Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 117.54 | EURUSD 1.12868 | EURJPY 132.672 | AUDUSD 0.7889 | NZDUSD 0.74596 | USDCAD 1.25319 | EURCHF 1.02164 | USDCHF 0.90508 | GBPUSD 1.51402 | EURGBP 0.74557 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               118.10 | 117.40

EUR/USD             1.1296 | 1.1262

EUR/JPY               133.31 | 132.40

AUD/USD            0.7907 | 0.7860

NZD/USD             0.7348 | 0.7316

USD/CAD             1.2537 | 1.2512

EUR/CHF              1.0282 | 1.0213

USD/CHF             0.9117 | 0.9046

GBP/USD             1.5156 | 1.5130

EUR/GBP             0.7457 | 0.74425
For today

  • EUR: Having opened around the 1.1280 levels the market was unable to push to far through the 1.1290’s and quietly traded around that area until late in the session. As the day moved on light selling pushed the Euro into the 1.1270’s trading into the mid 1.1260’s but generally the market has been quiet and looks very uninteresting before the Euro numbers later today. Topside offers from the 1.1340 levels being light but likely to be continuous to the 1.1380 levels were offers a likely to be a little stronger, stops are possible through 1.1400 levels however, the offers are likely to continue until the 1.1420 were better stops are likely once through 1.1430’s. Downside bids into the 1.1250 levels are likely to slow the market in normal circumstances however a push through that level will again open the market for a test deeper and towards the 1.1100 level with very little to slow the market until 1.1150.
  • GBP: Again the Cable market has remained in a tight range so far pushing off the 1.5140 rising into the mix 1.5150’s before sliding slowly back as the Euro drifted and the EURGBP slipped slowly through the 0.7450. Bids into the 1.5100 levels are likely to be a little weak but a push through the 1.5080 areas will see weak stops opening a the downside for a test of the strong bids around the 1.5000 areas with bids likely to go as deep as to the 1.4950 levels the market a push through this level will possibly see strong stops and the opening to the downside to 1.4800 areas before finding some possibly strong bids from the bottom of the range in 2013.
  • JPY: USDJPY headed into the Asian session moving off the 117.60 levels dipping in early trading to the 117.40 levels before the Tokyo open, Tokyo were quick buyers of the USDJPY and the market jumped to just short of the 117.80 levels and into some light offers, limited supply during the fix in Tokyo slowed the market a little and the AUDJPY although moving again off its lows around the 92.60 levels helped the move as it moved to 93.20 levels. USDJPY moved quickly higher to push through the 118.10 levels after exporter selling failed to materialize in the market triggering weak stops, before running right into those offers above the 118.00 level with a well-supported Nikkei the early push left the market vulnerable to the fall that the market then took falling back to the 117.60 opening levels. Market observers stated that GPIF of onshore and offshore buying kicked in last Friday with approximately $1.7bln of buying occurring in the 4 sessions so far. The market is open from the 117.20-118.80 levels with the market having traversed these levels over the start of the year and leaving the market vulnerable between the levels however, topside offers are likely to the 118.30 level before the market opens up for another test to that 118.80 area and the stronger offers will likely see stops through the 119.20 areas leading to exporter offers likely in the 119.50-120.00 levels and possibly small option interest. Downside has spent the last week or so moving off the 117.30-40 areas on dips below 117.50 and those bids are likely to continue to the 117.00 areas before stops appear on the break through and a test of the 116.00 level holds the key to the downside.
  • AUD: The Oz has drifted today for the most part having finished the day around the 0.7890 the market held the levels deep into the session and only started to dip late in the session with the movement of the USDJPY from its highs with the carry trade coming under pressure from its highs above the 93.20 areas, with no real news late in the session to drive the market that AUDJPY selling late in the session over spilled into straight AUDUSD selling and the market pushed steadily to the 0.7860 areas before finding some support. Downside bids into the 0.7850 levels provide the support for the moment with possible option barriers in the area a push through the level though sets up further downside potential with 78 cents likely to be a spoiling level before opening the market to the 75 cent areas. Topside has seen a few attempts to negate the move however, the topside offers seem to be concentrated for the moment between the 0.8000-0.8050 levels and even through that level congestion is likely around each 1 cent increment higher and the market sees nothing to persuade it fundamentally other than the slowing of the downtrend by persistent AUDJPY carry trades.

 

Overnight News

JPY:

Japanese Bought Net 45.6 Billion Yen Overseas Debt Last Week

Japan’s Retail Sales Unexpectedly Slump in Challenge to Abe

Suga: BOJ Should Decide on Its Policy Direction

NZD:

RBNZ Shifts to Neutral on Rates as Inflation Evaporates

Imported Aircraft Pushes N.Z. into Trade Deficit

Fonterra Cuts 2014-15 Milk Production Forecast on Weather

New Zealand Central Bank Says It Sold Net NZ$16 Mln in December

N.Z. December Low-Deposit Home Loans Fall to 8.2% of New Lending

EUR:

ECB Supervisor Nouy Says Greek Banks Strong Enough to Survive

EUR/USD:

German Advisory Panel Criticizes EU-U.S. Trade Accord: Welt

CNY/EUR:

Weaker Euro to Hurt China’s Exports to Europe, Ministry Says

CNY:

China Upsets Foreign Businesses with Cyber Security Rules: Times

China to Apply Some Shanghai Free-Trade Zone Policies Nationwide

 

Today’s data

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

NZD       RBNZ Rate Decision A 3.50% | C 3.50% | P 3.50%

NZD       Trade Balance (NZD) Dec A -159M | C 75M | P -213M | R -285M

AUD       Conference Board Leading Index Nov A 0.10% | P -0.20%

JPY         Retail Trade Y/Y Dec A 0.20% | C 1.00% | P 0.40%

AUD       Import Price Index Q/Q Q4 A 0.90% | C 1.40% | P -0.80%

08:55     EUR        German Unemployment Change Jan C -10K | P -27K

08:55     EUR        German Unemployment Rate Jan C 6.50% | P 6.50%

09:00     EUR        Eurozone M3 Y/Y Dec C 3.50% | P 3.10%

10:00     EUR        Eurozone Business Climate Indicator Jan C 0.12 | P 0.04

10:00     EUR        Eurozone Industrial Confidence Jan C -4.5 | P -5.2

10:00     EUR        Eurozone Consumer Confidence Jan (F) C -8.5 | P -8.5

10:00     EUR        Eurozone Economic Confidence Jan C 101.6 | P 100.7

10:00     EUR        Eurozone Services Confidence Jan C 6 | P 5.6

11:00     GBP       CBI Reported Sales Jan C 34 | P 61

13:00     EUR        German CPI M/M Jan (P) C -0.80% | P 0.00%

13:00     EUR        German CPI Y/Y Jan (P) C -0.10% | P 0.20%

13:30     USD       Initial Jobless Claims (JAN 24) C 300K | P 307K

15:00    USD       Pending Home Sales M/M Dec C 0.50% | P 0.80%

 

Harry Hindsight              

  • EUR: The market opened just below the 1.1380 levels and was unable to push through the level throughout the day dropping initially from the opening in light USD buying taking the market to the 1.1330 level and remaining there until the grey hours and early European buying. London opened and again the market was pushing the 1.1380 levels, the movement between the two levels continued into the NYK session before slowly falling away again this time triggering weak stops through the 1.1330 levels to tumble to the 1.1310 area. The market did recover into the run to the FOMC, the FOMC meeting acknowledge stronger growth and weakening inflation because of declining energy prices however, did not mention a weakness in core prices for the moment this left the market continuing to believe that rate will be this year and more indications are likely in the June announcement. The announcement saw a small spike in the Euro to the 1.1370 levels before dropping quickly to the 1.1310 triggering weak stops again and falling away to the 1.1280 areas into the close.
  • GBP: Cable drifted in a reasonably tight range drifting from the opening 1.5190 to base on the 1.5160 levels for the majority of the Asian session, the market rose a little into the grey hours and the market into the London saw the market start to rise to push at the resistance around 1.5220 areas. The market was unable to push through and started to drop away from the level and into the NYK session pushing back to the early lows before the FOMC. USD rallied from the FOMC however, against the GBP it was limited with a push to just below 1.5140 before holding for the end of the day.
  • JPY: USDJPY opened around the 117.90 levels and although the move into Tokyo saw buying pressure from a resurgent AUDJPY carry trade after the AUD numbers taking the USDJPY higher from the release however, having pushed to the 118.20 levels the market was unable to push through and was limited by inaction as the market played a two way game with sellers lightening positions while carry trade buyers matched the selling. The move into the grey hours saw the carry trade buying melt away and the USDJPY dropped back into the London opening slipping through the 117.80 area and triggering some weak stops and a fall to the 117.60 levels. The market then held around the 117.80 levels all the way into the FOMC announcement, while the rest of the market lost ground at this point JPY strengthened as Japanese investors found the carry trade less attractive and the weak longs quickly lost interest dropping back and taking the USDJPY lower in the face of the USD rally moving down through the 117.30 areas and into the light supportive area and holding into the close around 117.50.
  • AUD: The Oz slipped from the opening levels around the 0.7935 areas to tumble to just above the 79 cent levels and into the release, better than expected CPI numbers broadly speaking led the market quickly higher pushing to the 80 cent levels before spending the day trading around the 0.7990 areas until the grey hours and early buyers tried to push the topside offers out of the way but failed to push to far through the 0.8020 levels and dropped back to the 0.7990 areas. At this point the EURAUD broke from its holding areas around the 1.4200 level triggering weak stops triggering a small short squeeze to the 1.4300 areas, driving the Oz back to 0.7950 areas. The market traded in a tight area around the 0.7960-70 level into the FOMC and the reversal of fortune for the Oz saw the market lose all the gains and a little more to push to the 0.7890 levels and the close.

 

Yesterday’s premiership results

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

AUD       Westpac Leading Index M/M Dec A 0.00% | P -0.10%

AUD       CPI Q/Q Q4 A 0.20% | C 0.30% | P 0.50%

AUD       CPI Y/Y Q4 A 1.70% | C 1.80% | P 2.30%

AUD       CPI RBA Trimmed Mean Q/Q Q4 A 0.70% | C 0.50% | P 0.40% | R 0.30%

AUD       CPI RBA Trimmed Mean Y/Y Q4 A 2.20% | C 2.20% | P 2.50%

AUD       CPI RBA Weighted Median Q/Q Q4 A 0.70% | C 0.50% | P 0.60%

AUD       CPI RBA Weighted Median Y/Y Q4 A 2.30% | C 2.20% | P 2.60%

EUR        German Import Price Index M/M Dec A -1.70% | C -1.50% | P -0.80%

CHF        UBS Consumption Indicator Dec A 1.42 | P 1.29

EUR        German GfK Consumer Sentiment Feb A 9.3 | C 9.1 | P 9

USD       Crude Oil Inventories A 8.9M | C 4.2M | P 10.1M

USD       FOMC Rate Decision A 0.25% | C 0.25% | P 0.25%

NZD       RBNZ Rate Decision A 3.50% | C 3.50% | P 3.50%

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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