Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 117.524 | EURUSD 1.14776 | EURJPY 134.888 | AUDUSD 0.7798 | NZDUSD 0.73896 | USDCAD 1.24366 | EURCHF 1.05731 | USDCHF 0.92123 | GBPUSD 1.5329 | EURGBP 0.74873 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               117.55 | 117.27

EUR/USD             1.14865 | 1.14615

EUR/JPY               134.93 | 134.45

AUD/USD            0.7860 | 0.7795

NZD/USD             0.7434 | 0.7400

USD/CAD             1.2451 | 1.2430

EUR/CHF              1.05965 | 1.05705

USD/CHF             0.92415 | 0.92085

GBP/USD             1.5341 | 1.5319

EUR/GBP             0.7488 | 0.7478
For today

  • EUR: With NFP ahead, and New Zealand closed for Waitangi Day the market has been extremely quiet with the Euro’s dropping from the opening to trade to just above the 1.1460 and trading to the 1.1470 levels for much of the day so far, Topside offers into the 1.1500 levels give way to weak stops before stronger offers from the 1.1540 levels going back to the 1.1600 areas, a push through will likely see a test of the 1.1650 which is likely to be key to a larger move higher. Downside see’s light bids into the 1.1420-1.1400 areas with stops likely on a break below the 1.1380 areas and then stronger support around the 1.1350 level into 1.1300.
  • GBP: Cable like the Euro has remained fairly quiet with the market trading in a tight 1.5320-40 range for most of the day with volumes very light. While the market continues to struggle around the 1.5340 areas a move through the level leaves little in the way of Cable testing through to the 1.5600 levels, with light offers likely around the sentimental 50’s and 00’s you will need to follow the Euro and or USD depending on the time of day for direction, a disappointing trade balance is only a political football and the details will count for more if the export side is weaker and may undermine the GBP in early trading. Downside has only light bids into the 1.5200 level with better bids from the 1.5150 down into the 1.5100 areas. EURGBP is likely to dominate in early trading in London before the NFP kick in.
  • JPY: USDJPY remained in the lower end of the range we’ve seen for the past two weeks trading slowly lower from the opening 117.50 areas to push below 117.30 before finding support enough to remain in the 117.30-40 areas for the rest of the session. Topside offers light from the 117.60 level but likely to increase in size the closer to 118.00 areas you get, a push through the 118.20-30 will again set up a test higher however, and this would likely need a strong NFP number. Downside bids 117.20 through to 116.80 dominate the downside and only a strong break through the level will open up a test of the 116.00-115.90 lows of the year however, while it opens up the downside the Japanese are still investing fairly heavily in foreign investments and would likely see those yield chasers moving in quickly to fill the gap.
  • AUD: The market traded quietly into the Tokyo session and the RBA Monetary policy release, with expectations of lower GDP growth for 2015, and inflation however, the key event seemed to be that the RBA was now on hold for the rates until May as it assesses the 0.25 cash rate cut and its impact on the market, so from the quiet trading around the 78 cent level the market shot up to just short of the 0.7860 level surprising the market and then forcing some to sell quickly and back to the 0.7830 area, the market then drifted as some in the market caught long from the quick market slowly cleared there risk and once these were out of the market the rally started again over a longer period pushing steadily back to the 0.7840 area and poised just below what was the strong offers. Topside offers still around the 0.7850 areas however, I would guess that some of that has been taken out and the balance may be weaker and so 0.7860 will likely see weak stops through the area and then an open run to the 0.7900 levels and another strong set of offers. Downside has light bids into the 78 cent level however; the new shorts are not likely to be turning their position so quick so expect better bids from the 0.7760 level down. Of course this is notwithstanding the NFP.

 

Overnight News

CNY:

PBOC Sets Yuan Fixing 2.06% Stronger Than Yesterday’s Shanghai Close

JPY:

Amari: To Work With LDP in Crafting Fiscal Consolidation Plan

JPY/CNY/KRW:

Japan, China, S.Korea Foreign Ministers to Meet in March: Yomiuri

JPY/PHP:

BOJ, Philippine Central Bank Announce Liquidity Arrangement

CNY:

China Reserve Ratio Cut Not QE Replication, People’s Daily Says

CNY/SGD:

China, Singapore Plan Financial Cooperation Project: 21st Herald

AUD:

RBA Cuts 2015 GDP, CPI Forecasts; Investment Pickup Delayed

AUD:

Australia’s Jan. Construction Index Rises 1.5 Pts to 45.9

 

Today’s data

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

JPY         Leading Index Dec (P) A 105.2 | C 105.5 | P 103.9

07:00     EUR        German Industrial Production M/M Dec C 0.40% | P -0.10%

08:00     CHF        Foreign Currency Reserves Jan P 495.1B

08:15     CHF        Retail Sales (Real) Y/Y Dec C 0.40% | P -1.20%

09:30     GBP       Visible Trade Balance (GBP) Dec C -9.0B | P -8.8B

13:30     USD       Change in Non-farm Payrolls Jan C 233K | P 252K

13:30     USD       Unemployment Rate Jan C 5.60% | P 5.60%

13:30     USD       Average Hourly Earnings M/M Jan C 0.30% | P -0.20%

13:30     CAD       Net Change in Employment Jan C 5.1K | P -4.3K

13:30     CAD       Unemployment Rate Jan C 6.70% | P 6.60%

13:30    CAD       Building Permits M/M Dec C 4.50% | P -13.80%

 

Harry Hindsight              

  • EUR: The market dipped from the opening moving from the 1.1340 areas to below the 1.1310 before recovering as the market moved into the Tokyo session, buying in EURJPY taking the market through the 133.00 areas helped the Euro to gain the 1.1360 levels after the previous day’s precipitous drop. The move into the grey hours saw the market slip back a little until the release of German Factory number sent the market from the 1.1340 areas moving steadily into the NYK session with fund buying moving in just before and a move back to the 1.1450’s before holding steadily for the bulk of the session with early US numbers doing little to stir the market with a weak set of numbers apart from the initial jobless numbers. The push later in the day through the 1.1460 levels saw weak stops triggered and the market attempted to push to the 1.1500 areas before slowly rejecting the level and drifting to the 1.1480 level for a quiet close.
  • GBP: The market was fairly steady having made gains through the previous session and continuing from the 1.5180 levels to push slowly higher through early Tokyo and into the grey hours holding the 1.5200 levels. Pulled along by the Euro in early trading the market slowly rose to the 1.5240 areas and struggled to push through the 1.5250 areas and only pushing through the 1.5260 levels into the NYK opening and a push quickly to the 1.5300 levels and holding around the level until another late push sent the Cable to the 1.5340 areas and holding around the level till the end of the session.
  • JPY: A reasonable choppy session for the USDJPY moving from the opening levels around the 117.25 to test the downside in early trading with strong fixing supply taking the USDJPY towards the 117.00 levels before running out of steam and bouncing back strongly as early AUDJPY selling reversed and USDJPY rose steadily over the next few hours to push towards the 117.50 areas, the move to the grey hours saw a reversal  of the movement and although the choppy market continued throughout the day the market gradually made new highs and higher lows before rising quickly to above the 117.60 level, before drifting back to the 117.50’s.
  • AUD: Weak Oz retail numbers initially sent the market lower, from the 0.7780 areas dipping through the 0.7735 levels before starting a strong recovery as the carry trade was steadily bought in to the Tokyo session and the Oz pushed back to the 0.7790 levels before holding and drifting over the course of the remaining session and into London. London were steady buyers pushing through the 0.7820 areas before finding topside offers holding the line, the session from then on was quiet dipping back through the 0.7790 but generally holding the 0.7800-20 levels.

 

Yesterday’s premiership results

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%

CHF        SECO Consumer Confidence Jan A -6 | C -13 | P -11

EUR        German Factory Orders M/M Dec A 4.20% | C 1.40% | P -2.40%

EUR        Eurozone Retail PMI Jan A 46.6 | P 47.6

GBP       BoE Rate Decision A 0.50% | C 0.50% | P 0.50%

GBP       BoE Asset Purchase Target A 375B | C 375B | P 375B

USD       Challenger Job Cuts Y/Y Jan A 17.60% | P 6.60%

CAD       International Merchandise Trade (CAD) Dec A -0.6B | C -1.0B | P -0.64B | R -0.3B

USD       Non-Farm Productivity Q4 (P) A -1.80% | C 1.00% | P 2.30%

USD       Unit Labour Costs Q4 (P) A 2.70% | C 1.00% | P -1.00%

USD       Initial Jobless Claims (JAN 31) A 278K | C 277K | P 265K | R 267K

USD       Trade Balance Dec A -46.6B | C -$38.3B | P -$39.0B | R -39.8B

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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