Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 119.66 | EURUSD 1.17939 | EURJPY 141.13 | AUDUSD 0.81228 | NZDUSD 0.78246 | USDCAD 1.18302 | EURCHF 1.20101 | USDCHF 1.01826 | GBPUSD 1.50902 | EURGBP 0.78155 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.88 | 119.165

EUR/USD             1.1815 | 1.1786

EUR/JPY               141.365 | 140.77

AUD/USD            0.8148 | 0.8105

NZD/USD             0.7846 | 0.7806

USD/CAD             1.1841 | 1.1812

EUR/CHF              1.2013 | 1.20095

USD/CHF             1.0189 | 1.0166

GBP/USD             1.5104 | 1.5078

EUR/GBP             0.7825 | 0.78145
For today

  • EUR: The Euro eased back through the 1.1800 levels into the Tokyo session having initially opened just above the 1.1790 area and then spent the remainder of the session holding the 1.1800-10, which is no real surprise with NFP later today and a plethora of numbers to contend with over the session in the Euro area. Topside the market needs to push again past the 1.1820 levels and with a mixed review of the NFP a break above that level will open up a test to the 1.1850-60 areas where the market looks to be a bit mixed before the stronger offers from 1.1880 and into the 1.1900 levels and possible stronger stops through the level with very little likely on the push through to 1.1960. Downside sees light bids around the 1.1780 levels with better bids towards the lows of yesterday around 1.1750-60 however, a push through here will see the 1.1700 levels vulnerable for a strong test and further stops below the level.
  • GBP: The EURGBP cross held steady through the session and this translated into a steady rise for Cable to test the 1.5100 on several occasions, unfortunately there is no impetus to push through the level firmly and the market drifts along holding a very narrow range. Topside sees light congestion from the 1.5100 level and is likely to be slow going in early trading however, while the Trade balance is of only minor significance the IP numbers will be watched intently for improvements on the previous numbers and a failure to return to consensus may cause the GBP to break away from its attachment to the Euro and the EURGBP to again attempt to move higher, 1.5150 would seem to be the key level for the day and a push through the level will see the market pushing to close the gap on the charts from the break down through the 1.5200 level with the possibility of weak stops above the 1.5220 areas. Downside has not really been tested and yesterday’s 1.5040 areas are likely to see the first appearance of support going to the 1.5000 levels even through those levels the market is likely to be mixed at best and the market driven by the NFP on a good number.
  • JPY: USDJPY opened around the 119.70 levels and early buying again took the market towards the 120.00 however, while the market held above 119.80 into the Tokyo session, weekend approaching saw the market effected by the Nikkei and position closing, the previous opening on Monday still smarting in some sectors, pushing down with a little help from slightly weaker PPI numbers in CNY the market dipped to the 119.50 levels and once the market broke through that level quickly moved to the 119.20 areas and mild support. Downside 119.20 bids are likely to be less difficult to push through this time, and 118.80 is likely to provide the first area of real support and a push through this level will likely see some remaining longs being stopped on the move and the market opens up for a move to test the 118.20/00 areas with a mixture behind giving way to stronger stops likely in the 117.80 areas. Topside offers from the 119.80 level continue to dominate the market and as in today the market was never able to push to far through the level and the 120.00 remains intact however, one suspects that the shorts are spread around the market and not contained in the usual manner meaning that a push through the 120.00 level will see weak stops appearing quickly and not behind the 120.20-30 areas at those levels will be further stops however, of less significance than you’d expect.
  • AUD: The Oz today as with yesterday has been quiet, apart from the initial move higher on the CNY numbers to push the pair to trade around the 0.8140 areas and unable to push through the 0.8150 areas for the moment. Topside sees congestion through to the 82 cent levels and possibly slow going, a break through the 0.8220-30 area will open up the market only marginally and a push through the 0.8250 areas will see likely stops and the market able to test into the 83 cent level. Downside has only light bids back through the 0.8100 levels and then bids begin to bid as the market approaches the double bottom area created this week around the 0.8040 and better bids from there to the large sentimental level of 80 cents, stops likely on a break through 0.7980 opening the market up for a deeper move.

 

Overnight News

CNY:

China Dec CPI ticked up to 1.5% on year while PPI hit the lowest since Nov 2012

BoA warns of lethal damage to China’s financial system as deflation deepens

AUD:

Retail spending for Nov increased by 0.1%

USD:

Top Fed official Kocherlakota urges no US rate increases this year

NZD:

NZ heading for deflation, leaving CB hamstrung, BNZ says NZH

 

Today’s data

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

NZD       Building Permits M/M Nov A 10.00% | P 8.80% | R 9.80%

AUD       Retail Sales M/M Nov A 0.10% | C 0.20% | P 0.40%

CNY        CPI Y/Y Dec A 1.50% | C 1.50% | P 1.40%

CNY        PPI Y/Y Dec A -3.30% | C -3.20% | P -2.70%

JPY         Leading Index Nov (P) A 103.8 | C 104.9 | P 104.5

6:45        CHF        Unemployment Rate Dec C 3.10% | P 3.10%

7:00        EUR        German Industrial Production M/M Nov C 0.30% | P 0.20%

7:00        EUR        German Trade Balance (EUR) Nov C 20.5B | P 21.9B

7:45        EUR        French Industrial Production M/M Nov C 0.30% | P -0.80%

7:45        EUR        French Trade Balance (EUR) Nov C -4500M | P -4608M

8:15        CHF        CPI M/M Dec C -0.30% | P 0.00%

8:15        CHF        CPI Y/Y Dec C -0.20% | P -0.10%

9:30        GBP       Visible Trade Balance (GBP) Nov C -9.500B | P -9.620B

9:30        GBP       Industrial Production M/M Nov C 0.20% | P -0.10%

9:30        GBP       Industrial Production Y/Y Nov C 1.60% | P 1.10%

9:30        GBP       Manufacturing Production M/M Nov C 0.30% | P -0.70%

9:30        GBP       Manufacturing Production Y/Y Nov C 2.30% | P 1.70%

13:15     CAD       Housing Starts Dec C 190.0K | P 195.6K

13:30     CAD       Building Permits M/M Nov C 0.80% | P 0.70%

13:30    CAD       Net Change in Employment Dec C 10.0K | P -10.7K

13:30     CAD       Unemployment Rate Dec C 6.60% | P 6.60%

13:30     USD       Change in Non-farm Payrolls Dec C 243K | P 321K

13:30     USD       Unemployment Rate Dec C 5.70% | P 5.80%

15:00     USD       Wholesale Inventories Nov C 0.30% | P 0.40%

15:00    GBP       NIESR Gross Domestic Product Estimate Dec P 0.70%

 

 

Harry Hindsight              

  • EUR: The market opened around the 1.1835/40 areas and today held no surprises moving into the Tokyo opening around that 1.1835 level before quick EURJPY buying sent the market to the 1.1845 areas and the high was set. From that point on the market drifted lower over the course of the session with USDJPY rising and setting a general bid tone to the USD against most currencies, with no change to the stance from the FOMC minutes the market eased back to the 1.1820 level into the grey hours, a slight dip as the early London dealers sat down taking the market to the 1.1805 areas as the German factory orders number were released however, the bids held and the official London open saw the market back around the 1.1820 level and now a steady push lower and the break through 1.1800 triggering weak stops, even so the low was just above the 1.1790 area but now the damage is done and the markets bounce was very limited and the selling continued into the Eurozone numbers and the move through the levels took the market into the 1.1770 levels before holding into the NYK session, a minor dip to set a new low not seen pre crisis was then set around the 1.1755 areas. Job cuts in the states rose again and this stopped the Euro from even further lows and turned the market around however, it was nothing exciting and the rally though steady could not get through the 1.1820 on the topside, once the NYK opt cut was out of the way the market again dropped back but it was limited and ended the day trading around the 1.1790 level.
  • GBP: The market drifted from the opening in Asia peaking on the Tokyo opening just below 1.5120 the market then fell back with little interest in the pair per sae and the strength of the USDJPY translating into a broad USD move if limited. The move into the grey hours saw early buying in the EURGBP from the 0.7830 areas driving the market into the London opening to above the 0.7855 levels, this was possibly a better trade than going long the straight EURUSD into the numbers however, sellers quickly appeared in the market to put the market back to its previous area as the numbers appeared in the market and the cross dropped quickly to the 0.7810 area where it continued to trade for the rest of the day, Cable having been dragged and driven lower by the Euro and the cross play found support appearing around the 1.5040 levels into the London session and gradually through the day recovered to test the highs for a longer period into the NYK session before seeing the market drift back to the 1.5090 areas for the close.
  • JPY: The USDJPY opened around the 119.20 areas and broke a little higher during pre-Tokyo to push to the 119.40 levels before dipping back into the Tokyo opening and setting the low for the day around 119.18 areas however, from the lows the market moved steading over the first two hours pushing to the 119.80 offers and ranged for several hours around the areas with strong buying into the grey hours attempting to reach the 120.00 areas and failing in the mid 119.90’s and then trading around the 119.80 area through the early London session and into the NYK numbers. As with the other currencies the US numbers set the USD back and the USDJPY slipped to the 119.40 level before a steady rise over the balance of the session to close around the 119.70 areas in quiet trading.
  • AUD: The Oz spent the day quietly rising back to above the 81 cent level, quickly rising on the building approvals number for the breakthrough of the level from the opening 0.8080 opening. Having made the initial moves the carry trade dominated the market with the market making its way back through the 97.00 levels and the Oz remaining in a reasonably tight range into the London session basing on the 81 cent. NYK saw the Oz moving slightly higher and although unable to break through the 0.8130 level cleanly based from the 0.8110 in slow trading into the close.

 

Yesterday’s premiership results

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

AUD       Building Approvals M/M Nov A 7.50% | C -3.00% | P 11.40%

EUR        German Factory Orders M/M Nov A -2.40% | C -0.80% | P 2.50% | R 2.90%

EUR        Eurozone PPI M/M Nov A -0.30% | C -0.10% | P -0.40% | R -0.30%

EUR        Eurozone PPI Y/Y Nov A -1.60% | C -1.40% | P -1.30%

EUR        Eurozone Retail Sales M/M Nov A 0.60% | C 0.20% | P 0.40% | R 0.60%

EUR        Eurozone Business Climate Indicator Dec A 0.2 | C 0.16 | R 0.18

EUR        Eurozone Services Confidence Dec A 4 | C 4.6 | P 4.4

EUR        Eurozone Industrial Confidence Dec A -4 | C -4 | P -4.3

EUR        Eurozone Economic Confidence Dec A 100.8 | C 101.2 | P 100.8

EUR        Eurozone Consumer Confidence Dec (F) A -12 | C -10.9 | P -10.9

GBP       BoE Interest Rate Decision A 0.50% | C 0.50% | P 0.50%

GBP       BoE Asset Purchase Target A 375B | C 375B | P 375B

USD       Challenger Job Cuts Y/Y Dec A 6.60% | P -20.70%

CAD       New Housing Price Index M/M Nov A 0.10% | C 0.10% | P 0.10%

USD       Initial Jobless Claims A 294K | C 290K | P 298K

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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