Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 117.336 | EURUSD 1.17885 | EURJPY 138.319 | AUDUSD 0.81486 | NZDUSD 0.77351 | USDCAD 1.19505 | EURCHF 1.20095 | USDCHF 1.01879 | GBPUSD 1.52347 | EURGBP 0.77379 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               117.85 | 117.14

EUR/USD             1.17925 | 1.1765

EUR/JPY               138.785 | 138.15

AUD/USD            0.8222 | 0.8134

NZD/USD             0.7746 | 0.7707

USD/CAD             1.1975 | 1.1940

EUR/CHF              1.20105 | 1.20095

USD/CHF             1.0208 | 1.0184

GBP/USD             1.5245 | 1.5227

EUR/GBP             0.7740 | 0.7726
For today

  • EUR: The market opened around the 1.1790 areas before starting a steady move lower pushing back through the 1.1780 levels in the early part of Tokyo before again settling lower as the day progressed and pushing back into the 1.1760’s as the USD regained some confidence in the session and positions were reset from yesterday’s action. Topside sees light offers now through to the 1.1840 areas and then stronger offers appear moving through the 1.1860-80 areas. Inflationary releases for the US are likely to dominate the market later but until then we wait for the next commentary from the ECB/Draghi on the subject of QE and the form it will take. Downside has new lows to contend with and the market is light through to the 1.1730 areas and strong bids appear from there into 1.1700 areas however, that is not withstanding any commentaries on imminent action now they have clearance to enact a plan devised nearly 3 years ago. A push through the 1.1680 area will see likely stops being triggered and a test to the 1.1620 area opens up.
  • GBP: Cable has reversed its fortunes despite the 0.5% inflation number this week, moving in a tight range over the course of the Asian session trading around the 1.5240 for much of the session until dragged lower with Euro selling to trade to just below the 1.5230. Offers now to the topside start to appear around the 1.5250 areas with light stops possibly appearing behind that level before further offerings increase from the 1.5270 level into 1.5300. Downside has light bids into the 1.5200 levels with a stronger level more likely around the 1.5150 area with likely weak stops behind that level.
  • JPY: Apart from light profit taking early in the session through the Sydney session the market has seen early buying into the Tokyo session continuing to take the market to the 117.80 and light offers that for the moment are holding the market with weaker numbers in Japan the market has taken the opportunity to reset positions particularly in the AUDJPY carry, and other JPY crosses leading to the majors drifting off from the opening. USDJPY topside sees offers through the 117.80 level and into the 118.00 with the likelihood of weak stops just beyond that level with a light mix to the 118.20. Downside has some light bids from the 117.00 and into 116.80 but they are light and they only improve in size as the market moves below the 116.50 with strong bids into the 116.00 level.
  • AUD: A big employment number sent the Oz quickly higher after a brief amount of selling before the numbers, moving off the lows just below 0.8140 the market quickly moved to the 82 cent level before spending a short time pushing at the level to eventually rally to the 0.8220 area. The market pulled back however, early Europeans and Middle Eastern traders moved into the market and have kept it above the 82 cent level into the grey hours. Topside offers into the 0.8260-80 area with similar likely around the 83 cent level, a push through 0.8320 opens up a larger move higher in the face of fundamentals as the carry trade attracts early year attention. Downside has some reasonable support around the 0.8140 levels however, we have been there before and a concerted effort will again open up a test of the 0.8040 levels from earlier in the month and a deeper move lower.

 

Overnight News

JPY:

Kuroda Says BOJ to Continue Easing Until 2% Inflation Stable

Japan Nov. Core Machine Orders Rise 1.3% M/M Vs Est. +4.4%

BOJ Keeps Assessment of 8 of 9 Domestic Regions Unchanged

CNY:

China’s Credit Growth Surges as Interest-Rate Cut Spurs Lending

China M2 Growth In ‘Normal Range,’ PBOC Says: Securities News

AUD:

Australian Dec Employment Rises 37,400 M/M; Est. 5,000 Gain

GBP:

London Housing Weakens as Election adds to Buyer Uncertainty

EUR:

Greece May Get Debt Extension, Must Avoid ‘Turmoil,’ Rehn Says

Schaeuble Says He Sees No Sign of Deflation in Germany: Welt

NZD:

N.Z. House-Price Inflation Led by Auckland’s 13.5% Gain

RUB:

Russian Economy to Contract 4%-5% W/ Oil at $45: Ulyukayev

 

Today’s data

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

23:50     JPY         Domestic CGPI Y/Y Dec A 1.90% | C 2.20% | P 2.70% | R 2.60%

23:50     JPY         Machine Orders M/M Nov A 1.30% | C 4.80% | P -6.40%

00:01     GBP       RICS House Price Balance Dec A 11% | C 11% | P 13%

00:30     AUD       Employment Change Dec A 37.4K | C 5.3K | P 42.7K | R 45.0K

00:30     AUD       Unemployment Rate Dec A 6.10% | C 6.30% | P 6.30% | R 6.20%

10:00     EUR        Eurozone Trade Balance (EUR) Nov C 21.3B | P 19.4B

13:30     USD       Empire State Manufacturing Jan C 5 | P -3.58

13:30     USD       PPI M/M Dec C -0.40% | P -0.20%

13:30     USD       PPI Y/Y Dec C 1.20% | P 1.40%

13:30     USD       PPI Core M/M Dec C 0.10% | P 0.00%

13:30     USD       PPI Core Y/Y Dec C 2.00% | P 1.80%

13:30     USD       Initial Jobless Claims (JAN 10) C 299K | P 294K

15:00    USD       Philly Fed Survey Jan C 20 | P 24.5

 

Harry Hindsight              

  • EUR: The market opened around the 1.1775 areas and traded quietly through the Asian session touching below the 1.1770 levels briefly before the market moved steadily higher as the USD gave ground led by the USDJPY. By the time the market reached the London session it had managed a steady push to the 1.1810 levels, the move into London saw strong EURJPY selling filtering through and the last obstacle to QE was removed giving speculation that imminent may actually mean imminent this time. The market dropped to below the 1.1730 areas as new 9 year lows were set, slightly better Eurozone numbers set the market to a slight recovery to the 1.1760 levels before moving into the NYK session and a weak set of numbers and the Euro started a quick recovery trading to the 1.1780 levels and triggering weak stops and a short squeeze ensued with the market rallying quickly to above the 1.1845 in a complete reversal of the days fortunes. The market drifted off from the highs and settled down to trade in an ever decreasing range and into a close only slightly higher than the opening.
  • GBP: Cable moved quietly through the Asian session opening around the 1.5160 area and slipped into mid-session to the 1.5150 areas and into the grey hours, the previous days push through the 0.7800 level in EURGBP seemed to have opened up a new test lower and the market didn’t disappoint pushing from the 0.7780 levels to the 0.7740 into the grey hours as the Euro dipped further GBP held on and pushed back to the 1.5200 having briefly pushed through the level on the opening. The market in London then held in the 1.5160-1.5200 levels for a good portion of the session until the release of the US numbers, Cable at that point had risen steadily to the 1.5200 level and needed no excuse to squeeze through the level again and push to above the 1.5260 areas triggering some weak stops before slipping back to trade the 1.5220 level for a long period pushing slightly higher into the close.
  • JPY: USDJPY dropped back from the opening pushing from the 117.90 areas as strong selling moved into the market, the selling seemed to occur after the copper market dropped quickly lower to limit down on the exchange taking with it the AUD and triggering AUDJPY selling  and several of the different markets, gold, Nikkei to follow suit triggering margins. The market eased down to the 117.40 in the first half of the day and then steepened to touch below the 117.20 levels and dropped quickly into the grey hours and a quick drop to 116.80 levels. The market moved off the levels into the London opening before dropping again on the opening touching just below 116.670 before holding again, weak stops were triggered on the move and the market held around the 117.00 areas into the NYK session and a weak set of numbers and the market quickly dropped into the 116.10 areas before bouncing back into the 116.80 level as a short squeeze sent the market higher the close of the London session the market moved steadily higher as the earlier sellers started to reset positions and load up on the USDJPY and crosses. With JPY crosses doing a lot of work the USDJPY managed to move to near 117.40 into the close.
  • AUD: The Oz moved to an early high in the Tokyo session around the 0.8190 levels before dropping quickly back as the market in the carry trade started to impact the market in conjunction with the Copper news that impacted all the commodity currencies, Oz quickly dropped to touch the 81 cent level before stabilizing for an hour before continuing to the 0.8080 levels, the move into the grey hours saw the final move to the downside setting the low just below the 0.8070 area before strong buying started to appear from early London players. The market from that point on was almost continual buying through London and into the NYK numbers taking the market back to the opening levels helped by strong AUDJPY buying after numbers and the market finished the day holding the 0.8150 levels.

 

Yesterday’s premiership results

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

JPY         Japan Money Stock M2+CD Y/Y Dec A 3.60% | C 3.60% | P 3.60%

JPY         Machine Tool Orders Y/Y Dec (P) A 33.80% | P 36.60%

EUR        Eurozone Industrial Production M/M Nov A 0.20% | C 0.00% | P 0.10%

USD       Advance Retail Sales Dec A -0.90% | C 0.10% | P 0.70%

USD       Retail Sales Less Autos Dec A -1.00% | C 0.10% | P 0.50%

USD       Import Price Index M/M Dec A -2.50% | C -2.40% | P -1.50%

USD       Business Inventories Nov A 0.20% | C 0.20% | P 0.20%

USD       Crude Oil Inventories A 5.4M | C 1.2M | P -3.1M

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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