Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 118.812 | EURUSD 1.13345 | EURJPY 134.662 | AUDUSD 0.7804 | NZDUSD 0.75214 | USDCAD 1.25715 | EURCHF 1.07661 | USDCHF 0.94985 | GBPUSD 1.54563 | EURGBP 0.73333 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.145 | 118.78

EUR/USD             1.13415 | 1.1323

EUR/JPY               135.03 | 134.67

AUD/USD            0.7807 | 0.7762

NZD/USD             0.7535 | 0.7464

USD/CAD             1.2600 | 1.2564

EUR/CHF              1.0787 | 1.0761

USD/CHF             0.9521 | 0.9496

GBP/USD             1.5458 | 1.5430

EUR/GBP             0.73415 | 0.7332
For today

• EUR: Another day in paradise with a lack of tier 1 data and a market unable to move to far from the opening levels just below the 1.1340 levels and generally contained in a 1.1330-40 range, with Yellen’s testimony to come later today It would seem enough to keep the market on hold. Topside offers light into the 1.11400 levels and then stronger through that level and into the 1.1440-50 areas, through these levels the market is still likely to see sellers to the 1.1500 levels before giving way through the 1.1520 areas and opening the 1.16 areas. Downside bids are light with the first set beginning from the 1.1300 and into the 1.1280 levels and then the likelihood of stops increases opening the market for a test of 1.1200 and less likely to be strong with the lows just below the 1.1100 areas exposed for a run.
• GBP: Cable slipped back from the opening 1.5460 levels trading to the 1.5430 before running out of steam and remaining in the 1.5440 area as the market runs towards the grey hours. Topside offers from the 1.5470 level and into the 1.5500 area for the moment continue to hold, through 1.5500 area weak stops and then strong stops likely to appear and the market opens to the 1.5600 levels. Downside bids into the 1.5350 seem to be a little stronger than expected with those bids likely to reappear from 1.5300 onwards with congestion from the 1.5250-00 areas dominating that downside.
• JPY: USDJPY moved off the low areas opening around the 118.80 and trading to above the 118.90 levels the move into Tokyo did little and even the fix was light and evenly matched with the market slowly rising over a few hours to the 119.00 level and a brief little move as weak stops triggered through the level. The market has since then traded around the 119.10 levels and continues around those levels into the grey hours. Topside offers into the 119.30-40 levels and a push through the level is likely to see some light stops and the way open to 119.80 and further offers, a move above the 120.00 level will see further stops and then 120.40 is likely to hold stronger offers. Downside bids into the 118.80 levels with stops through the 118.70 opens up the 118.00 areas with some strong bids likely. Of concern in the market is a slow breakdown between the BoJ and government as both are beginning to differ on their stance for the way forward and given Kuroda has been on both sides and Abe’s frustration could present a problem for the future with the country in a similar position to the UK with retirees beginning to overbalance the economies of both countries.
• AUD: The Oz moved into the Asian session holding above the 78 cent level and looking fairly dull, the release of the NZ inflationary numbers with 2yr inflationary expectations dropping to 1.80% from 2.06% prior, 1yr 1.11% vs. 1.59%, this weakness sent the NZD down from the 0.7530 for a 50 pip loss to the 0.7470 areas, the movement dragged on the Oz and it followed dropping only 30 pips but given the ranges in the rest of the market was sufficient to wake some traders up and the market holds that 0.7770 level as the market moves into the grey hours. Downside bids into the 0.7750 areas before opening up on a break below 0.7730 with light stops running into possible bids into the 77 cent level, a move below the level will likely see some strong buying into the lows of the year however, a push through the 0.7640 areas may see stronger selling appear however, one suspects that option plays are in force down there and into the 76 cent level. Topside remains curtailed with light offer possibly into the 78 cent level and then stronger offers into the 0.7850 which has held for the most part this month, even through the area one suspects those offers continue into the 79 cent level and only a push through there will open up the market.

Overnight News

JPY/EUR:

Hitachi Said to Be Near $2.1 Billion Deal for Finmeccanica Rail

NZD:

N.Z. Inflation Expectations Fall to 15-Year Low

RBNZ Cannot Justify Any Cash Rate Change in 2015, NZIER Says

Key Says New Zealand Will Send Non-Combat Troops to Iraq

AUD:

Australia ANZ Weekly Consumer Sentiment Rises 0.9% to 110.8

USD:

Fed Must Address Struggles of Low-Income Americans: Sen. Brown

CNY:

China Says UN Debate Proposal Not Targeting Any Country

Today’s data

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

JPY         Corporate Service Price Y/Y Jan A 3.40% | C 3.60% | P 3.60% | R 3.50%

NZD       2-Year Inflation Expectation Q1 A 1.80% | P 2.10%

07:00     EUR        German GDP Q/Q Q4 (F) C 0.70% | P 0.70%

10:00     EUR        Eurozone CPI M/M Jan C -1.60% | P -0.10%

10:00     EUR        Eurozone CPI Y/Y Jan (F) C -0.60% | P -0.60%

10:00     EUR        Eurozone CPI – Core Y/Y Jan (F) C 0.60% | P 0.60%

14:00     USD       S&P/Case-Shiller Composite-20 Y/Y Dec C 4.40% | P 4.31%

15:00    USD       Consumer Confidence Feb C 100 | P 102.9

Harry Hindsight              

• EUR: A quiet session through Asia saw the market move from a slightly elevated opening around the 1.1390 level before drifting into Tokyo and heading quickly to the 1.1360 as EURJPY cross selling finished its move into the Tokyo fixing demand and Euro was able to move back to the opening levels, an uninspiring BoJ minutes left the market untouched and the market drifted slowly to the 1.1380 levels into the grey hours, early London selling then kicked in and the market moved to the official opening holding the 1.1350 levels before fresh selling continued to move in and the market dropped back German IFO numbers came in weaker than expected and the market traded lightly through the 1.1300 and based for several hours off the level. NYK were steady buyers and the market started to cover some of the USD longs, the market however, could only move to the 1.1360 levels before drifting back again and trading in between 1.1330-50 into the close.
• GBP: Early trading was reasonably quiet with the market moving off the opening 1.5390 areas and down to the 1.5370 levels into early Tokyo with cross JPY movement dominating early trading, the rest of the Asian session was spent recovering the meagre losses and pushing back to the opening levels into the grey hours. London opening again saw the Cable dropping back as the drag of the Euro pulled the market lower and having pushed to the previous lows, CBI numbers came in very weak and the market triggered light stops through the 1.5350 area and traded down into the low 1.5330’s however, while this was going on the Euro was suffering more and the EURGBP cross dropped steadily lower during the period and so the recovery for the Cable was a balance of continued EURGBP weakness and then add to which USD weakness from the NYK opening onward, Cable moved steadily higher into the London close moving briefly above the 1.5470 levels and then holding above 1.5450 into the close.
• JPY: USDJPY saw steady cross selling through the session with the market moving off the 119.00 areas to test through the 119.10 levels on the Tokyo opening, BoJ minutes did little for the market and the USDJPY dropped to the 119.00 levels and late into the session the market broke below the area and to the 118.90 where sufficient bids held the market. The move into the grey hours saw early London buying quickly to push the USDJPY through the waiting offers pushing into the London opening to just above the 119.30 and then nothing no stops and no reason to buy any further. The market saw some strong selling on the move back below 119.20 and the market staged lower into the NYK session and a push to just above the 118.80’s and the support area. The USDJPY remained in the 118.90 area for several hours before dipping in the final two hours of trading to push below the 118.80 before moving back to the level into the close.
• AUD: With the market pushing from the opening at the 0.7850 levels the market spent much of the session moving down to the 0.7830 levels and back again with little volume to drive the market and no tier 1 data. The move into the grey hours saw early London sellers appear and the market moved off those offers at the top and quickly dropped to the 78 cent levels before triggering light stops through the level, the run ended just above the 0.7780 levels and then drifted through the remainder of the session with a gentle rise back to the 0.7800 levels but unable to push through 0.7810 without any convictions.

Yesterday’s premiership results

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

EUR        German IFO – Business Climate Feb A 106.8 | C 107.2 | P 106.7

EUR        German IFO – Current Assessment Feb A 111.3 | C 112.7 | P 111.7

EUR        German IFO – Expectations Feb A 102.5 | C 103.3 | P 102

GBP       CBI Reported Sales Feb A 1 | C 42 | P 39

USD        Existing Home Sales Jan A 4.82M | C 5.00M | P 5.04M

Good Luck,

Andy

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