Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 117.957 | EURUSD 1.16098 | EURJPY 136.951 | AUDUSD 0.80853 | NZDUSD 0.75737 | USDCAD 1.2339 | EURCHF 0.99809 | USDCHF 0.85943 | GBPUSD 1.51418 | EURGBP 0.76674 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               118.34 | 117.80

EUR/USD             1.1629 | 1.1589

EUR/JPY               137.31 | 136.78

AUD/USD            0.8109 | 0.8056

NZD/USD             0.7578 | 0.7516

USD/CAD             1.2371 | 1.2325

EUR/CHF              1.0033 | 0.99605

USD/CHF             0.8651 | 0.8589

GBP/USD             1.5159 | 1.5126

EUR/GBP             0.7676 | 0.7656
For today

  • EUR: Early gains were quickly eroded having opened around the 1.1610 level the market saw early positioning’s being reduced as the market moves towards the ECB announcement, having moved to the 1.1629 level the market quickly reversed as sellers in Tokyo entered the market and the market dipped into the 1.1590’s before settling down to range around the 1.1600 levels, as the market moved towards the grey hours the market again started to test the downside. The ECB announcement is either likely to be €600b of QE or nothing the reaction of the market would I suppose be the same with the Euro dropping however, the market is extremely nervous as with the movement yesterday, the fact that the market disappeared in the CHF altogether is a frightening aspect of the current situation however, the upside is we are aware of what could happen today so strap yourself in. Topside offers from the 1.1680-1.1700 levels with possible strong stops beyond the 1.1730 areas and an opening to the 1.1800 levels. Downside has limited bids into the 1.1550 however, this is likely to melt away into the release and the market is open to the 1.1470-50 levels and previous support a move through opens up all sorts of possibilities and 1.1000 is likely to be the largest sentimental level to the downside. Downside is likely to be dominated by cross interest.
  • GBP: The market for Cable has been moving in line with the Euro for the most part opening around the 1.5140 levels before rising towards the 1.5160 level in quiet trading. The market drifted back to the lows and just above the 1.5130 level, just a year ago the fact we had 30 pips of range in an Asian session would have been pleasing now however, it seems as if the day is dragging. Topside offers into the 1.5200 levels a push through see’s limited opening to the 1.5260 areas and stronger offers in any attempt to push to the 1.5300 levels. Downside bids into the 1.5040 area are strong however, whether the balance of the EURGBP plays into the market will be the thing and any movement lower by the Euro could see GBP rising in early stages as the cross is sold however, there is likely to be a limit to this and GBP is likely to follow the movement of the Euro in the long run. 1.5000 remains the key level and given the import of the day a break could see the Cable having a life of its own and a deeper movement into the 1.4850’s
  • JPY: USDJPY had limited movement as the market stalls and waits for the ECB. USDJPY opened quietly just below the 118.00 levels and over the course of the session has steadily risen to the 118.20 areas topping out just above the 118.30 level and holding steadily into the grey hours. Topside sees strong offers towards the 118.80-119.20 area before giving way to light stops and then patches of resistance on any further move to the 120.00 levels. Downside has some lighter bids into the 117.20 areas and the market could possibly see EURJPY selling which may have a limited effect to the downside however, through the 117.20 areas sees light bids to 116.80 area and then the market is open for a fresh attempt to 116.00 and below.
  • AUD: The Oz has slipped back from the opening 0.8090 levels having topped briefly above the 81 cent area, Tokyo were good sellers into the opening and although the market recovered it was unable to maintain the rise and drifted back to hold the 0.8060 levels for much of the session. 0.8160-82 cent sees plenty of light offers a push through see offers increasing into the 0.8250 levels before 83 cent tops off the offers. Downside the current levels down into the 0.8040 areas sees strong bids before breaking through and opening further potential for the downside however, for the moment stops likely to appear through the 0.7950 areas.

 

Overnight News

JPY:

Japanese Investors Pour Into Foreign Stocks With Record Purchase

BOJ Says Loan Demand From Households Rises in Jan. from Oct.

Shiozaki Says Japan Industrial Competitiveness Key to Wage Gains

GPIF Governance Overhaul Close to Completion, Shiozaki Says

Japanese Islamic Law Scholar Offers to Negotiate With ISIS

Suga Says Japan Hasn’t Been Contacted by Hostage-Takers

CNY:

PBOC Injects Cash Using Reverse Repos for First Time in a Year

China Sees Net Capital Outflows in 4Q 2014: Forex Regulator

China Banks Sold Net 69.9b Yuan for Forex for Clients in Dec.

Moody’s Estimates China 2014 Shadow Banking Assets 45t Yuan

CHF:

SNB Ended Cap as Big Interventions Loomed, Zurbruegg Tells Blick

NZD:

N.Z. Consumer Confidence Rises to Six-Month High, ANZ Says

AUD:

Australia’s Nov. Private New Home Sales Rise 2.2% M/m

 

Today’s data

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

NZD       Business NZ Manufacturing Index Dec A 57.7 | P 55.2 | R 55.6

AUD       Consumer Inflation Expectation Jan A 3.20% | P 3.40%

09:30     GBP       Public Sector Net Borrowing (GBP) Dec C 9.2B | P 13.4B

12:45     EUR        ECB Rate Decision C 0.05% | P 0.05%

13:30     USD       Initial Jobless Claims (JAN 17) C 301K | P 316K

14:00     USD       House Price Index M/M Nov C 0.30% | P 0.60%

15:00     EUR        Eurozone Consumer Confidence Jan (A) C -11 | P -11

16:00    USD       Crude Oil Inventories P 5.4M

 

Harry Hindsight              

  • EUR: With the market focused on the upcoming ECB announcement the Euro saw slow movement to the topside, moving from the opening around the 1.1555 levels the market initially dipped into the 1.1540’s before starting a steady rise pushing into the grey hours to just below 1.1590 with the early buyers out of the way the market again slipped back into the London opening before holding steady through into the NYK session. Strong buying appeared in the market as shorts started to liquidate positions and the market surged over the first hour to above the 1.1640 levels. A surprise interest cut in CAD sparked furious movement with the market extremely nervous after last Thursdays movement and USDCHF was sold quickly lower and the Euro dropped from its highs to the 1.1570 level and then back and through to 1.1680 in a very short period of time. It would seem that for the most part the market is fractured and banks having been regulated to the point of inaction are unwilling to do nothing more than be a conduit for liquidity and only if it suits and has little risk attached. Having hit the 1.1680 levels the market again turned lower and while the movement back to the 1.1570 area was a little more sedate it did kill off to some extent the rest of the day with the market rising back to just above the 1.1600 levels.
  • GBP: Cable tentatively moved higher over the course of the Asian session moving from the lows around 1.5140 back through the opening levels around 1.5150 and to above the 1.5170 into mid-Tokyo holding for the most part into the grey hours and into London. A surprise difference in the voting pattern triggered a quick move lower and to the 1.5080 levels as no rate change became unanimous again, this overshadowed another dip in unemployment as the market focused on the fact that any rate rise has now been put back to probably 2016, the market traded through the session centring around the 1.5120 areas in some choppy trading however, the downside seemed to be supported below the 1.5100 level and eventually closed little changed over the day.
  • JPY: USDJPY slipped lower with revisions in GDP higher and CPI lower upset the buying we’ve seen this week and the market slipped from the opening 118.80 levels steadily until the BoJ MPS was released with the market around the 118.40 levels. After the release the market dropped quickly to the supportive 117.80 areas and remained in the area into the grey hours before again dropping as the early Europeans and late Japanese sold the market to below 117.40, London reversed the last move but had very little appetite for USD generally and the selling again appeared and gradually ground the market to the 117.20 areas and the supportive areas. The surprise move by the BoC instilled some movement and the market moved back to above the 118.00 levels as the market rebalanced itself in the JPY against a weak Euro and flows into the CHF. The market ended the session trading in a tight 117.90-118.00 band for several hours.
  • AUD: USDJPY weakness during the Asian session saw the Oz rise from the opening levels around the 0.8165 areas pushing to above the 0.8230 areas in the move into the grey hours. Selling did appear into the London session however it was limited by the previous lows and held around the 0.8220 areas into the NYK session and the surprise BoC announcement triggered USD buying across the board moving the Oz quickly from its highs to trigger weak stops through 0.8160 and tumbling to the 81 cent level and light support, the push through was shortly later and the market dropped to the 0.8080 and remained between there and the 81 cent level into the close.

 

Yesterday’s premiership results

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

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         BoJ Monetary Policy Statement

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

GBP       Claimant Count Change Dec A -29.7K | C -25.0K | P -26.9K | R -29.6K

GBP       Claimant Count Rate Dec A 2.60% | C 2.60% | P 2.70%

GBP       ILO Unemployment Rate 3M Nov A 5.80% | C 5.90% | P 6.00%

GBP       Bank of England Minutes

GBP       MPC Official Bank Rate Votes A 0–0—9 | C 2–0—7 | P 2–0–7

GBP       MPC Asset Purchase Facility Votes A 0–0—9 | C 0–0—9 | P 0–0–9

CHF        ZEW (Expectations) Jan A -10.8 | P -4.9

CAD       Wholesale Sales M/M Nov A -0.30% | C -0.20% | P 0.10%

USD       Building Permits Dec A 1.03M | C 1.06M | P 1.05M

USD       Housing Starts Dec A 1.09M | C 1.04M | P 1.03M

CAD       BoC Rate Decision A 0.75% | C 1.00% | P 1.00%

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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