Andy Harrison
Good morning,
LMAX Close
USDJPY 118.375 | EURUSD 1.18902 | EURJPY 140.761 | AUDUSD 0.80845 | NZDUSD 0.77929 | USDCAD 1.18354 | EURCHF 1.20102 | USDCHF 1.01004 | GBPUSD 1.5151 | EURGBP 0.78482 |
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Interbank Ranges as of 6am London time
Highs   Lows
USD/JPYÂ Â Â Â Â Â Â Â Â Â Â Â Â Â 119.17 | 118.45
EUR/USDÂ Â Â Â Â Â Â Â Â Â Â Â 1.1892 | 1.1842
EUR/JPYÂ Â Â Â Â Â Â Â Â Â Â Â Â Â 141.50 | 140.58
AUD/USDÂ Â Â Â Â Â Â Â Â Â Â 0.8086 | 0.8055
NZD/USDÂ Â Â Â Â Â Â Â Â Â Â Â 0.7766 | 0.7737
USD/CADÂ Â Â Â Â Â Â Â Â Â Â Â 1.1846 | 1.1823
EUR/CHFÂ Â Â Â Â Â Â Â Â Â Â Â Â 1.2015 | 1.2009
USD/CHFÂ Â Â Â Â Â Â Â Â Â Â Â 1.0138 | 1.0099
GBP/USDÂ Â Â Â Â Â Â Â Â Â Â Â 1.5154 | 1.5118
EUR/GBPÂ Â Â Â Â Â Â Â Â Â Â Â 0.7848 | 0.7832
For today
- EUR: For the second day this week the market quickly dropped from the opening gapping quickly to below the 1.1860 level before struggling back slowly to the 1.1870-80 levels where the market struggled to make any headway for the rest of the session. Again the largest contributing factor was the lack of market participants as banks roll there systems forward leaving only a meagre handful quoting. With the 2010 lows broken for the second time a push to the 1.1820 area now seems likely with better bids likely to be there and then continuing below 1.1800 before stops are likely to appear however, the buyers are becoming less prominent in the rush for the imminent QE, really even Der Spiegel is promoting the concept of operation Helicopter, which in short means the ECB printing money, loading it in a helicopter and then dropping it over built up areas, the recipients then rushing to the shops with what they have collected and spending it. Topside offers are light going into the 1.1880 area and continuing through the 1.1900 areas, a push through the 1.1920 levels which usually dominate the Euro are meaningless today and the 1.1980 levels has now become the strong offering levels with possibly 1.2030 area holding some stops.
- GBP: The opening was less volatile than the Euro however the spike lower took the market briefly below the 1.5130 level before holding that level and basing off it for the session in limited action, the market did push to just below the 1.5150 level and for the moment that seems to be the weak resistance for the topside with a push through 1.5160 likely to see weak stops but possibly light in nature, a push higher and through the 1.5200 level provides the best that could happen on the topside with stops likely to be accumulated through the level to push the market into the 1.5240-50 areas however, with little data available for the GBP it is more dependent on the Euro numbers. Downside 1.5100 level now seems vulnerable for a test to the area and a possible break however, the next big figure 1.5000-1.5100 may be a stronger level since breaking down through the 1.6000 level with 1.50 being a sentimental value with possible strong option plays on that handle.
- JPY: USDJPY steadily recovered some of the previous days losses pushing from the opening 118.40 areas and gradually back through the 119.00 over the course to the day, weak stops were taken out however, the market was unable to push through the 119.20 areas and the market to the topside seems fairly contained at least until the FOMC minutes are released. The market continued the session trading around the 119.00 area as the drift until the FOMC continues. Topside offers continue into the 119.20 level before the market opens a little however the market would need to push through the 119.50 areas to reach light stops and then the 119.80 level stands in the way of further movement. A strong push through the 120.20 will likely see strong stops triggered however, the offers from there are likely to temper any move higher for the moment. Downside 118.20-00 hold the best support however, those bids while weaker continue through to the 117.80 levels before likely stops appear and once broken has a clear run to the 116.00 areas before any substantial bids really appear again.
- AUD: Limited action in the Oz as the AUDJPY ranges around the 96.00 areas and the Oz runs along with little direct data to affect it. Trading from the 0.8090 level and dropping quickly with the Euro to the 0.8070 areas the market has continued to trade in a tight 0.8060-80 range for the session. Downside bids through the 0.8050 levels still to be fairly firm and only a push through the 80 cent level is likely to upset that areas with the market opening once 0.7980 is truly broken and a deeper move could open. Topside sees 0.8150 as the level that opens up the topside with offers once broken there holding around the 82 cent level and each sentimental level.
- Crude Oil: It’s been many years since I traded in the energy products and I’ve forgotten most of what I learned over that time. The crux of the movements have been down to oversupply in an attempt to force the US market away from the development of shale oil/gas recovery by creating a market that is cheaper than that recovery however, the situation is now that the US companies have borrowed significant amounts for this research and development and this late in the game would leave them with nothing, as it is some of the weaker independent companies are in trouble as they struggle to service the debt they have accrued so far so the choice is suffer the debts and do nothing or continue with the development in the hope of producing more oil to service the debt and in doing so weaken the price of oil further seems to be an all or nothing situation.
Overnight News
EUR:
Greece and Germany continue with the two at odds.
EU parliament head berates “irresponsible†Merkel over Greek plight
RUB:
Russia faces “perfect storm†as reserves vanish and derivatives flash default Daily Telegraph
Today’s data
Actual = A | Consensus = C | Previous = P | Revised = R All timings GMT
GBPÂ Â Â Â Â Â BRC Shop Price Index Y/Y Dec A -1.70% | C -1.80% | P -1.90%
08:00Â Â Â Â CHFÂ Â Â Â Â Â Â Foreign Currency Reserves Dec C 472.0B | P 462.4B
08:55Â Â Â Â EURÂ Â Â Â Â Â Â German Unemployment Change Dec C -6K | P -14K
08:55Â Â Â Â EURÂ Â Â Â Â Â Â German Unemployment Rate Dec C 6.60% | P 6.60%
09:10Â Â Â Â EURÂ Â Â Â Â Â Â Eurozone PMI Retail Dec P 48.9
10:00Â Â Â Â EURÂ Â Â Â Â Â Â Eurozone CPI Estimate Y/Y Dec C -0.10% | P 0.30%
10:00Â Â Â Â EURÂ Â Â Â Â Â Â Eurozone CPI – Core Y/Y Dec (A) C 0.70% | P 0.70%
10:00Â Â Â Â EURÂ Â Â Â Â Â Â Eurozone Unemployment Rate Nov C 11.50% | P 11.50%
13:15Â Â Â Â USDÂ Â Â Â Â Â ADP Employment Change Dec C 226K | P 208K
13:30Â Â Â Â CADÂ Â Â Â Â Â International Merchandise Trade (CAD) Nov C -0.20B | P 0.10B
13:30Â Â Â Â USDÂ Â Â Â Â Â Trade Balance Nov C -$42.0B | P -$43.4B
15:00Â Â Â Â CADÂ Â Â Â Â Â Ivey PMI Dec C 52 | P 56.9
15:30Â Â Â Â USDÂ Â Â Â Â Â Crude Oil Inventories P -1.8M
19:00Â Â Â USDÂ Â Â Â Â Â FOMC Minutes
Harry Hindsight             Â
- EUR: PMI numbers put paid to the rally we’d seen in the Asian session. Having opened around the 1.1930 level the market had gradually improved as the USD suffered against most currencies. As the market moved on into the grey hours the market had managed to push to just below the 1.1970 level however, early London and Europeans were quick to turn the market lower again and the market was already dropping towards the opening levels when the official opening sent it too just above the 1.1920. The release of the PMI numbers again dropped the market lower triggering some weak stops along the way and continuing for several hours as the drag of Cable continued the effect. The market found a base eventually at the 1.1890 level and although the US numbers came out on the weak side and the market started to reverse its losses, while the range was limited the volumes seen in the market were not too bad and the market eventually pushed to the end of London pushing to just below the 1.1960 level. The disappearance of the London market left the market vulnerable to another fall and the market didn’t have to wait long before the market was again testing below the 1.1900 level, closing just below the level and just off the day’s lows.
- GBP: Cable had been fairly stable through the Asian session moving from the 1.5250 levels in early trading to test the 1.5270 levels on a couple of occasions through into the grey hours. London became early sellers as the Euro slipped back Cable followed to test the 1.5220 area before beginning a limited attempt to recover. The release of Services PMI well below expectations saw the Cable drop quickly having avoided much of the Euro action. Dropping from the 1.5230-40 areas to 1.5190 before finding some support which lasted for several hours before dipping to the 1.5160 levels into the NYK session. The market ranged for a good deal of time around the 1.5180 before again making a quick stab lower to the 1.5150 level.
- JPY: The USDJPY continued the previous days drop if a little less spectacular, opening around the 119.60 level and dropping in pre-Tokyo to the 119.30’s before seen successive selling taking it gently lower over the session and pushing through the 119.00 as the market moved into the grey hours. Cross selling entered the market in the grey hours with the EURJPY pressing lower, early London started to buy from the 118.75 levels once the market had failed to reach the stops and pushed back to the 119.20 areas and into the official opening, the downside was tested again over the course of the European and UK numbers however, it weathered that particular storm to again push higher, this was the final time to the topside and the market moved into the NYK session again pushing and testing the lows before breaking through to trigger stops through the 118.50 areas and a test too the 118.05 level and the support around those levels. The market then managed to reverse some of the losses before settling back to the 118.40 areas.
- AUD: As the USDJPY fell back the Oz caught a rally initiated by a better than expected trade balance and revision, pushing from the opening 0.8080 areas to above the 81 cent level and then continuing as the AUDJPY carry traded around the 97.00 level for the session. The market continued to push to above the 0.8150 level before trading around the 0.8130 level deep into the London session. AUDJPY broke down through the 9650 level and triggered stops in a quick fall to the 96.00 levels and through before finding further support around the 95.90 areas which stabilized the market, Oz dropped back through to the opening levels and finished more or less unchanged.
Yesterday’s premiership results
Actual = A | Consensus = C | Previous = P | Revised = R All timings GMT
JPYÂ Â Â Â Â Â Â Â Monetary Base Y/Y Dec A 38.20% | C 34.30% | P 36.70%
AUDÂ Â Â Â Â Â Trade Balance (AUD) Nov A -0.93B | C -1.59B | P -1.32B | R -0.88B
CNYÂ Â Â Â Â Â Â HSBC PMI Services Dec A 53.4 | P 53
EURÂ Â Â Â Â Â Â Italian PMI Services Dec A 49.4 | C 51.7 | P 51.8
EURÂ Â Â Â Â Â Â Eurozone PMI Services Dec (F) A 51.6 | C 51.9 | P 51.9
GBPÂ Â Â Â Â Â PMI Services Dec A 55.8 | C 58.5 | P 58.6
CADÂ Â Â Â Â Â Industrial Product Price M/M Nov A -0.40% | C -0.70% | P -0.50%
CADÂ Â Â Â Â Â Raw Materials Price Index M/M Nov A -5.80% | C -4.70% | P -4.30%
USDÂ Â Â Â Â Â Factory Orders Nov A -0.70% | C -0.40% | P -0.70%
USDÂ Â Â Â Â Â USM Non-Manufacturing Composite Dec A 56.2 | C 58 | P 59.3
Good Luck,
Andy