Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 117.271 | EURUSD 1.13456 | EURJPY 133.039 | AUDUSD 0.77531 | NZDUSD 0.73651 | USDCAD 1.25764 | EURCHF 1.05051 | USDCHF 0.92611 | GBPUSD 1.51824 | EURGBP 0.74721 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               117.44 | 117.02

EUR/USD             1.1370 | 1.1304

EUR/JPY               133.435 | 132.57

AUD/USD            0.7792 | 0.7733

NZD/USD             0.7395 | 0.7341

USD/CAD             1.2585 | 1.2544

EUR/CHF              1.05055 | 1.0472

USD/CHF             0.9267 | 0.9226

GBP/USD             1.5213 | 1.5170

EUR/GBP             0.7475 | 0.7450
For today

  • EUR: The Euro continued the move from NYK dropping to just above the 1.1300 areas before finding sufficient support to hold the market, Tokyo were quick buyers on the opening as the EURJPY pushed back through the 133.00 levels. Euro’s moved steadily from that point pushing to the 1.1360 levels in quiet trading in quiet trading before holding for the remainder of the session. The market holds its breath for the next round of the Greek Tragedy II with the downside holding bids into the 1.1280 levels through to 1.1250 however, they are not likely to be as strong this time around, a move through that level exposes the downside 1.1100 level and better bids. Topside offers are a little thin however, a push through the 1.1400 area with weak offers and then 1.1450 better offers from then on towards the 1.1500 areas.
  • GBP: Cable rose steadily with trading quiet pre Tokyo and then steadily rising away from the 1.5170 areas through the opening 1.5180 and continuing in a tight channel to the 1.5210 areas. Topside offers into the 1.5250 area before giving way to light stops through the 1.5260 areas, a push through the level still leaves the 1.5300 likely to be well protected and one would suspect the Euro would need to be very weak and EURGBP under pressure.
  • JPY: The USDJPY remained in a reasonably tight range but moving quietly into the Tokyo session the market dropped back from above the 117.30 levels before the Tokyo session saw strong fixing supply and the market dipped towards the 117.00 areas before running out of steam. The move back higher was steady and lacked volume and conviction and having nearly reached the 117.50 fell back to the opening levels. Light bids 117.00 areas with increasing size to the 116.80 with limited stops through the level if the market did find enough impetus the market could make an attempt lower however, 116.00-115.80 remains a strong level.
  • AUD: The Oz traded very quietly dipping a little into the Tokyo session to just below the 0.7740 area before recovering and moving back to the 0.7790 levels in quiet trading, for the moment the market holds around the 0.7780 areas as the market moves towards the grey hours. Topside offers into the 0.7850 remain in play and likely to cap the market with no news to help however, there are a few US numbers that could add to the mix, downside bids are weak until through the 0.7740 area where bids increase into 77 cents however, those bids are not likely to be too strong for the moment and could quiet easily give way for a further test of the 0.7650 levels.

 

Overnight News

JPY:

Japan Nominates Yutaka Harada to Be Bank of Japan Board Member

Japanese Bought Net 675.2 Billion Yen Overseas Debt Last Week

JGB 30-Year Auction Draws Lowest Bid-to-Cover Ratio Since Oct.

EUR:

ECB’s Praet Sees 1st Signs Euro-Zone Eco Improvement: Les Echos

Greece Banking ‘Adequately Capitalized,’ Finance Ministry Says

CNY:

China Should Expand Forex Trading Band, Researcher Says: Daily

China 2014 Overseas Rail Project Contracts Value $24.7b: Mofcom

INR/USD:

Rajan Says U.S. Must Accept Strong Dollar as Fed Normalizes

AUD:

Australian Dec. Retail Sales Rise 0.2% M/M; Est. 0.3% Gain

Australia’s Dec. Private New Home Sales Fall 1.9% M/m

 

Today’s data

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

AUD       Retail Sales M/M Dec A 0.20% | C 0.30% | P 0.10%

06:45     CHF        SECO Consumer Confidence Jan C -13 | P -11

07:00     EUR        German Factory Orders M/M Dec C 1.40% | P -2.40%

09:10     EUR        Eurozone Retail PMI Jan  P 47.6

12:00     GBP       BoE Rate Decision C 0.50% | P 0.50%

12:00     GBP       BoE Asset Purchase Target C 375B | P 375B

12:30     USD       Challenger Job Cuts Y/Y Jan P 6.60%

13:30     USD       Non-Farm Productivity Q4 (P) C 1.00% | P 2.30%

13:30     USD       Unit Labour Costs Q4 (P) C 1.00% | P -1.00%

13:30     CAD       International Merchandise Trade (CAD) Dec C -1.0B | P -0.64B

13:30     USD       Initial Jobless Claims (JAN 31) C 277K | P 265K

13:30    USD       Trade Balance Dec C -$38.3B | P -$39.0B

 

Harry Hindsight              

  • EUR: The market opened around the 1.1480 level and traded down through the 1.1460 levels before recovering into the grey hours in fairly quiet trading, with the FT reporting less than encouraging news from the negotiations between Greece and its creditors, the market then started trading lower from the official opening onwards and although the range remained limited the market trended steadily lower ignoring the better PMI numbers and focused more on the Greek tragedy II, the move into the NYK session saw numbers slightly less than expected however, it was sufficient for the market to test the 1.1400 levels and then hold quietly around the 1.1420 areas for several hours.  Late into the session the ECB announced the end to waivers on Greek Government debt as collateral which will raise immediate tensions. The market initially spiked higher for some reason trading towards 1.1450 before dropping quickly through to 1.1380 and once through hitting 1.1320 very quickly before a tiny bounce into the close.
  • GBP: Cable moved quietly in Asia moving from the 1.5160 level and to the 1.5140 levels before rising in the Tokyo opening towards the opening, from then the market moved quietly around the 1.5160 level before starting a steady rise late into the session. The move into the grey hours saw the market moving quietly towards the London opening just short of the 1.5180 areas, good PMI numbers saw the Cable rise steadily from that point on pushing to the 1.5240 over a few hours and into the NYK session, the market moved back towards the 1.5200 levels struggling quietly to maintain the gains until the ECB release. The EURGBP cross moved quietly throughout Asia and only on the release of the PMI numbers did the cross start to lose ground dropping in a tight channel from the 0.7570 levels to below the 0.7500 areas, the release sent the market on the cross lower again and the market dropped to the 0.7460 level, this meant although Cable was dragged lower by the Euro it didn’t move too far and the market finished the day around 1.5180.
  • JPY: All the sellers of the AUDJPY carry trade the previous day moved back in to take back their longs and the USDJPY rose steadily through the first few hours from the 117.50 level to 118.00 and the strong offers, the market stayed in touch with the level for several hours however, the closer we got to the grey hours the less inclination for the buyers and the market started to steadily drift lower and into the 117.70 level, London came in as quick sellers and the market was back to where it started for the official opening. The market was then fairly choppy with as the market moved around on air at times trading between the 117.40-70 levels before again testing through to the 117.30 areas, ECB news sent the EURJPY lower and the USDJPY followed suit dropping to the 117.10 and holding just off those lows into the close.
  • AUD: The Oz moved towards the highs from the opening 0.7780 trading quietly until the Tokyo session opened then pushing to above the 0.7840 levels and into the strong offers, having failed to break through the market slowly dropped back and into the grey hours selling increased to take the market back to the opening levels, the market saw strong buying on the opening however, as with the first attempt the market failed to push through and the market moved into the NYK session around the 78 cent levels. NYK sold the market lower from the opening and it traded around the 0.7760 levels for the bulk of the day with EURAUD seeing the Oz rise at one point but the market finished on that 0.7760 level.

 

Yesterday’s premiership results

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

EUR        Italy Services PMI Jan A 51.2 | C 49.9 | P 49.4

EUR        Eurozone Services PMI Jan (F) A 52.7 | C 52.3 | P 52.3

GBP       Services PMI Jan A 57.2 | C 56.6 | P 55.8

EUR        Eurozone Retail Sales M/M Dec A 0.30% | C -0.10% | P 0.60% | R 0.70%

USD       ADP Employment Change Jan A 213K | C 220K | P 241K

USD       ISM Non-Manufacturing Composite Jan A 56.7 | C 56.8 | P 56.2

CAD       Ivey PMI Jan A 45.4 | C 55.9 | P 55.4

USD       Crude Oil Inventories A 6.3M | C     4.0M | P 8.9M

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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