Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 118.811 | EURUSD 1.15504 | EURJPY 137.223 | AUDUSD 0.81714 | NZDUSD 0.76824 | USDCAD 1.2113 | EURCHF 1.01152 | USDCHF 0.8757 | GBPUSD 1.51464 | EURGBP 0.76262 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               118.80 | 117.66

EUR/USD             1.1576 | 1.1542

EUR/JPY               137.105 | 136.17

AUD/USD            0.8223 | 0.8155

NZD/USD             0.7674 | 0.7628

USD/CAD             1.2114 | 1.2079

EUR/CHF              1.0115 | 1.00855

USD/CHF             0.8759 | 0.87185

GBP/USD             1.5176 | 1.5136

EUR/GBP             0.7634 | 0.76225
For today

• EUR: While the market is on hold somewhat until tomorrow however, today was all about the BoJ monetary policy and the Euro started the day trading a touch lower from the opening 1.1555 areas to again push into the low 1.1540’s as with the closing hours in NYK. The release of the communique saw the Yen strengthen and the Euro moved back from the lows and pushed into the 1.1570’s in steady but constant buying. Downside has light bids from the 1.1500 levels and into the 1.1475 areas however, through that level there is a likelihood of stops but until tomorrow the market is likely to be governed by cross plays and while the flows are likely to be light for the Euro only commentaries by various dignitaries in the European area could spoil the current status quo. Topside offers into the 1.1580 levels and into the 1.1600 levels that will for the moment slow a rise however a push through the 1.1620 level will likely see light stops however; the movement higher is still likely to be tempered by offers from then on and into the 1.1700 areas.
• GBP: Cable initially followed the Euro a little lower, moving from the opening levels around the 1.5150 and just below the 1.5140 area before the BoJ communique and a steady rise higher building to a quick stab through the 1.5170 levels, the market eventually settled back to trade above the opening levels quietly. Topside offers from the 1.5190 level and through to weak stops above the 1.5210 area opens up further gains only to the 1.5240 areas. With the usual likely to happen on the rates and purchasing vote the market is not likely to upset the market too much however, the employment numbers have possibilities and is an unknown for the moment, a push through 1.5260 will see a test of the 1.5300 levels and local news could hold the day against a background of patient waiting in the Euro. Downside has limited bids around the 1.5100 area and a drop through the level again sets up a test of those 1.5040 area lows and option barrier protection of the area.
• JPY: The USDJPY started to slip from the opening areas around the 118.80 level however, the Tokyo session was the main seller over the course of the day with the market slipping on steady selling in USDJPY to the 118.30 levels and the release of the BoJ monetary policy statement was released, BoJ forecasts on CPI dropped back to 1% against expected 1.7% for 2015 and the GDP was raised from 1.5% to 2.1% from the Oct statement, this quickly led the USDJPY lower with the GDP figure having the greater effect and USDJPY falling to the 117.70 before finding sufficient support to hold around the 117.80 levels and into the grey hours. Topside offers appear into the 118.00 level for the moment and while only for the moment will continue to build in all likelihood, through there will see weak stops through the 118.20 area and the market reversing quickly on a push above the 118.30 levels and a move to the 118.80 resistance area will likely contain the topside movement. Downside bids into the 117.50 level are light however a push through that level will see similar bids in the 117.20 area before the market opens up for a further test into the 116. Handle and the figure area in particular are likely to become vulnerable.
• AUD: The Oz struggled from the opening 0.8175 area opening, drifting into the 0.8155 level before the BoJ statement and the strengthening of the JPY started a strong rally as the AUDJPY balanced itself over the session, the Oz traded steadily through the 82 cent level triggering only small weak stops before topping out above the 0.8220 areas and holding in the 0.8210 areas into the grey hours. Topside push through the 0.8230 will possibly see weak stops however, offers still continue to appear into the 0.8250 areas before a little light appears and stronger offers into the 83 cent level that has contained the market this month. Downside bids into the 0.8150 area and down through to the 81 cent level for the moment seem strong enough for any move lower however, the true support area is not seen until we approach the 0.8040 levels seen twice in the early part of this month.

Overnight News

JPY:

Bank of Japan Cuts Price Forecast, Maintains Record Stimulus

JY: BOJ Expands and Extends Loan Program to Counter Growth Headwinds

Abe Seeks Middle East Support on Islamic State Hostage Crisis

NZD:

New Zealand Consumer Prices Fall for First Time Since 2012

N.Z. Wage Increases May Be Smaller Than Expected, English Says

USD:

Obama Says With Economy Healed U.S. Must Address Income Gap

CNY:

PBOC Should Be More Transparent in Monetary Policy: Sec. News

China Trade Faces Difficulties on Weak External Demand: Mofcom

China Weighs Allowing Bond Trades on Hong Kong-Shanghai Link

China to Help Russia If Needed, Mofcom Spokesman Says

AUD:

Australia Jan. Consumer Sentiment Rises 2.4% to 93.2

GBP:

U.K. Votes: Conservative 32%, Labour 30%, YouGov/Sun Poll Shows

Today’s data

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

JPY         BoJ Monetary Policy Statement

NZD       CPI Q/Q Q4 A -0.20% | C 0.00% | P 0.30%

NZD       CPI Y/Y Q4 A 0.80% | C 0.90% | P 1.00%

AUD       Westpac Consumer Confidence Jan A 2.40% | P -5.70%

JPY         All Industry Activity Index M/M Nov A 0.10% | C 0.00% | P -0.10%

09:30     GBP       Claimant Count Change Dec C -25.0K | P -26.9K

09:30     GBP       Claimant Count Rate Dec C 2.60% | P 2.70%

09:30     GBP       ILO Unemployment Rate 3M Nov C 5.90% | P 6.00%

09:30     GBP       Bank of England Minutes

09:30     GBP       MPC Official Bank Rate Votes C 2–0—7 | P 2–0–7

09:30     GBP       MPC Asset Purchase Facility Votes C 0–0—9 | P 0–0–9

10:00     CHF        ZEW (Expectations) Jan P -4.9

13:30     CAD       Wholesale Sales M/M Nov C -0.20% | P 0.10%

13:30     USD       Building Permits Dec C 1.06M | P 1.05M

13:30     USD       Housing Starts Dec C 1.04M | P 1.03M

15:00    CAD       BoC Rate Decision C 1.00% | P 1.00%

Harry Hindsight              

• EUR: The market opened around the 1.1610 areas and slipped back over the course of the Asian session to 1.1570 before finding some support, a USD broad based rally was the operative word and the market in USDJPY dominated to a large extent with cross JPY selling. The move into the grey hours saw the market pressing against the lows after a poor set of PPI numbers from Germany before recovering with a good set of ZEW numbers for a push back to the opening levels. The move through the NYK session saw the market slowly drift lower as the light selling continued for the time being and a push to the 1.1550 areas and lows just above the 1.1540 where the market closed. Volumes were reasonable however; again the general consensus is very nervous. Options trading for the moment seem to be the vessel of choice rather than straight Euro position taking.
• GBP: Although some of the technical reports hitting the news wires would suggest the Cable was looking for a way lower the market again held the downside around the 1.5060 levels after steady selling impacted the market from the opening and into the Tokyo session, taking the market from the 1.5120 levels to those lows in the first hour of Tokyo. Asia was only able to hold the 1.5070 levels and started to move higher only once the market moved into the grey hours and then into the London session proper. Weakening Euro’s and EURGBP saw the GBP strengthen across the market pushing back through the 1.5100 levels and triggering minor stops on the move through before holding in the 1.5160 levels and the NYK session. A push to the 1.5200 levels failed to break out to the topside and the market held the 1.5190 and a few hours later the market broke back to the 1.5150-60 areas where it remained into the close.
• JPY: A quick move higher from the opening 117.60 to push up through the 118.00 level with light stops triggered along the way to the 118.20 areas where the market held for a long period. The market again moved higher into the grey hours touching above the 118.50 areas before dropping away again into the official London open and down to the 118.00 levels. Limited EURJPY buying added to the USDJPY and it pushed steadily to above the 118.70’s before slipping and taking a second run to the 118.80 offers pushing gently through but never really breaking towards the 119.00 levels, the market finished the day around the 118.70-85 area.
• AUD: The market was contained within a reasonably tight band for the day with the market for the most part driven by JPY movements. Early trading saw the market drift off from the opening levels around the 0.8215-10 areas dropping into the Tokyo session to the 0.8170 levels and into the Chinese numbers, this showed a quick jump higher as IP numbers came in better than expected and GDP better than expected however, the enthusiasm was short lived and the market dropped back almost as quickly as it rose to the 0.8215 areas. Weak stops were triggered on the move lower and the market did set a new low for the day around the 0.8160 area. Asia remained fairly quiet and the market only started to rise again as taking the market steadily through to make highs for the day just short of the 0.8220 level. From there the USD controlled the day and USDJPY moved steadily higher dropping the AUD steadily lower and back towards the lows and a close just off that area.

Yesterday’s premiership results

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

CNY        Fixed Assets Ex Rural YTD Y/Y Dec A 15.70% | C 15.70% | P 15.80%

CNY        Retail Sales Y/Y Dec A 11.90% | C 11.80% | P 11.70%

CNY        Industrial Production Y/Y Dec A 7.90% | C 7.40% | P 7.20%

CNY        GDP Y/Y Q4 A 7.30% | C 7.20% | P 7.30%

EUR        German PPI M/M Dec A -0.70% | C -0.40% | P 0.00%

EUR        German PPI Y/Y Dec A -1.70% | C -1.40% | P -0.90%

EUR        German ZEW (Economic Sentiment) Jan A 48.4 | C 40 | P 34.9

EUR        German ZEW (Current Situation) Jan A 22.4 | C 13 | P 10

EUR        Eurozone ZEW (Economic Sentiment) Jan A 45.2 | C 37.6 | P 31.8

CAD       Manufacturing Shipments M/M Nov A 1.40% | C -0.50% | P -0.60% | R -1.10%

USD       NAHB Housing Market Index Jan A 57 | C 58 | P 57

Good Luck,

Andy