Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 117.774 117.75-84 | EURUSD 1.12063 1.1184-90 | EURJPY 132.038 131.70-132.60 | AUDUSD 0.79133 0.7904-50 | NZDUSD 0.7457 0.7427-75 | USDCAD 1.24232 1.2430-39 | EURCHF 0.98814 0.9833-0.9934 | USDCHF 0.88139 0.87575-0.8822 | GBPUSD 1.49919 1.4975-1.5038 | EURGBP 0.74743 0.7463-80 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               117.83 | 117.26

EUR/USD             1.12025 | 1.1098

EUR/JPY               131.88 | 130.16

AUD/USD            0.7905 | 0.7850

NZD/USD             0.7444 | 0.7407

USD/CAD             1.2460 | 1.2420

EUR/CHF              0.9870 | 0.9788

USD/CHF             0.8823 | 0.8765

GBP/USD             1.5027 | 1.4972

EUR/GBP             0.75105 | 0.7406

 

For today

  • EUR: The big news for the day saw the Syriza party looking to be some 12.5% ahead in exit polls being reported in Greece, this was sufficient for the market to open some 20 pips lower and quickly slip to the 1.1150 level before finding some limited support, with the Sydney market closed the limited support slowly caved to the selling and the market again ran lower pushing slightly through the 1.1100 level before bouncing quickly into the Tokyo session. One can assume that an option barrier was breached and the market moved quickly off the level in limited liquidity add to which the Tokyo opening and buying EURJPY crosses and the short squeeze sent the market to the 1.1200 levels, With talk in the market of Syriza making sufficient seats to hold a majority, however as the session wore on the market calmed and the projection now look for the anti-austerity party to secure 149 seats and some compromising to be done. With PM elect Alexiz Tsipras already harnessing the backlash to push the Europeans and Germany were quick to answer. The market for the most part has now remained above the 1.1150 level and initial volumes have drifted off from that of the opening. Topside offers through the 1.1250 levels and into 1.1300 areas with the market likely to see further offers for the moment, one imagines the market will need to get used to the idea of QE and the New Greek situation before the topside is a possibility. Downside has light bids into the 1.1100 levels and through to the 1.1080 area before fresh selling is likely to be seen even through the level stops are likely to be thin on the ground.
  • GBP: Cable moved up on the opening as cross Euro selling hit the market with the EURGBP pushing the cross from the 0.7480 levels and quickly to the 0.7420 areas, Cable continued trading around the 1.5000 level with a brief spike to the high 1.5020’s beofre drifting back to the figure and trading quietly over the session. EURGBP briefly made its way towards the 74 cent level before rebounding into the Tokyo session and the short squeeze in the Euro took the cross to the 0.7440 levels gradually moving towards the 0.7460 levels. Cable bids in the 1.4960 levels and through to 1.4950 before light stops make an appearance through the level and a test of the 1.4900 level opens up. Topside has light offers into the 1.5040 area and a push through the level is likely to see weak stops however, it’s a long way to the 1.5200 levels and better offers.
  • JPY: Cross JPY selling led by the EURJPY saw the USDJPY open around the 117.70 level s and trade quickly into the 117.50’s before finding some respite with the cross holding briefly the 131.00 areas. The market eventually gave way and the EURJPY dropped through to the 130.20-30 areas and the USDJPY was dragged to the 117.30 areas before Tokyo moved in and quickly reversed the move taking the EURJPY quickly back through 131.00 and trading quietly around the 131.40-50 areas. USDJPY moved higher however, it was unable to push back through the 117.80 levels and spent a good portion of the day trading in the 117.60-70 areas. Topside offers from the 117.80 levels and into the 118.00, weak stops likely just through that level with better stops probably through 118.20-30 before the market sees light to the 118.80 where strong offers appear. Downside bids now sees some minor support from the 117.30 areas and into 117.00 through the level the market is a little patchy with a mix of orders likely to give way to stops on a break through the 116.80 levels, then the market starts to see bids moving in and the closer the market moves towards the 116.00 the stronger they become.
  • AUD: The Oz has been dominated by crosses today with early EURAUD selling sending the Oz lower as the Euro moved too quickly for the Oz to not get dragged lower, the initial move saw the market move from the opening around 0.7910 and pushing into the 0.7870 levels before finding some light bids, the move into Tokyo saw the fortunes in the market rapidly change as the market moved quickly to the 79 cent level however, it was never able to push through the level with any conviction and although JPY weakened the market traded at the level for several hours before dipping back to the 0.7880 levels for the rest of the session. The market has now moved down into the ranges from the 2006 areas and although it’s a little dated there is likely to be some congestion through this 0.7800-0.7900 areas to slow the market however, the long term view is for more downward pressure to continue however, as can be seen over the past few weeks most of the movement has been dominated by other currencies and economies. Topside has offers into the 80 cent level with weak stops through the 0.8020 areas and a push through that level opens up weak stops.

 

Overnight News

EUR:

Tsipras Sets Collision Course for Greece After Syriza Win

Independent Greeks Will Support Syriza Govt: Syriza Official

Merkel Ally Friedrich Says Germany May Scrap Greek Aid: Bild

JPY:

Some BOJ Members: Oil Fall to Exert Upward Pressure on Economy

Japan exports grow most in year, signalling steady recovery from recession

Keidanren Head Calls on Cos. to Consider Wage Increases: Kyodo

Japan Using ‘Every Channel’ to Secure Release of Hostage Goto

Rengo’s Koga Says Oil Prices Good for Japan Wage Talks

NZD:

N.Z.’s Key Says QE ‘Sugar Hit’ Alone Won’t Fix Europe’s Economy

 

Today’s data

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

JPY         Trade Balance (JPY) Dec A -0.66T | C -0.74T | P -0.93T

09:00     EUR        German IFO – Business Climate Jan C 106.5 | P 105.5

09:00     EUR        German IFO – Current Assessment Jan C 110.8 | P 110

09:00     EUR        German IFO – Expectations Jan C 102.5 | P 101.1

09:30     GBP       BBA Mortgage Approvals Dec C 36.6K | P 36.7K

 

Weekend News

EUR:

Samaras Clashes With Tsipras as Greek Campaigning Wraps Up
ECB’s Draghi Seeks Real Economic Union to Lead Euro-Area Reforms
ECB’s Mersch Calls for Europe Capital-Market Union as Next Step
Coeure Says ECB Might Extend QE as Visco Calls Buying Open
Coeure Says ECB Has Done Its Part, Now Others Have to Do Theirs
Bundesbank’s Weidmann Says He Opposed ECB QE: Welt am Sonntag
ECB’s QE Is ‘Quite Positive’ for Greece, Finance Minister Says
JPY:

BOJ’s Kuroda Says Oil Price, ECB to Help Global Growth
Islamic State Seeks Swap After Video of Japan Hostage Death
Japan PM Abe Says There Should Be No Yielding to Terrorism
Toyota May Forecast 20% Rise in Op Profit to 2.7 Tln Yen: Nikkei
JPY/USD:

Japan Said to Propose Boosting Imports of U.S. Rice: Nikkei
GBP:

Carney Says BOE Has Ability to Look Through Low Commodity Prices
Carney Says QE Can Encourage Excessive Risk-Taking in Markets
USD/RUB:

Russia Must Stop Backing Separatists, U.S.’s Kerry Says
CNY:

China Coal Output May Drop 1st Time in 14 Yrs. Sec. Journal
Shanghai Isn’t Setting Economic Growth Target for This Year
CHF:

Odier Says Franc Move Is ‘Wake-Up Call’ for Banks to Cut Costs
USD:

Iran No Longer Using U.S. Dollar in Foreign Trades: Tasnim

Harry Hindsight

  • EUR: the market opened around the 1.1360-70 area the market held for the most part in that area through the Asian session dipping around the Tokyo opening to just below the 1.1350 levels but returning in each case back to the same area. The move towards the London session saw the market slip slowly down into the 1.1320 areas before the market dropped on the London opening, moving quickly from the 1.1350 levels and into the 1.1260 areas before slowing its descent a little and a push through to the 1.1240 areas, with PMI numbers slightly better than expected but generally ignored. Early US players also sold and the market again dropped down into the 1.1130 areas before finding some light support and enough to turn the market higher. Profit taking across the NYK session saw the market moving back steadily through to the NYK option cut and the market pushed to above the 1.1250 levels before starting a steady drift into the close just hanging on to the 1.1200 handle.
  • GBP: Cable remained within a reasonable range trading down through the day to below the 1.4960 level through into NYK having started the day above the 1.5000 area and holding for until the market started its run towards London sent the market to below 1.5000 to trade the 1.4960-1.5000 through into the NYK session and a steady move higher to above 1.5020 levels in quiet trading for the session compared to the Euro. The market drifted in the late session dropping back through the 1.5000 levels and finishing around the 1.4990, While Cable looked quiet the market in EURGBP was fairly active with the market pushing steadily lower through the session dropping from the 0.7580 levels and steadily down into the 0.7430 areas into the NYK session.
  • JPY: USDJPY initially made a move to the topside failing just above the 118.80 levels and then EURJPY selling took over in the market with the USDJPY seeing good PMI numbers to set the market moving, the market dropped down to the 118.30 over the course of the early part of the session holding around the 118.40 areas before trying the topside once more to 118.70 and then the move into the grey hours saw EURJPY selling impacting the market again to chase the market deeper this time holding the 118.10 areas. NYK came in as strong sellers of everything Euro and again the USDJPY leg didn’t escape with the market pushing it through 118.00 and too the 117.80 at which point it was only matter of time before the level broke and it gave ground to the 117.60 before holding around the 117.80 levels.
  • AUD: The Euro dominated everything, early buying of the Oz saw the market moved off the 0.8020 levels and pushed higher to above the 0.8050 as USDJPY dominated the market however, as the day moved on EURAUD selling took over and with little to hold the Oz in place it drifted lower as the Euro pushed lower, the move into London sent the market below 80 cent and although there was a brief attempt to hold the level the market drifted to the 0.7960 areas and then into the NYK session and stronger cross selling dragged on the Oz triggering stops through the 0.7940 areas and pushing quickly through into the 0.7880’s before finding enough support to hold the market above the 79 cents.

 

 

Friday’s premiership results

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

EUR        France Manufacturing PMI Jan (P) A 49.5 | C 48 | P 47.5

EUR        France Services PMI Jan (P) A 49.5 | C 50.9 | P 50.6

EUR        Germany Manufacturing PMI Jan (P) A 51 | C 51.7 | P 51.2

EUR        Germany Services PMI Jan (P) A 52.7 | C 52.5 | P 52.1

EUR        Eurozone Manufacturing PMI Jan (P) A 51 | C 51 | P 50.6

EUR        Eurozone Services PMI Jan (P) A 52.3 | C 52 | P 51.6

GBP       Retail Sales M/M Dec A 0.40% | C -0.60% | P 1.60%

CAD       CPI M/M Dec A -0.70% | C -0.60% | P -0.40%

CAD       CPI Y/Y Dec A 1.50% | C 1.60% | P 2.00%

CAD       BoC CPI Core M/M Dec A -0.30% | C -0.40% | P -0.20%

CAD       BoC CPI Core Y/Y Dec A 2.20% | C 2.10% | P 2.10%

CAD       Retail Sales M/M Nov A 0.40% | C 0.10% | P 0.00%

CAD       Retail Sales Ex-Autos M/M Nov A 0.70% | C 0.10% | P 0.10%

USD       Existing Home Sales Dec A 5.04M | C 5.08M | P 4.93M%

USD       Leading Indicators Dec A 0.50% | C 0.30% | P 0.60%

 

Stay lucky

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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