Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 118.494 | EURUSD 1.1366 | EURJPY 134.668 | AUDUSD 0.8027 | NZDUSD 0.75198 | USDCAD 1.23818 | EURCHF 0.99013 | USDCHF 0.87131 | GBPUSD 1.50107 | EURGBP 0.75718 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               118.82 | 118.245

EUR/USD             1.13765 | 1.13145

EUR/JPY               135.05 | 133.935

AUD/USD            0.8056 | 0.7965

NZD/USD             0.7529 | 0.7480

USD/CAD             1.2409 | 1.2360

EUR/CHF              0.9913 | 0.9868

USD/CHF             0.87245 | 0.8681

GBP/USD             1.5027 | 1.4981

EUR/GBP             0.7577 | 0.7552
For today

  • EUR: The excitement is over or so it would seem, the market opened in the 1.1360 levels and held that level for the most part with dips to below the 1.1350 area into the Tokyo session before again holding in the 1.1360’s again for several hours, late into the session the market started to see early Middle eastern sellers and longer term players started to sell having become impatient for a none existent rally, this took the market down into the 1.1320’s before finding sufficient bids to hold the market into the grey hours. Downside bids down through the 1.1320’s and into the 1.1300 levels. A move through the 1.1280 levels is likely to instil some quick selling as longer term sellers give up waiting for a bounce to sell into this in turn opens up a possible deeper movement with 1.1245 possible the next light supportive area. Topside sees offers though to the 1.1380 level and a possibility of more supply coming to market on any push through the 1.1400 levels, no real stops showing at the moment and one assumes only a move back through the 1.1500 area at the moment would trigger anything.
  • GBP: Back to reality with the Cable again slipping through the 1.5000 levels with very little for the moment to hold Cable above the level, and the drag of Europe likely to weigh heavily. The early part of the session held the 1.5020 levels and was very quiet before the slip down through to just above the 1.4980 levels, a push through the levels sees a double bottom from 2013 dominating the downside to the 1.4820 areas and this is likely to be the focus if the Euro continues to push lower. Topside see’s very little on a move higher and the market is fairly open to the 1.5200 area with offers likely to top the market at that point however, this is very dependent on the EURGBP cross continuing to weaken sufficiently for the Cable to rise.
  • JPY: USDJPY opened around the 118.50 levels and slowly rose into the Tokyo session to the 118.80 and the awaiting offers, Tokyo was reluctant to continue the move and once they entered the Tokyo session they sold the pair back to the 118.30 levels the weakness continued for the bulk of the session before seeing some steady buying into the Lunch hour period before settling a little lower into the grey hours. Topside offers through the 118.80 levels and through to just beyond the 119.00 before stops are likely to appear, a push through 119.30 levels opens up further stop interest and a possible test towards the 120.00 levels. Downside has light bids into the 118.00 levels with weak stops through the 117.80 likely and the market opened to the 117.20 areas where better bids are likely.
  • AUD: With the USDJPY rising the market in the Oz was pushed again to the 80 cent level in late trading with light carry trade selling as the market in the far east coming to a close for the weekend. Once through the level the Oz dipped through the 0.7980 level with support likely to be around the 0.7950 areas onwards and the market now open to the 77 cent levels at least. Topside offers are likely to begin into the 0.8050 areas and building to the 0.8100 levels and possibly now stronger, a push through that level will opening up on the next 50 pips and the pattern repeats if it was to move that high.

 

Overnight News

CNY:

China Manufacturing Gauge Picks Up as Stimulus Takes Effects

PBOC Says ECB Bond Buying Program to Help China Exports: CCTV

Shanghai 2014 GDP Growth at 7% Y/y; Retail Sales Rise 8.7%

OIL:

Saudi Arabia’s King Abdullah Is Dead, Prince Salman Named King

JPY:

Abe Shouldn’t Rely on ‘Easy Tax Increase,’ Govt. Adviser Says

Japan to Study Interest-Rate Impact on Mortgage Lenders: Reuters

Japan Needs to Improve Financial Literacy as Nation Ages: BOJ

Markit/JMMA Japan Jan. Flash Mfg. PMI 52.1 vs. 52 in Dec.

Japanese Government Doing Utmost to Rescue Hostages, Says Amari

 

Today’s data

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

JPY         Manufacturing PMI Jan (P) A 52.1 | P 52

CNY        HSBC Manufacturing PMI Jan (P) A 49.8 | C 49.5 | P 49.6

08:00     EUR        France Manufacturing PMI Jan (P) C 48 | P 47.5

08:00     EUR        France Services PMI Jan (P) C 50.9 | P 50.6

08:30     EUR        Germany Manufacturing PMI Jan (P) C 51.7 | P 51.2

08:30     EUR        Germany Services PMI Jan (P) C 52.5 | P 52.1

09:00     EUR        Eurozone Manufacturing PMI Jan (P) C 51 | P 50.6

09:00     EUR        Eurozone Services PMI Jan (P) C 52 | P 51.6

09:30     GBP       Retail Sales M/M Dec C -0.60% | P 1.60%

13:30     CAD       CPI M/M Dec C -0.60% | P -0.40%

13:30     CAD       CPI Y/Y Dec C 1.60% | P 2.00%

13:30     CAD       BoC CPI Core M/M Dec C -0.40% | P -0.20%

13:30     CAD       BoC CPI Core Y/Y Dec C 2.10% | P 2.10%

13:30     CAD       Retail Sales M/M Nov C 0.10% | P 0.00%

15:00     USD       Existing Home Sales M/M Dec C 2.20% | P -6.10%

15:00     USD       Existing Home Sales Dec C 5.04M | P 4.93M

15:00    USD       Leading Indicators Dec C 0.30% | P 0.60%

 

Harry Hindsight              

  • EUR: The market traded quietly through the day awaiting the ECB announcement moving from the opening levels just above 1.1600 and broadly holding the levels all the way through to the announcement and the NYK session. The market did dip below the 1.1600 before putting in a rally to the 1.1650 levels as some of the shorts cut positions on the rate announcement. Draghi’s commentary then kicked in with pretty much what had been expected however, the market got the open-ended QE it expected and this was sufficient to keep the market falling after the initial drop through to 1.1500 areas the market continued in a slower vane with cross profit taking kicking in and limited buying in the Euro generally slowing its move down to the 1.1320 levels, the market edged up from the lows and moved back into the 1.1360 areas and remained in a tight range for the close. That was what we had been waiting for an awful long time, the QE will continue until Sep 2016 or as inflation dictates along the way. So will it make a difference, only time will tell however, I do believe it will probably cause more of a political football to add to the woes of Euroland.
  • GBP: Cable held for most of the session around the 1.5140 levels through the Asian session pushing to the 1.5160 in early trading before slipping back to hold in the mid 1.5120’s into the London session. London were steady buyers and although the PSBR number was poor with the blame firmly laid at the door of the EU’s recent tax of the UK did little to alter the direction as EURGBP cross two action lifted the Cable a little to test above the 1.5200 levels, and while the cross barely moved it was only at this point that the Cable ran out of options and the slide in the Euro outweighed the crosses on the announcement. Cable started to feel the drag of the Euro and moved unsteadily to the opening areas to test the 1.5120 levels, the market stalled for a period however the continuing fall of the Euro again started to drag low and the move through the 1.5100 levels triggered some light stops and the market this time dipped to 1.5040. The market saw plenty of two way action from this point on with EURGBP dipping below the 0.7600 levels and slipping slowly to the 0.7560 levels however, the Cable eventually broke through the 1.5000 triggering a brief spike lower to the 1.4980 levels before bouncing back to the 1.5000 level to finish above the level however, what support there was into the 1.5000 level was taken out and opens up the downside.
  • JPY: USDJPY overall saw good gains however, the market was not all one way with the market moving off the 117.90 levels with Tokyo quickly chasing the market back above the 118.00 levels before taking its time to push to the 118.30 before London, while USDJPY may have been bid the EURJPY was not bid and the market into the London session saw the market in the cross sold steadily from the London opening as longs cut positions and took the USDJPY back through the 118.00 levels and into the 117.50 areas before the market started to chop with NYK willing to buy and the EURJPY being sold repeatedly into this strength. QE news sent the USDJPY to below the 117.30 levels once the Euro settled down the market in the USDJPY started to reverse its losses and head steadily higher pushing steadily to above the 118.60 levels and holding for a quiet close just below there.
  • AUD: The Oz had a reasonably quiet session moving from the opening 0.8100 levels and trading through the Asian session to the 0.8060 levels with a dip in consumer confidence showing the market the way in early trading. The market recovered to the 81 cent level and held the level to move to the 0.8130 levels into the NYK session as the Oz took second fiddle to the Euro. The QE saw the market dip to the 0.8080 level only before again holding around the 81 cent level. Selling by early Sydney saw the market drop back quickly to touch the 0.8000 touching briefly through before rallying back to close around the 0.8020. Most of the damage was to do more with other commodity currencies and a rebalancing of cross trades against the CAD.

 

Yesterday’s premiership results

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%

GBP       Public Sector Net Borrowing (GBP) Dec A 12.5B | C 9.2B | P 13.4B | R 11.7B

EUR        ECB Rate Decision A 0.05% | C 0.05% | P 0.05%

USD       Initial Jobless Claims (JAN 17) A 307K | C 301K | P 316K | R 317K

USD       House Price Index M/M Nov A 0.80% | C 0.30% | P 0.60%

EUR        Eurozone Consumer Confidence Jan (A) A -9 | C -11 | P -11

USD       Crude Oil Inventories A 10.1M | C 2.5M | P 5.4M

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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