Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 119.145 119.17-22 | EURUSD 1.13145 1.1314-19 | EURJPY 134.76 134.85-90 | AUDUSD 0.7796 0.7767-72 | NZDUSD 0.73666 0.7336-41 | USDCAD 1.25208 1.2535-45 | EURCHF 1.04821 1.0505-10 | USDCHF 0.92657 0.9280-90 | GBPUSD 1.52459 1.5225-35 | EURGBP 0.74215 0.7428-33 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.205 | 118.73

EUR/USD             1.1340 | 1.1286

EUR/JPY               134.73 | 134.35

AUD/USD            0.7778 | 0.7748

NZD/USD             0.7380 | 0.7325

USD/CAD             1.2545 | 1.2506

EUR/CHF              1.0505 | 1.0463

USD/CHF             0.9288 | 0.9245

GBP/USD             1.5262 | 1.5210

EUR/GBP             0.7435 | 0.7420

 

For today

  • EUR: After weekend commentary going backwards and forwards between the Europeans and the Greeks the market opened slightly lower trading initially through the 1.1300 level before beginning a steady rise higher over the course of the session rising to the 1.1340 areas before holding steady just below the levels as the market waits for the next round of discussions. Part of the market was listening to the ramifications of failure for the EU and Russia to come to agreement over the Ukraine situation and so the market rests waiting for fresh input. Light offers into the 1.1350 levels gives way to open ground and the market is likely to only run into light selling into the 1.1400 areas. A move through the level should open up for a fresh attempt to the topside with 1.1460 likely to slow the rise to 1.1500. Downside see’s bids into the 1.1300 levels and through to the 1.1280 areas a push through those levels opens up fresh attempts towards the 1.1250 areas and then an open market to the 1.1100 with profit taking likely to enter the market in an ad hoc mode through those levels.
  • GBP: Cable has been a steady riser moving from the opening 1.5240 areas to push again the 1.5260 levels into the later part of the session. Topside offers are likely to continue to the 1.5270 areas before opening up for another run towards the 1.5300 level with offers likely in the 1.5340-50 area with the 1.5500 level opening to the topside through those levels. Downside sees bids from the 1.5220 areas and likely to continue through to 1.5180 with strong patches likely in that 40 pip area, through 1.5180 the market opens only to the 1.5150 areas, a push through the 1.5140 will likely see the market hitting light stops and an opening to the 1.5100 levels.
  • JPY: Opening above the 119.00 areas the market has drifted from that moment with a generally slightly weaker tone to the USD, falling back to the 118.70’s the market held the level with sufficient bids around the 118.80 towards the grey hours in very quiet trading. Downside move through the 118.80 level convincingly will open up the market to a little bit of congestion around the 118.40-50 before the market openings to the stronger 117.80 areas and a lot of bidding from then on into the 117.00 areas. A push through the 119.25-30 area opens up a test higher with strong offers into the 120.00 areas and likely option offers along the way, a push through will open up a fresh attempt at the 121.00 levels.
  • AUD: With a no confidence vote quickly put down the market in the Oz opened in the 0.7760’s saw the market hold in the areas as the market slowly moved in a tight range dipping to the 0.7750 level but generally remaining above the 0.7760 level. Topside offers likely to reappear above the 0.7800 areas again with the market requiring a breakout above the 0.7880 levels, a downside push through the 0.7740 area will again opening up the market for a test to 0.7700 and through to test the previous lows however, with the market focused on no rate cuts till may this may take time at best.

 

Overnight News

CNY:

China’s Yuan to See More Flexibility in 1-2 Yrs. Eco Info Daily

China Executes Mafia Kingpin Linked to Disgraced Security Chief

USD:

Fed Shouldn’t Raise Rates, Lawrence Summers Writes in FT

JPY:

Morimoto: Is a Concern that Japan’s Consumers Are Still Cautious

BOJ to Approach Price Target toward 2H FY2015, Says Morimoto

Japan Books 6th Straight Current-Account Surplus in December

Japan’s Record Overseas Income Shows Upside of Production Shift

Japan consumer confidence improves in January

AUD/JPY:

Abbott Says No ‘Secret Deal’ With Abe on Submarine Contract

AUD/CNY:

Stevens Sees China Firms Opting for Yuan over USD in Long Term

RUB:

Nabiullina: No Reason to Think Russian Rate Increase Inevitable

Bank of Russia Buys Gold to Provide Ruble Liquidity: Nabiullina

 

Today’s data

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

CNY        Trade Balance Jan A $60.03B | C $48.20B | P $49.61B

JPY         Consumer Confidence Jan A 39.1 | C 39.4 | P 38.8

06:00     JPY         Eco Watchers Survey: Current Jan A | C 45.7 | P 45.2

07:00     EUR        German Trade Balance (EUR) Dec C 18.2B | P 17.7B

09:30     EUR        Eurozone Sentix Investor Confidence Feb C 3.4 | P 0.9

13:15     CAD       Housing Starts Jan C 184K | P 180.6K

 

Weekend News

CNY:

China’s Record Trade Surplus Highlights Weak Domestic Demand
China’s Zhu Says Divergent Fed, ECB Path Source of Uncertainty
China Should Increase Policy Support for Exports: Xinhua
China’s Exports Face Downward Pressure in 1Q, Early 2Q: Customs
China to Open Oil Futures Trading to Foreign Investors: Nikkei
CHF:

SNB Has Room for Further Cut in Deposit Rate, Jordan Tells SRF
JPY:

Japan Cabinet Support Rises to 54.2% From 52.8%: Kyodo Poll
Japan Cabinet Approval Jumps 5 Points to 58%: Yomiuri
More Japanese Companies Eyeing Wage Increase in Mainichi Poll
Japan Regulator May Tighten Capital Rules on Banks: Asahi
JPY/AUD:

Japan Eyes Abbott Vote as Threat to Submarine Deal: Australian
AUD:

Australia’s Abbott Brings Forward Leadership Vote to Monday
Australia to Toughen Some Foreign Investment Rules: Hockey
EUR/DKK:

Krone Pressure Shows Danes Should Join Euro, Central Banker Says
EUR:

Greek Premier Outlines Plans to Break Free From Bailout Program
Bank of Italy Boosts GDP Growth Estimates on ECB Measures
Bundesbank Vice President Buch Rejects New Greek Haircut: WiWo
EUR/UAH:

German-French Ukraine Peace Bid Seen as Crossroads for Europe
RUB:

Putin Rejects Attempts to Contain Russia After Peace Talks Fail
Russia Company Debt Isn’t as Bad as You Think, Siluanov Says

 

Harry Hindsight

  • EUR: The market traded quietly lower over the course of the Asian session drifting from the opening around the 1.1480 level and into a dipping market through to the grey hours just above the 1.1440 levels. London opening saw the market rise a little to the 1.1470 levels in early trading as the Greek story ebbs and flows, the market dipped again to below the 1.1440 before rising steadily to the 1.1460’s into the NFP numbers. A good set of numbers with 257K add to which the revision coming in at 329K, as normal the market lifted just before the number to the 1.1460’s before dropping back quickly to the 1.1360 areas and a small bounce of light bids before continuing on a second run to the 1.1320 levels over an extended period, the market saw a slight rise however, it returned to the 1.1320 levels and holding for the rest of the day.
  • GBP: Cable rose slightly through the Asian session moving from the 1.5330 levels pushing to above the 1.5340’s before drifting off into the grey hours. London held the 1.5310 level and then a steady rise to make the highs of the day above 1.5350’s. The market drifted into the numbers in the US dropping quickly from the release moving to the 1.5260, the market had a slight bounce but as with the Euro continued lower to the 1.5250 holding the level for several hours before breaking through the bids and triggering weak stops through the 1.5240 level and another move to the 1.5220 levels, holding again then attempting a further push to just above 1.5110 before recovering a little in the run to the close around the 1.5250.
  • JPY: A big day for the USDJPY drifting from the 117.50 levels and down to the 117.20 areas over the course of the day to the NFP number release. The move in USDJPY was quick and sudden rallying to the 118.20 level without touching the sides, light offers slowed the market at the area for a few minutes but the impetus was strong and the market continued to the 118.80 level during a longer period. The market struggled against offers based on option protection and although the 119.00 eventually buckled and moved through it was a grind into the 119.20. The market held the levels for several hours and in the final couple of hours the market saw profit taking enter the market and a move back through the 119.00 areas and closed in the area.
  • AUD: Leaps and bounds for the Oz moving from the opening 0.7800 levels and quietly into the Tokyo session, the monetary policy release with falling expectations for the GDP and inflation the short term market however, took heed of the comment about no likely rate cuts until May as the RBA assesses the recent 0.25% cut. The market having held quietly moved quickly higher towards the 0.7860 before running into the offers from 0.7850 and dropping back to hold around the 0.7820 levels for several hours, the move towards the grey hours saw the market rising to the 0.7840 levels and the market held around those areas into the London session. The move towards the NFP saw the market again gaining new highs edging up to the 0.7850 and triggering weak stops through the level to above 0.7875 before dropping quickly on the release to the 0.7760 level and then bouncing to the 0.7800 area before holding in that area for the rest of the session.

 

Friday’s premiership results

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

EUR        German Industrial Production M/M Dec A 0.10% | C 0.40% | P -0.10% | R 0.10%

CHF        Foreign Currency Reserves Jan A 498.4B | P 495.1B

CHF        Retail Sales (Real) Y/Y Dec A 2.20% | C 0.40% | P -1.20% | R -0.60%

GBP       Visible Trade Balance (GBP) Dec A -10.2B | C -9.0B | P -8.8B | R -9.3B

USD       Change in Non-farm Payrolls Jan A 257K | C 233K | P 252K | R 329K

USD       Unemployment Rate Jan A 5.70% | C 5.60% | P 5.60%

USD       Average Hourly Earnings M/M Jan A 0.50% | C 0.30% | P -0.20%

CAD       Net Change in Employment Jan A 35.4K | C 5.1K | P -4.3K

CAD       Unemployment Rate Jan A 6.60% | C 6.70% | P 6.60% | R 6.70%

CAD       Building Permits M/M Dec A 7.70% | C 4.50% | P -13.80% | R -13.60%

 

Stay lucky

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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