Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 102.207 | EURUSD 1.37418 | EURJPY 140.457 | AUDUSD 0.89506 | NZDUSD 0.83805 | USDCAD 1.10935 | EURCHF 1.21939 | USDCHF 0.8874 | GBPUSD 1.6664 | EURGBP 0.82465 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.29 | 102.115

EUR/USD             1.3745 | 1.37275

EUR/JPY               140.57 | 140.255

AUD/USD            0.8998 | 0.8934

NZD/USD             0.8410 | 0.8377

USD/CAD             1.1099 | 1.1073

EUR/CHF              1.2196 | 1.21835

USD/CHF             0.8879 | 0.88685

GBP/USD             1.6673 | 1.6656

EUR/GBP             0.8245 | 0.8238

 

For today

  • EUR: Barely a 10 pip range for the session, moving from the opening 1.3740’s to touch the 1.3731 levels in slow trading for the Euro, movements in the AUD dominated the market for the most part however, it had little impact on the Euro as the market digests the Ukraine situation before refocusing on the economics. Topside sees offers all the way to the 1.3780 level where the market thickens in size with offers every 10 pips or so, weak stops through 1.3800 with offers reappearing to the 1.3850 levels. Downside has light bids from here until 1.3690 and we see a batch of light stops with the pattern then repeating to the sentimental level around 1.3650 and stronger support 1.3630-00.
  • GBP: Cable was little different range wise to the Euro however; it held its opening levels dipping to below the 1.6660 levels on the AUD movement after making the highs above 1.6672 before settling down to trade into the grey hours just shy of the highs. No change to the orders as far as I can make out with the 1.6750 and 1.6820-30 resistance levels with stops behind each level. 1.6880 remains the stronger resistance area. Downside has light bids down to 1.6600 from around the 1.6630 levels and light stops below that level with 1.6650 area being the stronger line in the sand.
  • JPY: After strong gains yesterday the market holds onto those gains but cannot for the moment push through the 102.30 level, the downside is stuck with light bids around 102.10 holding the market for the moment however, as I say light bids. With offers showing up strongly as we creep towards the end of years repatriation likely to start limiting moves higher. Downside sees light mix to the 101.50 areas with some stops below with the mix increasing to the 101.00 levels. Better bids make an appearance below 100.80 from real money types.
  • AUD: The market opened quietly as with the rest however, the GDP figures surprised on the release moving the market quickly to above the 0.8995 levels and running into the same offers at the top, having seen the highs the market took a little longer to move back lower as the number was only just better, the move through 0.8970 levels triggered weak stops from the buyers and this deepened the selling to below the 0.8940 level before holding only slightly better than the opening. This leaves the standing no different from yesterday however with a much more vulnerable market to a choppy market now between 0.8900-0.8990. Light stops above the 0.9030 levels with more building above the 0.9050 levels behind some half decent offers before better offers in front of 91 cent. Downside is patchy below the 89cent to 0.8860 levels holds some light bids with better stuff the closer you get to 88 cent.

 

Overnight News

CNY:

China Sets 7.5% Growth Target for 2014 as Challenges Mount

China Must Keep Economic Development as Central Task, Li Says

PBOC Pan Says Flexible Exchange Rate is Key Step to Yuan Reform

China Lowers Yuan Reference Rate to Weakest Since Dec. 5

China’s Chaori Solar says to default on bond interest

HSBC China February Services PMI 51.0 Vs 50.7 in January

China 7.5% Growth Could Be Challenge – Ex-PBOC Adviser

CIC 2013 Overseas Investment Return Exceeds 8%: WSJ

AUD:

Australia economy picks up speed in Q4

USD:

Obama: Ukraine Situation May De-Escalate in Next Days, Weeks

JPY:

BOJ Kuroda: Conducting monetary policy to target domestic economy

BOJ Questioning When, Whether, Exports Will Recover–Sources

Japan concerned about lack of clarity in China’s defence policy

Ex-BOJ Muto sees little risk of tax hike harming Japan recovery
Today’s data

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

GBP       BRC Shop Price Index Y/Y Feb A -1.40% | P -1.00%

AUD       GDP Q/Q Q4 A 0.80% | C 0.70% | P 0.60%

08:45     EUR        Italian PMI Services Feb C 50.6 | P 49.4

09:00     EUR        Eurozone PMI Services Feb (F) C 51.7 | P 51.7

09:30     GBP       PMI Services Feb C 58 | P 58.3

10:00     EUR        Eurozone Retail Sales M/M Jan C 0.90% | P -1.60%

10:00     EUR        Eurozone GDP Q/Q Q4 (P) C 0.30% | P 0.30%

13:15     USD       ADP Employment Change Feb C 150K | P 175K

15:00     CAD       BoC Rate Decision C 1.00% | P 1.00%

15:00     USD       ISM Non-Manufacturing Composite Feb C 53.7 | P 54

15:30     USD       Crude Oil Inventories P 0.1M

19:00     USD       Fed’s Beige Book

 

Harry Hindsight

  • EUR: As the Russians back away from the abyss the Euro recovers until everyone one remembers where the economy is. Having opened in the Asian session around the 1.3730 level the market struggled in early trading to not far above that level before drifting off as USDJPY moved higher and EURJPY selling entered the market. We traded to a low of around the 1.3722/23 levels before the market started to find traction and move gradually to the grey hours. I will not surprise you to know that East European traders led the way on the move from the 1.3730 area to just above 1.3765 in the first few minutes post 6am, which followed reports that Putin had put a hold on whatever, he was suspected of thinking of doing. Having therefore regained the levels just prior to the crisis 1.3750 the market chopped from the 1.3745-70 levels into the NYK session having completely ignored the PPI numbers, fortunately the US market was a little more awake and sold the pair from the highs just above the 1.3780 area to close to the opening levels. The market moved off the lows but struggled to the close gaining only 15-20 pips before closing around the 1.3740 areas.
  • GBP: Cable traded quietly in a fairly busy Asian session moving from the opening 1.6660 to trade just above the 1.6640 in early trading as cross Yen selling in the face of USDJPY buying pushed the pair down. As with the Euro once the Ukraine situation lessened with comments in the grey hours the market in Cable started to climb moving to above the 1.6700 level into the London opening. With very little data out in the UK the market was more focused on Europe especially once the market in NYK opened and the declines roughly matched the Euro with the Cable slipping back steadily in a couple of waves to the opening areas and finishing pretty much unchanged.
  • JPY: USDJPY climbed steadily throughout the day, opening around the 101.40 levels the market traded to above the 101.70 levels into the grey hours and some of the safe haven flows reversed with a strong move to push for the 102.00. London opened the market remained stuck below the level for several hours, early NYK was little different and only once the session was in full swing did the USDJPY break through the 102.00 level triggering only minor stops on its way to the 102.20 levels where the market closed after failing to push through 102.30.
  • AUD: The Oz had an emotional day for some, the market opened around the 0.8935 areas and struggled in pre-Tokyo trading dipping below the opening levels before seeing strong AUDJPY buying before the RBA announcement, while the USDJPY did some work the Oz was forced higher also pushing to above the 0.8950 levels before slipping to the 0.8940 into the announcement. As expected there was no change however, there was a couple of announcements that had not been in the previous statement and the market had rushed to 0.8970 when these comments manifested. We have no interest in altering the interest rates was the one that damaged the market and reversed the gains and some more for good measure, the market found itself back through the opening levels and pushing against the 0.8910 support level before stabilizing and spending the rest of Asia regaining the highs. The move into London saw the market again towards the top before steadily drifting off through the session and into NYK, for the most part though the rest of the day was a drab affair and we moved for the most part between the 0.8940-50 for a finish around the levels.

Yesterday’s premiership results

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

JPY         Monetary Base Y/Y Feb A 55.70% | C 54.20% | P 51.90%

AUD       Building Approvals M/M Jan A 6.80% | C 0.70% | P -2.90% | R -1.30%

JPY         Labour Cash Earnings Y/Y Jan A -0.20% | C 0.30% | P 0.80% | R 0.50%

AUD       RBA Rate Decision A 2.50% | C 2.50% | P 2.50%

GBP       PMI Construction Feb A 62.6 | C 63.6 | P 64.6

EUR        Eurozone PPI M/M Jan A -0.30% | C 0.00% | P 0.20%

EUR        Eurozone PPI Y/Y Jan A -1.40% | C -1.20% | P -0.80%

 

Good Luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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