 0.40% | P 0.30%

09:30     GBP       BBA Mortgage Approvals Jan C 47.9K | P 46.5K

12:45     EUR        EU Economic Forecasts

11:00     GBP       CBI Realized Sales Feb C 15 | P 14

14:00     USD       Housing Price Index M/M Dec C 0.40% | P 0.10%

14:00     USD       S&P/Case-Shiller 20 Cities House Price Y/Y Dec C 13.10% | P 13.70%

15:00     USD       Consumer Confidence Feb C 80.1 | P 80.7

 

Harry Hindsight

  • EUR: As with most days, it was reasonably quiet in Asia with large reductions in volumes. Opening around the 1.3740 area and trading down to 1.3730 over the course of the first few hours into Tokyo. The grey hours saw the first move higher with early buyers taking the market to just short of 1.3750 before the London opening pushed it higher still before the numbers. The numbers helped the market a little higher more on the back of the IFO numbers than anything else with the market taking its time from the 1.3770 levels to decide to sell the market with CPI numbers still pointing to deflationary pressures continuing. With market expectations still mixed over what they are likely to do about it. By the time NYK started to move into the market fully we were already trading around the 1.3725 and pushing through the bids, early NYK struggled to push through and we bottomed out around the 1.3710 before a minor short squeeze moved the market back to the starting levels. The market ended the day drifting slowly to close just short of the opening in a well contained market.
  • GBP: With a similar pattern to the Euro the market still insists on finishing above or around the 1.6650 levels. Opening slightly higher that the NYK close on Friday, the market moved from the 1.6630 levels slowly to above 1.6650 in the grey hours with very little in the market. We saw some quick selling into the London opening touching just below the 1.6600 area however the market bounced quickly to its previous levels and through to just short of the 1.6680 levels on a little short squeeze before steadily moving lower into the NYK session, the US market saw strong selling on the futures market which led the way in early trading however, again once the market had soaked up the pressure to the 1.6590 levels for a fresh low the market moved steadily back to the starting levels and held around the 1.6650 levels into the close.
  • JPY: Talk of safe haven flows on the back of China commentary moved USDJPY lower, I’m more inclined to think that AUDJPY selling through the 92.00 area was more in line with what we saw, in any case from the opening 102.55 area the market initially made its way to above the 102.65 levels before meeting stiff resistance again at the 102.70 areas and rejecting the level and moving steadily down towards the 102.15 levels, talk of decent sized option expiry’s forced the pair higher again from the lows over the course of several hours and moving into the NYK cut we saw the pair move from just above 102.50 to just below and hold into that range for the close on a quiet day overall.
  • AUD: Early selling in the Oz caused by AUDJPY longs cutting positions took the market to below the 0.8940 levels in early Tokyo while the Chinese comments didn’t help matters with disparity between onshore and offshore the talk of the town, the Oz spent a good portion of the day moving higher to the 90 cent level before a sudden wakeup call around the NYK options cut, for which I’d be more inclined to believe that any large options were in the AUD rather than the Yen or maybe a combination of both. The market moved smartly from the 90cent level and pushed to above towards the 0.9050 levels and through some light offers, the move to the close was a drab affair with the market settling just below the highs.

Yesterday’s premiership results

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

EUR        German IFO – Business Climate Feb A 111.3 | C 110.6 | P 110.6

EUR        German IFO – Current Assessment Feb A 114.4 | C 112.9 | P 112.4

EUR        German IFO – Expectations Feb A 108.3 | C 108.2 | P 108.9

EUR        Eurozone CPI M/M Jan A -1.10% | C -0.40% | P 0.30%

EUR        Eurozone CPI Y/Y Jan A 0.80% | C 0.70% | P 0.80%

EUR        Eurozone CPI – Core Y/Y Jan A 0.80% | C 0.80% | P 0.70%

 

Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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