Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 120.45 | EURUSD 1.13356 | EURJPY 136.552 | AUDUSD 0.77184 | NZDUSD 0.73814 | USDCAD 1.26285 | EURCHF 1.05246 | USDCHF 0.92861 | GBPUSD 1.52387 | EURGBP 0.74378 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.475 | 119.98

EUR/USD             1.1353 | 1.1303

EUR/JPY               136.70 | 135.775

AUD/USD            0.7730 | 0.7644

NZD/USD             0.7379 | 0.7332

USD/CAD             1.2646 | 1.2613

EUR/CHF              1.05205 | 1.0500

USD/CHF             0.9300 | 0.9262

GBP/USD             1.5250 | 1.5217

EUR/GBP             0.74475 | 0.7420
For today

• EUR: The Euro opened on its highs and while the news on the face of it looks ok the term in principle lacks conviction and we will have to wait till Monday to see if any agreement can be reached, with that in mind the market took a little longer to trade back to down to the pre Euro group news and subsequent denial of a deal sent the market lower within an hour of the new market the Euro was back to the 1.3110 level and unable to push through the 1.3100, holding for the most part in the 1.1310 areas once the market moved into the Tokyo session. Light offers into the 1.1360 area with light stops likely through the 1.1380’s and another patch of offers far weaker around the 1.1400 area. Through to 1.1500 area see’s patches of selling protecting that double top the market has created this month. The downside is still exposed and a push to the 1.1250 levels opens up further tests lower with bids around the area and into the 1.1200 level looking weak at best a push through the level sees the lows from last month under threat.
• GBP: EURGBP continued to hold the bulk of its gains yesterday however; Cable opened around the 1.5240 level however has weakened over the session with Tokyo and the drag of the Euro pushing the market to the 1.5220 lows of yesterday. Bids likely to continue into the 1.5200 level and then possible weak stops through the level, a push through the 1.5150 levels will be a little bit of a struggle however, through this level the market opens up for a further test down through to the 1.5050-1.5000 areas and stronger bids. Topside offers remain around the 1.5300 levels and a gap before the stronger area into the 1.5350 kicks in and for the moment consolidation seems to be the name of the game.
• JPY: So the Tokyo market is back in full and the sellers appeared taking the market from the highs just below the 120.50 levels and a tight channel into Tokyo to the 120.00 levels, buyers hold the area for the moment and the market moved to the 120.30 levels and held for several hours as we move to London. Topside offers are likely to be strong all the way to the 121.00 areas with 120.80 being of more importance and into the 121.00 levels. A push through the 121.00 level which is likely to have some short dated option plays will likely see buying appear into the 121.50 areas and strong offers. Downside is possibly not so strong however, this is dependent on whether the yield players are again increasing, a push through the 120.00 light bids will see weak stops through the 119.80 sending the market back lower and some light congestion into the 119.20-00 areas and a reopening of the lower range down to the 117.00 levels.
• AUD: After the market drifted lower over the previous session the market started the day around the 0.7720 areas before moving into the Tokyo session and the release of another good set of employment numbers, the market collapsed pushing quickly to the 0.7660 levels, having reached there it traded a little lower through the 0.7650 areas but has remained in a tight range looking for fresh impetus with the market now believing that if the employment numbers continue rise then the pressure on the RBA is likely to continue and the next rate cut may not be too far away. Light offers into the 77 cent level give way to likely stops through the 0.7750 areas and then stronger offers from 0.7780-0.7800 areas.

Overnight News

EUR:

EU Fails to Agree Next Greek Bailout Steps After Brussels Talks

Greece Would Never Agree to Stay in Current Program: Varoufakis

Padoan Says Optimistic There Is Will to Move Forward on Greece

USD:

Lew Warns against Global ‘Race to Devalue’ Currencies: NDTV

JPY: Abe Vows to Push on With Reforms, Says Pacific Trade Deal Closer

Amari Sees Japan Making Steady Progress in Escaping Deflation

Japan to Draft Concrete Fiscal Reform Plan by summer, Amari Says

Sustainable Govt. Finance Needed for Smooth Monetary Easing: Aso

Japan Is Unlikely to Achieve Primary Balance Surplus by FY2020

Japan Dec. Core Machine Orders Rise 8.3% M/m; Est. +2.3%

AUD:

Australian Jan Employment Fell 12,200 M/M; Est. 5,000 Fall

UAH:

IMF’s Lagarde Says ‘Very Close’ to Completing Deal with Ukraine

NZD:

N.Z. January Residential Property Listings Rise 2.9% Y/Y

Today’s data

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

NZD       Business NZ Manufacturing Index Jan A 50.9 | P 57.7

JPY         Domestic CGPI M/M Jan A -1.30% | C -0.60% | P -0.40% | R -0.50%

JPY         Domestic CGPI Y/Y Jan A 0.30% | C 1.20% | P 1.90% | R 1.80%

JPY         Machine Orders M/M Dec A 8.30% | C 2.40% | P 1.30%

AUD       Consumer Inflation Expectation Feb A 4.00% | P 3.20%

GBP       RICS House Price Balance Jan A 7% | C 10% | P 11% | R 12%

AUD       Employment Change Jan A -12.2K | C -4.7K | P 37.4K | R 42.4K

AUD       Unemployment Rate Jan A 6.40% | C 6.20% | P 6.10%

JPY         Machine Tool Orders Y/Y Jan (P) A 20.4% | P 33.90%

07:00     EUR        German CPI M/M Jan (F) C -1.00% | P -1.00%

07:00     EUR        German CPI Y/Y Jan (F) C -1.30% | P -0.30%

10:00     EUR        Eurozone Industrial Production M/M Dec C 0.30% | P 0.20%

10:30     GBP       BoE Inflation Report

13:30     CAD       New Housing Price Index M/M Dec C 0.20% | P 0.10%

13:30     USD       Advance Retail Sales M/M Dec C -0.30% | P 1.70%

13:30     USD       Retail Sales Ex Auto M/M Jan C -0.40% | P -0.90%

13:30     USD       Initial Jobless Claims (FEB 7) C 279K | P 278K

15:00    USD       Business Inventories Dec C 0.20% | P 0.20%

Harry Hindsight              

• EUR: The USD was firmer over the course of the day deep into the session before reversing some of its gains into the close. Opening in the In the Asian session around the 1.1315 areas the market rose into the Tokyo session to push to the 1.1330 levels and held for several hours in that area before starting a steady decline lower, drifting into the grey hours to the opening levels and then triggering weak stops through the 1.1310 level and then stopping just before the 1.1300 levels, London tested the topside again on the opening with a tiny short squeeze before settling down to trade around the opening area for several hours before again dipping lower in the move towards NYK, with no tier 1 data for the day and the market was a little choppy through the NYK session dipping repeatedly down through the 1.1300 levels several times eventually pushing to the 1.1280 level. The market then traded around the 1.1300 levels before bouncing quickly on the close as news from the Euro Group meeting on Greece with a release into the close that Greece will remain in the bailout program in principle with discussions likely to continue until Monday the market quickly moved to above 1.1335-45 level before heading into the new session.
• GBP: The Cable mirrored the movements of the Euro during the Asian session doing very little independently with the EURGBP weakening only slightly over the session. Making a high in early trading to just below the 1.5270 level before drifting back down to the opening 1.5255 areas and pushing through and drifting into the grey hours and pushing to the 1.5235 levels before starting to see strong selling in EURGBP to push the market down to the 0.7385 levels making new lows last seen pre Lehman’s. While Euro was drifting the main impetus of the move was a push higher in the Cable taking the market to beyond yesterday’s highs through 1.5270 and topside offers initially deflected the rise and the market was forced a little lower before the EURGBP sellers reappeared and Cable pushed above the 1.5290 level triggering some weak stops from sellers from the first run and the market remained in that area for several hours into the NYK session, not quiet making the 1.5300 level but not drifting away either. While the safe haven flows lasted into the NYK session the return of USD strength particularly in USDJPY dominated the market in the NYK session and selling in GBPJPY kicked in as the market rose and Cable dropped back quickly as the liquidity in GBP disappeared and it quickly dropped to the 1.5240 level, a weak bounce was insufficient to protect the lows and the second run lower kicked in and a push to the 1.5220 levels and light support, and sufficient to hold the market. The market then held the 1.5230-40 into the close ignoring the news from the Euro group meeting.
• JPY: Even though the Japan were taking a bank holiday the buyers in the retail sector continued with their buying as the market rose steadily through the day pushing into the NYK session to the 119.90 levels, with the 120.00 close the NYK and London players quietly grabbed the opportunity and took the market through the levels pushing to the 120.40 levels and into the next line of resistance with the market attempting the level over an extended period but with little success having run through the previous levels. The rally in the Euro into the close helped the USDJPY make its highs as a little EURJPY buying took the market close to the 120.50 in USDJPY.
• AUD: As the USDJPY strengthened so the Oz weakened moving from the opening initially to test above the 0.7790 in early Tokyo before dropping back through the 0.7770 starting levels, The move into the London session saw the market holding in a tight range before the selling started as USDJPY slowly rose the Oz started to slip back moving in steps before dropping back quickly a couple of hours with the weak early buyers quickly stopped out through the 0.7750 levels and dropping to the 0.7715 areas just before the NYK opening, light buying from the opening was quickly squashed as USD strengthened in NYK and the lows were made as USDJPY made a move through the 120.00 areas trading through the 77 cent level before holding for the balance of the session in the 0.7710 areas.

Yesterday’s premiership results

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

AUD       Westpac Consumer Confidence M/M Feb A 8.00% | P 2.40%

AUD       Home Loans Dec A 2.70% | C 2.30% | P -0.70% | R -0.40%

USD       Crude Oil Inventories A 4.9M | C 3.7M | P 6.3M

USD       Monthly Budget Statement Jan A -$17.5B | C -$19.0B | P -10.3B

Good Luck,

Andy