Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 101.775 101.53-56 | EURUSD 1.38002 1.3780-90 | EURJPY 140.471 139.908-140.051 | AUDUSD 0.89302 0.8910-15 | NZDUSD 0.83857 0.8372-85 | USDCAD 1.10666 1.1053-55 | EURCHF 1.21427 1.2130-34 | USDCHF 0.87984 0.8800-77 | GBPUSD 1.67422 1.6730-60 | EURGBP 0.82432 0.8222-69 |

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               101.67 | 101.255

EUR/USD             1.3792 | 1.3754

EUR/JPY               140.075 | 139.36

AUD/USD            0.8928 | 0.8891

NZD/USD             0.8394 | 0.8343

USD/CAD             1.1082 | 1.1050

EUR/CHF              1.2134 | 1.21015

USD/CHF             0.8811 | 0.8782

GBP/USD             1.6760 | 1.6710

EUR/GBP             0.8238 | 0.8226

 

Overnight News

G7/RUB:

G7 condemns Russia Ukraine move, halts G8 prep – White House

USD/UAH:

Lew Says Ukraine’s Leaders Ready to Tackle ‘Market Reforms’

CNY:

China’s Feb official services PMI rises to 3-month high

China HSBC PMI Confirms Weak Growth, Fine-Tune Needed, Says HSBC

JPY:

BOJ’s Kuroda: Japan Moving Steadily on Path to Inflation Target

Japan 4Q Capital Spending Rises 4.0% Y/y; Est. +4.9%

JPY/INR:

Suntory to Buy 26% Stake in Radico’s IMFL Business, CNBC Says

AUD:

Australian 4Q Company Profits Rise 1.7% Q/q; Est. 2% Gain

NZD:

NZ Export Volumes Surge on Dairy as Terms of Trade Advance

NZD: N.Z. Treasury Says Economy Likely Grew About 1% in Fourth Qtr

For today

• EUR: With the declaration that the Russians mean to annex the Crimean area of the Ukraine the markets opened reflecting the tensions, with the Euro opening some 20 or so pips lower, with a lot of two way flow moving through the market. The market thereafter was unable to regain the 1.3800 levels although it did attempt to push the 1.3790 levels on a few occasions as it did the 1.3770 level however for the most part the market moved around the 1.3780 open and remains stuck there as the world digests the news, Putin is said to have discussed the moves with several world leaders as he seeks to defuse what could be a step to far. Everything else seemed to be bypassed as the market focuses on the situation. With the 1.3800 level taken out on Friday all that remains for the time being are light offers above the level running back to the 1.3850 area, the downside is little better and if anything the market is short and unattractive for my taste. With light bids from the 1.3740 levels with light stops appearing below 1.3710 one could say the market is open in both directions.
• GBP: Cable has ticked up from the opening and while it didn’t fare as poorly as the Euro dipped from the opening into a 1.6730-40 range before slowly climbing to the 1.6750 levels were the market held for several hours in quiet trading, as we move towards the grey hours the market has fallen towards its lows and holds just above the 1.6730 levels. Offers remain around the 1.6770-1.6800 with light stops above, downside see’s bids around the 1.6720-30 area with nothing until below 1.6680 were stops start to appear.
• JPY: USDJPY opened around the 101.60 levels some 15-20 pips away from Fridays close as safe haven flows moved in the JPY again, dropping to below the 101.30 levels the market struggled to push any lower and held for a couple of hours before making a move to above the 101.40 level, since then its struggled in a tight band between the 101.30-40 levels for the balance of the session. Given the movement across the board it belays the volumes that have impacted the market. Light offers appear in front of the 102.00 levels and stops above the 102.10 levels. The Downside remains fairly strong with light bids from the current levels to the 101.00 before stops appear and building inside the further below 101.00 you go. A push below 100.50 sees a general mix of orders however in the current situation there are likely to be plenty more bids in the face of the safe haven flows.
• AUD: The market opened lower as you would expect with all the other pairs facing the same action, from the opening 0.8905 the market struggled slowly higher to fill the gap the only pair to do so, as the USDJPY drifted the Oz was able to capitalize on the movement and has slowly pushed up through to the 0.8925 from just above the 0.8890 lows, this was with release of company 4q profits posting a 1.7% QoQ rise helping the market along. For now the market sees bids appearing below the lows and although light from the 0.8890 area to 0.8860 those below 0.8850 seem to be well spread around the market so better bid. The topside has very little showing until the 0.8990 levels with light offers showing and getting larger through the 90cent levels.

Today’s data

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

NZD       Terms of Trade Index Q/Q Q4 A 2.30% | C 1.90% | P 7.50%

AUD       TD Securities Inflation M/M Feb A 0.20% | P 0.10%

JPY         Capital Spending Q4 A 4.00% | C 5.10% | P 1.50%

CNY        Non-manufacturing PMI Feb A 55 | P 53.4

CNY        HSBC/Markit Manufacturing PMI Feb (F) A 48.5 | C 48.5 | P 49.5

8:30        CHF        SVME PMI Feb C 57.2 | P 56.1

8:45        EUR        Italian PMI Manufacturing Feb C 53.7 | P 53.1

9:00        EUR        Eurozone PMI Manufacturing Feb (F) C 53.2 | P 53

9:30        GBP       PMI Manufacturing Feb C 56.9 | P 56.7

9:30        GBP       Mortgage Approvals Jan C 74K | P 71.6K

9:30        GBP       M4 Money Supply M/M Jan C 0.30% | P -1.40%

13:30     CAD       Industrial Product Price M/M Jan C 0.90% | P 0.70%

13:30     CAD       Raw Materials Price Index M/M Jan C 2.30% | P 1.90%

13:30     USD       Personal Income Jan C 0.30% | P 0.00%

13:30     USD       Personal Spending Jan C 0.10% | P 0.40%

13:30     USD       PCE Core M/M Jan C 0.10% | P 0.10%

13:30     USD       PCE Core Y/Y Jan C 1.10% | P 1.20%

15:00     USD       ISM Manufacturing Feb C 52 | P 51.3

15:00     USD       ISM Prices Paid Feb C 57.2 | P 60.5

15:00     USD       Construction Spending M/M Jan C -0.30% | P 0.10%

Weekend News

RUB/UAH:

Russia Approves Use of Military as Ukraine Alleges Invasion
UAH/RUB:

Ukraine Tells Russia Invasion Means War as Putin Makes Plans
USD/RUB:

Obama Tells Putin U.S. Halts G-8 Planning on Call About Ukraine
U.S. Lawmakers See Sanctions Not Troops as Ukraine Response
RUB/USD:

Russian Energy Minister Alexander Novak Cancels Trip to U.S.
CNY:

China Manufacturing Index Decline Adds to Li’s Growth Challenges
China Blames Xinjiang Separatists for Deadly Knife Attack
China CPPCC Meeting to Finish on March 12, Spokesman Says
Shanghai February New Home Sales Fall 41% from Jan., Uwin Says
JPY:

Shirai Suggests Widening BOJ Target Once Inflation Advances
Abe Warns Japan Losing Global Image Battle over War Legacy

JPY/USD:

J. Crew Said to Hold Sale Talks With Japan’s Fast Retailing
EUR/RUB:

EU’s Ashton Deplores Decision by Russia on Use of Troops
EUR: Merkel Says Ukraine’s Crimea Situation Is Cause for Concern
JPY/RUB:

Japan Urges All Parties to Exercise Restraint in Crimea: Kishida
EUR:

Germany’s Credit Rating Outlook Increased to Stable by Moody’s
Portugal Raises 2014 Growth Forecast as Aid Program Nears End
AUD/XAU:

Australian Gold Output Climbs to 10-Year High on Higher Grades
AUD:

Qantas Strikes Not on Engineers’ Union Agenda, Purvinas Says
CNY/AUD:

Chinese Beat U.S. Buyers as Biggest Australia Property Investors

Harry Hindsight

• EUR: From a quiet shallow dip through the Asian session from the opening 1.3710 levels the market started to move higher in to the grey hours and while it was unable to push much beyond 1.3720 it held between the 1.3710/20 level into the London session and into the Employment and CPI numbers. Employment numbers held steady while there was a rise and an upward revision on the CPI number giving the Euro a boost higher. The market gave a short squeeze rising a big figure to above the 1.3810 level before stalling slightly and having to wait for NYK to move into the market to push and make the highs above 1.3820. The rest of the day was reasonably quiet having moved to the 1.3800 levels, although the market struggled in either direction holding between 1.3810-20 for the remainder of the session.
• GBP: Cable remained in a tight range in Asia holding the 1.6680-90 for the most part trading just south of the bottom into the grey hours before the moving strongly to the 1.6740 as safe haven flows took over the market as the Ukraine situation slowly developed with Russian troops suspected to be controlling the Crimean area of the country. The market held in the 1.6720-40 areas until Euro’s leapt higher on the CPI numbers and reversing its losses against GBP and more, moving from the 0.8192 areas in EURGBP to above the 0.8250 quickly. Cable was unable to sustain its rally, topping just short of the 1.6770 levels. From the highs it was forced lower as the EURGBP rallied and dropped back to the opening levels before stabilizing and again slowly returning to the 1.6740-60 areas for a quiet close.
• JPY: USDJPY had a mixed day with early flows selling the USDJPY and buying JPY against most other pairs in a mixture of end of month action and safe haven flows. The market moved from the 102.10 areas and steadily over the course of the Asian session moved to below the 101.60 levels. Having made the lows the London session saw the start of a recovery with the USDJPY moving to the 101.80 levels and moving into the NYK opening trading just short of the 102.00 levels again. With fairly strong numbers out of the US the market eventually pushed to above the 102.20’s peaking just below 102.30 as NYK bought. The close was full of profit taking with the market dropping in the last hour back through the 102.00 and sliding to the 101.70.
• AUD: The Oz was dominated throughout the day by the JPY with early buying in the carry trade AUDJPY taking the Oz to the 0.8990 however that was the last time we saw the level as the market began to move lower as USDJPY selling dominated the flows. In Asia the market made its way through the opening levels below 0.8970 and continued to the 0.8940 levels where some light bids sat in front of the 0.8900 area. The move into London put the pair back above the 0.8960 but was unable to capitalize on the move and held the 0.8970 levels into the NYK session and beyond, in mid-session the market dipped again triggering minor stops as we moved through the 0.8950 levels and held towards the close before light profit taking closed out around the 0.8920-30 areas.

Friday’s premiership results

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

NZD       Building Permits M/M Jan A -8.30% | C 7.60% | P 7.10%

JPY         Nomura/ JMMA Manufacturing PMI Feb A 55.5 | P 56.6

JPY         National CPI Core Y/Y Jan A 1.30% | C 1.30% | P 1.30%

JPY         Tokyo CPI Core Y/Y Feb A 0.90% | C 0.80% | P 0.70%

JPY         Household Spending Y/Y Jan A 1.10% | C 0.20% | P 0.70%

JPY         Unemployment Rate Jan A 3.70% | C 3.70% | P 3.70%

JPY         Industrial Production M/M Jan (P) A 4.00% | C 3.10% | P 0.90%

JPY         Retail Trade Y/Y Jan A 4.40% | C 3.90% | P 2.60% | R 2.50%

GBP       Gfk Consumer Confidence Feb A -7 | C -6 | P -7

JPY         Housing Starts Y/Y Jan A 12.30% | C 15.30% | P 18.00%

EUR        German Retail Sales Y/Y Jan A 2.50% | C 1.20% | P -2.50% | R -1.70%

CHF        KOF Leading Indicator Feb A 2.03 | C 2.03 | P 1.98 | R 2.01

EUR        CPI Y/Y Feb (P) A 0.80% | C 0.70% | P 0.70% | R 0.80%

EUR        Unemployment Rate Jan A 12.00% | C 12.00% | P 12.00%

CAD       GDP M/M Dec A -0.50% | C -0.20% | P 0.20%

USD       GDP Annualized Q4 (P) A 2.40% | C 2.70% | P 3.20%

USD       GDP Price Index Q4 (P) A 1.60% | C 1.30% | P 1.30%

USD       Chicago PMI Feb A 59.8 | C 58.2 | P 59.6

USD       U. of Michigan Consumer Sentiment Feb (F) A 81.6 | C 81.4 | P 81.2

USD       Pending Home Sales M/M Jan A 0.10% | C 2.90% | P -8.70%

Stay lucky

Andy