Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 102.301 | EURUSD 1.37335 | EURJPY 140.497 | AUDUSD 0.89849 | NZDUSD 0.84299 | USDCAD 1.1030 | EURCHF 1.21842 | USDCHF 0.88724 | GBPUSD 1.6721 | EURGBP 0.82131 |

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.77 | 102.27

EUR/USD             1.37375 | 1.3723

EUR/JPY               141.02 | 140.515

AUD/USD            0.9033 | 0.8973

NZD/USD             0.8431 | 0.8407

USD/CAD             1.1045 | 1.1025

EUR/CHF              1.2199 | 1.2182

USD/CHF             0.88895 | 0.88685

GBP/USD             1.6729 | 1.6707

EUR/GBP             0.8215 | 0.8208

For today

• EUR: A quiet day as usual in front of a rate announcement, moving steadily lower helped buy a strong AUD move causing EURAUD selling to appear after the numbers. Moving from the opening 1.3735 the market has steadily slipped to the 1.3725 levels and holds for the moment. With only light offers showing to the 1.3800 levels and similar size stops beyond the market is fairly open until we see the commentary from the ECB. Downside sees stops on a break below the supporting 1.3710-1.3690 levels with again only light bids covering until 1.3630 where better bids remain.
• GBP: Almost as quiet as the Euro with the market somewhat reluctant to give ground having made its way above the 1.6720 levels again. We opened around the 1.6720 area and although for the bulk of the session we remained in touch with that level, we dropped a little in mid-session and remain glued to the 1.3710 levels as we move into the grey hours. Offers around the 1.6750 levels with better ones hanging around 1.6800 light stops through that level and stronger offers again from the 1.6860-80 areas. Downside sees light bids to the 1.6700 level with weak stops below and into the 1.6680 area, for the moment there seems to be light bids down to the 1.6640 levels where it thickens up a little.
• JPY: USDJPY tested the topside helped along by a healthy amount of AUDJPY buying through the session. Opening around the 102.30 area it held steady in pre-Tokyo before moving to above 102.45 into the AUD numbers, as AUD climbed we saw some light profit taking in the carry trade and this resulted in the market moving back to the opening levels. From then on it was pretty much one way traffic with retail carry trade buying and real money buyers joining in to take the pair to the 102.75 areas before dipping as we head into the grey hours. Offers scattered from the highs back to the 103.20 levels not as thick as previous sessions however, enough to slow the market down for the time being, weak stops through the 103.20 area before another set of offers around the 103.50 levels moving back to 103.80. Downside has light bids from the 102.20 area down to 102.00 with stops below but becoming more mixed the closer to 101.60 you get. From there it’s light bids to the 101.00 levels.
• AUD: A quiet opening with some light position cutting before the numbers moving the market off the 0.8990 levels to the mid 0.8970’s, in hindsight obviously it was the wrong move as both the trade balance and the retail sales came in strongly above expectations, the market rallied sharply to above the 0.9030 levels and has drifted from the level since. With some medium sized offers now appearing above the highs and weak stops above 0.9050-60 we move to the 0.9080 area with a confusion of orders offering small resistance, a break through 91 cent sees stronger stops. The downside has nothing really to mention until you hit the 89 cent levels where some light bids remain and then light stops from 8880 level until support appears around the 0.8860-20 areas.

Overnight News

JPY:

GPIF Urged to Link Return Goal to Wage Growth, Cut Bond Focus

BOJ’s Iwata: To adjust policy if risks threaten price goal

JPY/USD:

Japan, U.S. Officials to Meet Over TPP in Washington Next Week -Kyodo

AUD:

Australia Trade Balance Improves Sharply

Australian Retail Sales Rise Strongly

CNY:

Pan Gongsheng Says PBOC May Pre-emptively Fine-Tune Policy

China 2014 GDP Growth Goal Is a Guiding Target: MOF’s Zhu

NDRC’s Zhu Says China Has Policy ‘Toolboxes’ for Scenarios

China May Remove Forex Deposit Rate Cap Nationwide: Official

China to extend joint property ownership pilot scheme to cool prices

KRW/CNY:

S. Korea to Support Creation of Yuan-Won Market, Hyun Says

USD:

Fed’s Fisher says Fed focusing on how to manage exit, avert inflation

NZD:

New Zealand house price growth slows further in February QV
Today’s data

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

AUD       Trade Balance (AUD) Jan A 1.43B | C 0.11B | P 0.47B | R 0.59B

AUD       Retail Sales M/M Jan A 1.20% | C 0.50% | P 0.50% | R 0.70%

11:00     EUR        German Factory Orders M/M Jan C 1.10% | P -0.50%

12:00     GBP       BoE Rate Decision C 0.50% | P 0.50%

12:00     GBP       BoE Asset Purchase Target C 375B | P 375B

12:30     USD       Challenger Job Cuts Y/Y Feb P 11.60%

12:45     EUR        ECB Rate Decision C 0.25% | P 0.25%

13:30     CAD       Building Permits M/M Jan C 1.90% | P -4.10%

13:30     USD       Non-Farm Productivity Q4 (F) C 2.60% | P 3.20%

13:30     USD       Unit Labour Costs Q4 (F) C -1.00% | P -1.60%

13:30     USD       Initial Jobless Claims (FEB 28) C 336K | P 348K

15:00     CAD       Ivey PMI Feb C 56.7 | P 56.8

15:00     USD       Factory Orders Jan C 0.00% | P -1.50%

Harry Hindsight

• EUR: With a lessening of tensions in the Ukraine a little at least the markets settle back and await the ECB announcement, which in all likelihood will be a none event with the usual rhetoric about what they may do, but would just like to talk about. Opening around the 1.3745 levels the Euro slowly traded lower through the Asian session to below the 1.3730. Early Europeans took the market back to above the 1.3740 levels during the grey hours. London opened and the market again tested the downside broadly ignoring a good set of PMI’s and testing the near support level around the 1.3700/10 area, we attempted the level again during the NYK session having peaked just below the 1.3750 areas as US figures came in slightly worse than expected. The poor figures had less impact than you would normally expect and the market moved into the later part of the session once London had retired into the same opening range holding into a 1.3735 level close.
• GBP: Cable spent the day out performing its counterparts with a steady session through the Asian session moving around the 1.6665 opening levels with nothing more than a 12 pip range. Early London was a gradual buyer taking the market to above the 1.6690 level and into the light offers in front of the 1.6700 area. A better than expected PMI services number helped the market and as we moved into the NYK session the market caught new buyers in Cable and sellers of the EURGBP from the 0.8240 areas down to 0.8205 levels deep into the session. Cable moved steadily and although there were light stops above the 1.6700 level betters stops were triggered through 1.6720 before peaking above the 1.6740 areas, the market then stalled and slowly slipped back to the 1.6720 into the close.
• JPY: The USDJPY held a steady range through Asia and only once the London market opened did we see a significant rise compared to the range. Opening around the 102.25 areas the market traded only slightly higher and spent most of the time basing from the 102.15 level with 102.12 low. A surge in cross buying before the Tokyo close in early London the market legged to the 102.35 level holding for several hours in the area before moving slightly higher to touch the 102.55 levels in early NYK. Buying was from real money and leveraged types moving in however, once the buying was complete the market started to slip back towards the opening levels. We finished the session basing off the opening levels and struggled in a 10 pip range into the close.
• AUD: The Oz opened around the 0.8950 levels and with the market being really empty between 0.8900-0.8990 the following movement shouldn’t really have been that much of a surprise. Moving into the AUD GDP number it leapt higher to around the 0.8997 level on the better than expected figure only to fall back and trigger weak stops from the news traders leaving the market dropping to below the open to the 0.8938 level before stabilizing and gradually moving through the day higher in a reasonable tight channel. Again the market stalled at the first resistance levels around the 0.8990 levels with range players jumping on a chance to sell.

Yesterday’s premiership results

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%

EUR        Italian PMI Services Feb A 52.9 | C 50.6 | P 49.4

EUR        Eurozone PMI Services Feb (F) A 52.6 | C 51.7 | P 51.7

GBP       PMI Services Feb A 58.2 | C 58 | P 58.3

EUR        Eurozone Retail Sales M/M Jan A 1.60% | C 0.90% | P -1.60%

EUR        Eurozone GDP Q/Q Q4 (P) A 0.30% | C 0.30% | P 0.30%

USD       ADP Employment Change Feb A 139K | C 150K | P 175K | R 127K

CAD       BoC Rate Decision A 1.00% | C 1.00% | P 1.00%

USD       ISM Non-Manufacturing Composite Feb A 51.6 | C 53.7 | P 54

USD       Crude Oil Inventories A 1.4M | C 0.9M | P 0.1M

Good Luck

Andy