Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 117.558 | EURUSD 1.14787 | EURJPY 134.959 | AUDUSD 0.77917 | NZDUSD 0.73251 | USDCAD 1.2417 | EURCHF 1.06049 | USDCHF 0.92368 | GBPUSD 1.51663 | EURGBP 0.75688 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               118.00 | 117.47

EUR/USD             1.14845 | 1.14555

EUR/JPY               135.35 | 134.745

AUD/USD            0.7846 | 0.7752

NZD/USD             0.7450 | 0.7288

USD/CAD             1.2444 | 1.2390

EUR/CHF              1.0627 | 1.0580

USD/CHF             0.9264 | 0.92345

GBP/USD             1.5176 | 1.5139

EUR/GBP             0.75705 | 0.7560
For today

  • EUR: Euro’s opened around the 1.1480 level and traded steadily lower and into the Tokyo session dipping through the 1.1460 areas, the rest of the session has been quietly moving around that level pushing only to the 1.1470 area and remaining in the small range. Topside offers now begin in the 1.1550 area and stiffen the closer to the 1.1600 areas, through there see’s further offerings and while Greece according to the FT negotiations for the moment are not full of sunshine and light and disagreements continue, with German populace said to be disapproving of any further bailouts with 73% against further loans and while it may be labelled ECB we all know who the paymaster is. The next level is possibly a step to far with offers appearing around the 1.1650 areas. Downside sees light bids into the 1.1420 areas giving way to weak stops likely through the 1.1380 areas, a push through this level opens up the market for another test lower towards the 1.1100 area.
  • GBP: As with the Euro the market has been reasonably quiet moving from the 1.5160 levels the market tested lower into the Tokyo session dipping to the 1.5140 area before moving back to test slowly the topside and into the 1.5170’s in quiet but steady trading. Topside offers remain strong into the 1.5200 level with the offers running into the 1.5220 areas, a push through here should see some stops being triggered however, and the market to the topside is likely to run into further offers above the 1.5250 areas and a short lived rally as the market starts to see another round of strong offers into the 1.5300 key areas. Downside bids are likely to be patchy with congestion around the 1.5100 possibly giving way easily with a concerted move lower, the downside bids thicken as the market moves towards the 1.5000 areas again and that 1.4990 level remains a strong level. A push through that level is not likely to see too much interference until light option barriers into the 1.4900 area and a more concerted bidding area from 1.4850 onwards.
  • JPY: With the RBA announcement out of the way the USDJPY again started the day slowly rising into the Tokyo session from the opening 117.55 areas, moving into the Tokyo session pushing through the 117.70 levels as early buyers in AUDJPY moved in to reset there longs after closing out yesterday and possibly slightly better than they were having seen the carry trade move from 89.40 to move into this session just short of the 91.60 levels seen yesterday at the start of the session. The TKY session saw fresh impetus and the market in USDJPY traded through the offers and into the 118.00 level before running out of steam and slipping back to the 117.70’s and the move towards the grey hours. USDJPY offers continue through the 118.00 level and likely to continue to the 118.50 areas, even a break through this level will likely see the offers move back in the closer you get to 118.80. Downside bids into the 117.00 levels and into 116.80 before giving away to only light stops and further downside bids likely to appear from the 116.50 areas and onwards.
  • AUD: Having moved back from yesterday sharp drop to the 0.7630 areas the markets recovery led into the Tokyo opening around the 0.7760 areas and the market in AUDJPY started to rise and Oz moved steadily higher trading initially to the 78 cent level and then having dipped from the first rally pushed in a tight range to touch through the 0.7840’s. Offers start around the 0.7850’s and into the 0.7860 levels and the 200DMA and previous tops a push through will see the market attempt the 79 cent levels and probably less on the offer side protecting. To the downside the market is fairly open with light bids into the 77 cent level but nothing really large until the market tests the lows from yesterday around the 0.7650 levels.

 

Overnight News

JPY:

Japan to Nominate Re-inflationist Harada for BOJ Board, Nikkei Says

BOJ’s Easing Isn’t for Financing Government Debt, Says Kuroda

Iwata: Inflation Expectations Haven’t Fallen Much, in Wider View

BOJ Iwata: Prices Likely to Reach 2% in Period Centred on FY15

Markit/JMMA Japan Jan. Composite PMI 51.7 vs 51.9 in Dec.

Japan to Consider Expanding Navy Patrols to South China Sea

NZD:

RBNZ’s Wheeler Says Period of Rate Stability Best Option

N.Z. Employers Added More Jobs than Forecast Last Quarter

EUR:

ECB Said to Resist Key Element of New Greece Plan, FT Reports

Syriza Will Dismantle Greek Cartels, Varoufakis Says: Telegraph

Weidmann Says Sovereign QE Is Not Normal Policy Instrument: vbw

CNY:

HSBC China Jan. Services PMI 51.8 vs 53.4 in Dec.

AUD:

Australian FX Committee Plans to Discuss Market Reaction to SNB

GBP:

U.K. Price Deflation adds to Consumer Spending Cheer, BRC Says

 

Today’s data

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

NZD       Unemployment Rate Q4 A 5.70% | C 5.30% | P 5.40%

NZD       Employment Change Q/Q Q4 A 1.20% | C 0.80% | P 0.80% | R 0.90%

GBP       BRC Shop Price Index Y/Y Jan A -1.30% | P -1.70%

JPY         Labour Cash Earnings Y/Y Dec A 1.60% | C 1.60% | P -1.50% | R 0.10%

CNY        HSBC Services PMI Jan A 51.8 | P 53.4

08:45     EUR        Italy Services PMI Jan C 49.9 | P 49.4

09:00     EUR        Eurozone Services PMI Jan (F) C 52.3 | P 52.3

09:30     GBP       Services PMI Jan C 56.6 | P 55.8

10:00     EUR        Eurozone Retail Sales M/M Dec C -0.10% | P 0.60%

13:15     USD       ADP Employment Change Jan C 220K | P 241K

15:00     USD       ISM Non-Manufacturing Composite Jan C 56.8 | P 56.2

15:00     CAD       Ivey PMI Jan C 55.9 | P 55.4

15:30    USD       Crude Oil Inventories P 8.9M

 

Harry Hindsight              

  • EUR: A quiet opening for the market with Euro’s moving around the 1.1340 levels in early trading and dipping slightly lower and into the 1.1320’s after the RBA announcement, the market moved into the London session and although the range increased slightly trading between the 1.1315-50 level the market remained quiet until the NYK session with numbers in Europe continuing to disappoint. With semi positive headlines for Greece with a potential to resolving the debt standoff the Euro caught a short squeeze into NYK and this continued from the 1.1440 levels to trade higher after a very disappointing factory orders number sending the market trading to above 1.1500 and light stops to the high 1.1530’s before drifting off once the market closed in London and back through 1.1500 to touch into a 1.1480 close. As a side note the continuation of the EURCHF rally took the market above the 1.0600 levels over the course of the session as the market continues to buy the rumour.
  • GBP: Cable made early losses, holding steady in the 1.5040 level before dropping back after the RBA announcement to the 1.5020 level and into the London session dipping just before the official opening to again touch below the 1.5000 level and around the 1.4990 area, Construction PMI helped to move the market back higher but it was limited pushing only to the 1.5040 area initially, the break out high was weak stops above the 1.5040 area, EURGBP selling from the 0.7560-50’s while Euro’s remained static saw the Cable start to push higher in steady waves finding limited resistance every 20 pips but only spending an hour or so before breaking each level with another set of weak stops through the 1.5080 areas breaking as the Euro pushed higher. EURGBP quickly reversed its losses from this point with the short squeeze in the Euro having little effect on the Cable as it traded around the 1.5100 level but seeing the cross rally to the 0.7590 areas into the later part of the NYK session. Cable eventually followed through and moved higher on the factory order number and the market completed its highs just short of the 1.5200 levels and the end of the London session. The end of the day saw the market stabilise around the 1.5160 areas for the run into the close as volumes dropped off.
  • JPY: The USDJPY saw nervous selling in the AUDJPY carry trade early in the session with the JPY leg doing most of the work as Oz held its own as professional buyers moved in to take positions for the weak side, a no change in interest rates would have given the Oz a reasonable boost to the topside however, while they bought the Oz the Japanese retail market was less inclined to continue holding the carry trades and the USDJPY slipped from the 117.70’s to trade over the first two hours from the Tokyo opening to the 117.20 supportive area. The release by the RBA saw the AUDJPY drop quickly and the USDJPY moved down to below the 117.00 areas driving through the bids and almost reaching the bottom of the buying touching just through the 116.90 areas and then holding for grim life to the 117.00 into the grey hours, the early Europeans and specifically early London were quick buyers moving the market into the London open back to the 117.20 levels and steadily taking the market to the 117.50 as the USDJPY traded independently of the rest of the complex. NYK opening saw the same type of buying a little bit sharper as the weak stops were close out and the market ran to above the 117.70 areas before the release of the US Factory Order numbers however, although the poor numbers effected the market in general the USDJPY was less inclined to move to much dropping slowly back to the 117.20 areas before bouncing and holding the 117.50-60 area into the close.
  • AUD: The Oz initially tested the topside as professional dealers/traders bought steadily in the session, while Japanese retail lightened there carry trades and the Oz moved from the opening 78 cent level to push into the mid 0.7830’s before holding around 0.7810 into the RBA announcement. While the some sectors of the market appear to have been surprised this was telegraphed over the past few weeks and although it arrived a little quick they did state that there was likely to be a couple of cuts over the year. The market in Oz dropped from the 0.7810 level quickly down to the 0.7680 area without touching the sides, the market continued a little further to just above the 0.7650 area and holding into the grey hours, early London dropped the market down towards the 0.7630 area before the official opening saw the market revers and trade steadily higher into the NYK session. Pre US Factory orders the market hit the 77 cent level and the release saw strong buying as the shorts quickly covered into the 0.7740 areas and then the market started to see option gamma buying moving in around the NYK cut to take the market all the way back to the start of the day and a weak push through the 0.7850 on the topside before settling back as the London market disappeared and the market finished only slightly lower on the day.

 

Yesterday’s premiership results

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

JPY         Monetary Base Y/Y Jan A 37.40% | C 40.10% | P 38.20%

AUD       Trade Balance (AUD) Dec A -0.44B | C -0.85B | P -0.93B | R -1.02B

AUD       Building Approvals M/M Dec A -3.30% | C -4.80% | P 7.50% | R 7.70%

AUD       RBA Rate Decision A 2.25% | C 2.50% | P 2.50%

CHF        Trade Balance (CHF) Dec A 1.52B | C 2.17B | P 3.87B | R 2.80B

GBP       Construction PMI Jan A 59.1 | C 56.9 | P 57.6

EUR        Eurozone PPI M/M Dec A -0.40% | C -0.70% | P -0.30%

EUR        Eurozone PPI Y/Y Dec A -2.70% | C -2.50% | P -1.60%

CAD       Industrial Product Price M/M Dec A -1.60% | C 0.30% | P -0.40%

CAD       Raw Materials Price Index M/M Dec A -7.60% | C -4.60% | P -5.80%

USD       Factory Orders Dec A -3.4% | C -2.4% | P -1.7%

 

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

Any opinions, news, research, analyses, prices or other information ("information") contained on this Blog, constitutes marketing communication and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the information contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. LMAX Group has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

LMAX Group will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the produced information was obtained from sources deemed to be reliable, LMAX Group does not provide any guarantees about the reliability of such sources. Consequently any person acting on it does so entirely at his or her own risk. It is not a place to slander, use unacceptable language or to promote LMAX Group or any other FX and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.