Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 118.352 | EURUSD 1.1834 | EURJPY 140.06 | AUDUSD 0.81563 | NZDUSD 0.7763 | USDCAD 1.19736 | EURCHF 1.20097 | USDCHF 1.01486 | GBPUSD 1.5171 | EURGBP 0.78002 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               118.79 | 117.74

EUR/USD             1.18595 | 1.18205

EUR/JPY               140.44 | 139.45

AUD/USD            0.8198 | 0.8127

NZD/USD             0.7804 | 0.7756

USD/CAD             1.1978 | 1.1943

EUR/CHF              1.2010 | 1.20095

USD/CHF             1.0160 | 1.0127

GBP/USD             1.5192 | 1.5154

EUR/GBP             0.78065 | 0.7799
For today

  • EUR: Early gains were whipped out over the course of the session as EURJPY selling allowed the Euro to move steadily higher as the JPY took the brunt of the move. Moving from 1.1830 opening areas the market eventually moved off the low 1.1825 areas to top above the 1.1860 before the USD started to assert itself in the market and the Euro slipped back to the opening levels. The market was limited in movement to some extent however, volumes were reasonable over the session today. Topside offers into the 1.1870 level and into the 1.1880 area a push through will likely see weak stops building however, only a strong push through the 1.1900 level will open up the topside and then likely to attract sellers as the word imminent continues to be used. Downside bids into the 1.1800 level are thin but building into the 1.1790 areas increasing as the market moves towards the 1.1760 area, a move through the 1.1750 area will likely set up a test of the 1.1700 levels and some reasonable stops likely with bids appearing from possible option barriers.
  • GBP: Cable had a similar move with the market moving down from the opening 1.5175 into the 1.5160’s before catching a bid as the USDJPY tested lower pushing to above the 1.5190 and into the waiting offers before drifting off in a steady move lower pushing through the lows and holding just above the 1.5150 levels into the grey hours. Topside offers into the 1.5200 level with a push through the level likely to see some stops through to the 1.5220 and then weakness until 1.5260’s a push here will see 1.5300 levels a possibility but only if there is a move higher on inflation, but with energy prices continuing to dip that is unlikely. Downside sees only light bids into the 1.5100 levels and beyond sees limited buying into the lows around the 1.5040 area however, these may be tested as consensus seem to be a little optimistic at best, a push through the low will likely see some bids into the 1.5000 however, it will depend on impetus.
  • JPY: USDJPY opened quietly moving from the 118.30 areas to push through 118.40 into Tokyo, selling quickly appeared in the market with a better current account number strengthening the JPY and pushing the market down to the 117.80 level where it held for several hours. The market then recovered late in the session with improving somewhat and real money and equity types buying strongly to take the market back through the highs and continuing towards the grey hours to above the 118.60 levels. Topside offers into the 118.80 levels with those light offers likely going back to 119.20 area where the market is probably still heavy with offers, a push through the 119.30 levels will likely see stops triggered and another run to the 119.80-120.00 areas. Downside bids into the 117.80 levels and weak stops through the level opening up a test for a deeper move into the 116.50 areas.
  • AUD: Early selling in the Oz from the opening 0.8160 to the 0.8130 levels was quickly reversed as the Trade balance numbers in China showed a gain against expectations. The Oz managed a move to the 82 cent levels before the market saw USD’s rising as the USDJPY picked up strength and the market therefore remains pretty much unchanged on the day. Topside offers around the 82 cent level quickly give way to a patchy area to the 0.8250 areas where stronger offers know show, through 0.8260 the market will see stops triggered with an attempt likely to 83 cent however, this would for the moment be contrary to the markets beliefs on the economic potential. Downside support is around the 0.8130 levels and into the 81 cent area a break through that level opens up a move for a third attempt at the 0.8040 levels and the 80 cent level ultimately.

 

Overnight News

JPY:

Japan Nov current account surplus 433.0 bln yen

Amari: Govt. Forecast Shows May Be Hard to Reach 2% Inflation FY15

Japan’s Five-Year Govt. Bond Yield Drops to Zero for First Time

Japan service sector sentiment improves in December

Japanese Company Bankruptcies in 2014 Fewest Since Bubble Era

CNY:

China’s Exports Rise More Than Economists Forecast in December

China Trade Growth Shifting to Medium-High Speed, Customs Says

China’s Trade Growth in 2015 to Be Higher Than 2014: Customs

China May Let Foreign Banks Open FTZ Account: Apple Daily

China to Improve Audit of Key Commercial Bank Loans in 2015

CHF:

SNB’s Danthine Says Franc Cap to Stay Key Policy Tool: RTS

AUD:

Australia ANZ Weekly Consumer Sentiment Rises 0.3% to 112

NZD:

N.Z. December Property Asking Prices Fall 0.9% M/M: Trade Me

GBP:

U.K. LFL Dec. Retail Sales Fall 0.4 Y/y, BRC Says

 

Today’s data

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

CNY        Trade Balance Dec A $49.60B | C $48.00B | P $54.47B

JPY         Current Account (JPY) Nov A 0.91T | C 0.69T | P 0.69T

GBP       BRC Sales Like-For-Like Y/Y Dec A -0.40% | P 0.90%

JPY         Bankruptcies Y/Y Dec A -8.53% | P -14.61%

JPY         Eco Watchers Survey: Current Dec A 45.2 | C 44.3 | P 41.5

09:30     GBP       CPI M/M Dec C 0.10% | P -0.30%

09:30     GBP       CPI Y/Y Dec C 0.70% | P 1.00%

09:30     GBP       Core CPI Y/Y Dec P 1.20%

09:30     GBP       RPI M/M Dec C 0.20% | P -0.20%

09:30     GBP       RPI Y/Y Dec C 1.60% | P 2.00%

09:30     GBP       PPI Input M/M Dec P -1.00%

09:30     GBP       PPI Input Y/Y Dec C -12.20% | P -8.80%

09:30     GBP       PPI Output M/M Dec C -0.40% | P 0.20%

09:30     GBP       PPI Output Y/Y Dec C -0.60% | P -0.10%

09:30     GBP       PPI Output Core M/M Dec P 0.50%

09:30     GBP       PPI Output Core Y/Y Dec C 1.10% | P 1.40%

09:30     GBP       DCLG UK House Prices Y/Y Nov P 10.40%

19:00    USD       Monthly Budget Statement Dec C 24.9B | P -56.8B

 

 

Harry Hindsight              

  • EUR: Opening buyers took the market from the 1.1845 levels to push against the 1.1870 levels as the USD weakened across the board led by the USDJPY. Through the Asian session the market traded in a reasonably tight band between the 1.1850-70 levels until the London open where rumours and chatter through the early part of London, the market turned quickly lower pushing down in the first hours to the 1.1810 areas and then pushing back below the 1.1800 levels touching the 1.1790 levels and finding sufficient support holding the market into the NYK session and a gradual move back through to the 1.1840 areas.
  • GBP: The early buying in Cable saw the market drift back from the 1.5190 levels for the high of the day. By the time the market opened in London the market had pushed to the opening levels just above the 1.5160 area. The early London market started to sell into the pre London session and the move increased on the break through the 1.5150 area triggering weak stops on a test of the 1.5100 level before holding and a slow steady rise back to the 1.5150 areas, NYK took the market through the level and the market became a little choppy as EURGBP dropped back from its highs around the 0.7830 levels and the bids into the 0.7800 levels and into the 0.7790 areas where the bids eventually took over. The market in both Cable and the cross eventually settled into a tighter range into the close.
  • JPY: Strength in the JPY eventually helped to give the pretence of a broad USD weakness however, the market was unable to push cleanly through the 118.20 levels and held into the London session before a short squeeze in the market took the market higher from the London opening, the market pushed through to the 119.20 level and as you’d expect was unable to break back through to make significant gains, the market held for around 3 hours and into the NYK session before again dropping back to the holding area and the market then continued to hold around the 118.20.
  • AUD: The exception to the rule, with early gains through Asia quickly turned as the market moved into the London session, pushing to above the 0.8250 levels in Asia the market then fell back as worries about the economy surfaced and were picked up only once the Japanese AUDJPY buyers disappeared. The drop escalated into the London session crashing through the 82 cent levels and triggering weak stops on the move down through 0.8160 and to lows just above the 0.8130 level and a gradual move a little higher to finish the day around the 0.8150 areas. Talk of weakening energy prices continue to weigh on the Commodity currencies in general, and with banks revising their levels for the first quarter with some calling 77 cent a possibility.

 

Yesterday’s premiership results

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

AUD     Home Loans Nov A -0.70% | C 1.80% | P 0.30% | R 0.20%

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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