Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 117.543 117.48-58 | EURUSD 1.12855 1.1281-95 | EURJPY 132.661 132.50-65 | AUDUSD 0.7768 0.7735-44 | NZDUSD 0.72579 0.7255-65 | USDCAD 1.27306 1.2719-27 | EURCHF 1.03899 | USDCHF 0.92065 | GBPUSD 1.50634 | EURGBP 0.74912 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               117.88 | 116.64

EUR/USD             1.1328 | 1.1280

EUR/JPY               133.37 | 132.00

AUD/USD            0.7795 | 0.7726

NZD/USD             0.7277 | 0.7236

USD/CAD             1.2740 | 1.2681

EUR/CHF              1.0502 | 1.0400

USD/CHF             0.92835 | 0.92015

GBP/USD             1.5100 | 1.5070

EUR/GBP             0.75065 | 0.7479

 

For today

• EUR: Weekend news dominated the opening and pre-trading before the official opening. With the war of words gentile for the moment with Greece wanting further negotiations in a move to restrict austerity while Germany wants the agreements stuck too. CHF paper ran a story of an unofficial SNB level in the EURCHF to be 1.05-1.10 however, there has been no official notification or movement in that direction and to be honest it’s not likely to be a good game plan if QE in the Eurozone kicks in and weakens the Euro further, which is why the SNB backed off in the first place. The market opened above the 1.1310 areas as good EURCHF buying entered the market and supported the Euro from the opening, a light round of selling was unable to push the market through the 1.1300 downside before steady buying into the Tokyo session saw the market push through the 1.1320. The market then settled back to trade around the 1.3110 areas again and remains in the area into the grey hours. Topside offers into the 1.1370 area through to 1.1400 have capped the moves higher over the past few days however, a good push through 1.1420 will see some light stops being triggered and the market opening for a test into the 1.1500 lightly defended areas. Downside has light bids into the 1.1250 areas at which point the bids start to increase on any move to the 1.1200 areas, even through this area the market has bids lined up with profit taking from shorts hanging around to counter the stops a push through the 1.1150 level will see the downside open up with 1.1100 not so well defended as previous.
• GBP: Cable opened slightly higher than the close around the 1.5080 levels and this has been where the market has remained a minor attempt above the 1.5090 levels was turned in pre Tokyo and the market remains around the 1.5080 opening levels into the grey hours. Topside has only light offers into the 1.5100 levels before giving way to weak stops on a move through the levels, A push through the 1.5150 areas will see only limited offers before opening up for a further test of the 1.5200 areas and the better offers just above. Through 1.5230 still leaves the market offered to the topside and strong enough to hold the market without strong impetus. Downside would likely see light bids into the 1.5000 areas and stronger through the level, only a strong push through the 1.4950 areas would open the market with a test into the 1.4880 levels a possibility.
• JPY: Pre-opening saw the interbank market drop back quickly with the market triggering stops and the market quickly touching 116.64 before slowly recovering as liquidity moved into the market, by the time the market reached the official opening the market had moved back to above the 117.10 area and the opening was contained in a tight range until Tokyo opened its doors and the market quickly pushed into the bottom end of Fridays range, the market steadily recovered and there were weak stops triggered through the 117.60 levels and a small squeeze to above the 117.809 levels. Offers above the 117.80 levels however, the market is possibly lighter than previously with the better offers likely to be above the 118.50-80 levels and this is the tough level for the moment with a push through 119.00 likely to see further selling appearing from the exporters. Downside bids into the 117.20 and through to 116.80 before any real sign of stops, but a push here opens up a new test of the downside 116.00 areas.
• AUD: Apart from opening weaker in the pre-market the Oz has traded in a narrow band once the official opening took the market from the 0.7755 areas and steadily to the 0.77.90 level, the market having made the highs drifted back to the 0.7770 and back again as the market sufficient impetus to move in any direction. Downside see’s bids into the 0.7720 areas and a push through to test below 77 cents will see the market probing the 0.7680 likely support. A push above the 78 cent level will likely see some weak stops however, the market through that level opens up a chance of a rally however, the fundamentals for the moment would suggest consolidation in the area before a move in either direction.

Overnight News

CNY:

HSBC China Jan. Manufacturing PMI 49.7; Est. 49.8

China Should Adopt More Flexible Forex Policy: People’s Daily

USD:

Obama Says Wages in the U.S. Are Starting to Tick Up

Obama to Seek 1.3% Pay Boost for Federal Workers, Troops: W.Post

CHF:

SNB Has Unofficial Corridor of CHF1.05-CHF1.10 Against Euro: SAM

JPY:

Kuroda Says FX Rate Overall Not a Big Negative Now for Japan

Markit/JMMA Japan Jan. Manufacturing PMI 52.2 vs 52 in Dec.

Japan’s GPIF Seeking to Hire Staff for Alternative Investments

AUD:

Abbott Says Remains Focussed on Reducing Budget Deficit

Australia’s Jan. TD Monthly Inflation Gauge Rises 0.1% M/m

AUD: Australia Jan. Manufacturing Index Rises 2.1 Pts to 49.0

CAD/AUD:

Canadian Pension Plan to Invest A$525m in Australian Motorway

Today’s data

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

AUD       TD Securities Inflation M/M Jan A 0.10% | P 0.00%

CNY        HSBC Manufacturing PMI Jan (F) A 49.7 | C 49.8 | P 49.8

8:30        CHF        SVME-PMI Jan C 54.5 | P 54

8:45        EUR        Italy Manufacturing PMI Jan C 49.3 | P 48.4

9:00        EUR        Eurozone Manufacturing PMI Jan (F) C 51 | P 51

9:30        GBP       PMI Manufacturing Jan C 52.9 | P 52.5

13:30     USD       Personal Income Dec C 0.20% | P 0.40%

13:30     USD       Personal Spending Dec C -0.30% | P 0.60%

13:30     USD       PCE Deflator M/M Dec C -0.30% | P -0.20%

13:30     USD       PCE Deflator Y/Y Dec P 1.20%

13:30     USD       PCE Core M/M Dec C 0.00% | P 0.00%

13:30     USD       PCE Core Y/Y Dec C 1.40% | P 1.40%

15:00     USD       Construction Spending M/M Dec C 0.70% | P -0.30%

15:00     USD       ISM Manufacturing Jan C 55 | P 55.5

15:00     USD       ISM Prices Paid Jan C 40 | P 38.5

Weekend News

CNY:

China Factory Gauge Sinks to First Contraction in Two Years
JPY:

Japan Says Journalist Goto Is Probable Jihadist Video Victim
Tanigaki Says Japan Needs Debate on Use of Military Overseas
EUR:

Tsipras Targets Deal With Euro Area Ahead of Diplomatic Effort
ECB’s Constancio Signals Greek Waiver May End If Program Dropped
Germany Says Greece Risks Isolation as Merkel Shuns Tsipras
ECB’s Praet Says Not Central Bank Role to Pressure Governments
Dijsselbloem Says It’s Up to Greece to Decide How to Move Ahead
Greek Debt-Servicing Ability Better Than Data Shows: Liikanen
Podemos Pledges to Restructure $1.1 Trillion of Spanish Debt
DKK:

Denmark to Stop Government Bond Sales to Fight Krone Gains
USD:

Obama Said to Seek 19% Global Minimum Tax to Aid Road Fund
UAH:

No Deal in Ukraine Peace Talks as Fight Rages Over Key Town
AUD:

Abbott Pressured as Allies Punished in Queensland Election

Harry Hindsight

• EUR: The market opened around the 1.1325 areas and during the early part of the Asian session was unable to move to far from the 1.1330 level trading to the 1.1320 levels and into the mid 1.1330’s before starting to move higher into the grey hours and above the 1.1340. From the grey hours onwards the market started to trade in an ever widening range, moving into the London session pushing above the 1.1350 area before dropping back to below the 1.1310 levels before the Eurozone CPI and unemployment numbers. The release had the market reversing and moving steadily to above the 1.1360 and towards the offers waiting for the market. The move into the NYK session saw USD buying starting to move into the market and the reversal of fortune for the Euro, with the market trading down through the 1.1300 level and steadily pushing lower over the course of the session to hold around the 1.1290 levels touching through the 1.1280 levels a couple of times. With figures in both Europe and US showing mixed results the market was unwilling to head into the weekend carrying too much position wise.
• GBP: Cable had a quiet session before moving into the NYK session and increasing the range to the downside. Opening around the 1.5070 levels the market held just above the level deep into Asia eventually pushing the 1.5080 level aside into the grey hours. Some light buying in EURGBP took the cable a little lower however, this only expanded the range into the London session with the market basing off the 1.5050 level and trading towards the 1.5100 level several times before moving towards the NYK session. USD buying kicked in for the opening and the Cable opened to the downside and tested into the 1.4990 level before bouncing slightly and regaining its opening levels into the closing period.
• JPY: The drifted started just before the opening of Tokyo  continued throughout the day and even when USD buy kicked in against the other Majors it didn’t materialize in the USDJPY and the4 market dropped from the mid 118.40’s in a tight channel to the 117.30 level late in the day and only started to stabilize once the London session disappeared from the scene, with the USDJPY only able to make the 117.55 areas for the close.
• AUD: A rise from the opening saw the Oz move through Asia basing off the opening 0.7770 areas before becoming choppy through the London and NYK sessions dropping on two occasions down into the 0.7730 levels and recovering each time to the 0.7790 areas and finishing the day just above the opening and in the 0.7780’s with the currency buffeted by the movement of the other majors.

Friday’s premiership results

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

NZD       Building Permits M/M Dec A -2.10% | P 10.00% | R 10.50%

JPY         Unemployment Rate Dec A 3.40% | C 3.50% | P 3.50%

JPY         Household Spending Y/Y Dec A -3.40% | C -2.30% | P -2.50%

JPY         National CPI Core Y/Y Dec A 2.50% | C 2.60% | P 2.70%

JPY         Tokyo CPI Core Y/Y Jan A 2.20% | C 2.20% | P 2.30%

JPY         Industrial Production M/M Dec (P) A 1.00% | C 1.20% | P -0.50%

GBP       GfK Consumer Sentiment Jan A 1 | C -2 | P -4

AUD       PPI Q/Q Q4 A 0.10% | C 0.30% | P 0.20%

JPY         Housing Starts Y/Y Dec A -14.70% | C -14.80% | P -14.30%

CHF        KOF Leading Indicator Jan A 97 | C 94.7 | P 98.7 | R 98.8

EUR        Italian Unemployment Rate Dec (P) A 12.90% | C 13.50% | P 13.40% | R 13.30%

GBP       Mortgage Approvals Dec A 60.0K | C 59.0K | P 59.0K

GBP       M4 Money Supply M/M Dec A 0.10% | C 0.50% | P 0.00%

EUR        Eurozone Unemployment Rate Dec A 11.40% | C 11.50% | P 11.50%

EUR        Eurozone CPI Estimate Y/Y Jan A -0.60% | C -0.50% | P -0.20%

EUR        Eurozone CPI – Core Y/Y Jan (A) A 0.50% | C 0.70% | P 0.70%

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

USD       Employment Cost Index Q4 A 0.60% | C 0.70% | P 0.70%

USD       GDP (Annualized) Q4 (A) A 2.60% | C 3.10% | P 5.00%

USD       GDP Price Index Q4 (A) A 0.00% | C 0.90% | P 1.40%

USD       Chicago PMI Jan A 59.4 | C 58 | P 58.3

USD       U. of Michigan Confidence Jan (F) A 98.1 | C 98.2 | P 98.2

Stay lucky

Andy