Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 118.976 | EURUSD 1.13404 | EURJPY 134.923 | AUDUSD 0.78307 | NZDUSD 0.74712 | USDCAD 1.24886 | EURCHF 1.0779 | USDCHF 0.95058 | GBPUSD 1.54551 | EURGBP 0.73374 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.00 | 118.62

EUR/USD             1.1352 | 1.1337

EUR/JPY               134.94 | 134.58

AUD/USD            0.7892 | 0.7824

NZD/USD             0.7555 | 0.7476

USD/CAD             1.2498 | 1.2451

EUR/CHF              1.07895 | 1.0773

USD/CHF             0.95075 | 0.9488

GBP/USD             1.5480 | 1.5448

EUR/GBP             0.7343 | 0.73305
For today

• EUR: With the major concerns for the moment put on the backburner the market has seen more volume coming through than the past couple of weeks in Asia however, the ranges have not improved with the Euro seeing good a move from the opening 1.1340’s to 1.1350 and remaining in that range through the session and into the grey hours. Light topside offers into the 1.1360 are likely and increasing through the 1.1380 levels however, a move through the 1.1400 areas still sees offers continuing through to the 1.1450 levels and the areas the market has struggled with for the past couple of weeks. Downside bids into the 1.1300 levels have been the downside support for a similar period however a push through the 1.1270 levels will likely see stops triggered and the market vulnerable to a deeper move with bids into the 1.1200 the only thing protecting the 1.1120 areas.
• GBP: Cable saw a larger range however, it was the same story as the Euro with a quiet opening above the 1.5450 level drifting to the Tokyo opening and a quick jump to the 1.5480 levels before settling down to trade quietly in a range around the 1.5470 levels. Topside offers into the 1.5500 levels however the past 24hrs has left the market close to those levels and with no real news for the day unlikely to back away for the moment and likely to test the levels for the break out traders above the level and the opening to 1.5600. Downside has congestion back to the 1.5450 levels with light stops through the level and light bids into 1.5400, a failure to the topside will likely see the retracement moving into the better supported 1.5350 areas.
• JPY: After yesterday’s Yellen testimony market has been limited for the USD with the market opening around the 119.00 levels and dropping back into the Tokyo opening to the 118.80 levels and unable to move from the level, Downside bids around the current levels give way to possible stops below the 118.70 levels and opens up another test to the 118.20 areas, a move through the 118.00 will continue to be contested but with less conviction and the stops are not likely to appear in the 117.70 areas with congestion suggesting that the market is likely to see bids into the 117.00 areas. Topside offers remain likely through the 119.00 levels with good offers appearing above the 119.50 levels to slow any movement to 120.00.
• AUD: With the waters muddied by Yellen’s testimony the market saw Oz move from the opening 0.7830 levels and triggering light stops through the 0.7850 areas and the market followed through with the HSBC China PMI numbers and the market gapped slightly and moved to the 0.7880 levels and steady trading through offers available in the market. Topside offers continue into the 79 cents and a push through the 0.7910 likely to trigger only minor stops before offers again begin to appear in the market and building from the 0.7950-0.8000 levels. Downside bids appear into the 78 cent level is limited and the weakness continues into the 0.7700-0.7750 before stronger bids enter.

Overnight News

CNY:

China Factory Gauge Rebounds in February After Monetary Stimulus

China Sets Yuan Reference Rate at Weakest Since Feb. 2

China Said to Ready Policies to Aid Property If Slump Continues

JPY:

Japan’s Parliament Approves Yutaka Harada for BOJ Board Seat

Japan’s Amari: primary budget surplus goal will be in fiscal discipline plan – RTRS

Japan Drops Plan to Limit Pension Pay out in Deflation: Yomiuri

Japan Considers Annual Targets for Fixing Deficit: Sankei

JPY/EUR:

Japan, EU Leaders Plan Summit in Tokyo in Late May, Nikkei Says

AUD:

Australia Treasury Chief Says Global Economic Outlook Still Weak

Australia to Enforce Rules on Foreign Investment in Homes

NZD:

Wheeler Says Low-Deposit Loan Limit Has Reduced House Inflation

Today’s data

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

00:30     AUD       Wage Cost Index Q/Q Q4 A 0.60% | C 0.70% | P 0.60%

01:45     CNY        HSBC China Manufacturing PMI Feb (P) A 50.1 | C 49.5 | P 49.7

07:00     CHF        UBS Consumption Indicator Jan P 1.42

09:30     GBP       BBA Mortgage Approvals Jan C 36.2K | P 35.7K

15:00     USD       New Home Sales Jan C 475K | P 481K

15:30    USD       Crude Oil Inventories P 7.7M

Harry Hindsight              

• EUR: Euro’s traded reasonably quietly through the Asian session, opening around the 1.1335 level and ranging between the 1.1325-40 levels for much of Asia and only once London entered the market did the range start to increase with the market fading and drifting down into the 1.1290’s with unchanged German GDP figures unable to hold the market. Eurozone CPI numbers were also unchanged however, this had more effect than the German numbers and set the market moving higher again. Into the NYK session the market had more or less moved back to the opening levels. Greece’s terms had been more or less accepted and the market pushed to the 1.1340 levels again and the market then awaited Yellen’s commentary, this was less hawkish than expected overall however, the initial result saw the Euro hit above the 1.1355 levels before dipping back to the 1.1305 areas and back to the original levels to hold the 1.3140 into the close in a choppy market.
• GBP: Cable was extremely quiet moving from the opening 1.5450 levels and drifting lower through the Asian session towards the 1.5430 levels and holding a narrow range into the grey hours. London saw light buying too take the market through the 1.5460 and then a slow drift from then into NYK to the 1.5420 levels, Greece and Yellen has little impact on the Cable with the Yellen commentary sending the Cable only a little higher into the 1.5470 levels and then a slow session to the close around 1.5450’s.
• JPY: USDJPY opened around the 118.80 levels moving slowly into the Tokyo session and a gradual rise over the course of the session to the 119.10 in slow trading. London entered as strong buyers with end of Asia adding weight to the move and weak stops triggered through the 119.40 and then a flat period of trading around the 119.50 levels until the Yellen commentary hit the market, initially the market raced to the 119.80 before dropping back as the commentary became less hawkish than the market expected dropping back to the 119.10 levels and squeezing out the break traders through 119.40-50. A push through the 119.00 dropped the market down to the supportive 118.80 levels were the market opened and held rising only slightly into the close.
• AUD: The Oz was very dull in early trading holding just above the 78 cent level and looking for any excuse to move below the level, the release of the 2yr inflation rate in NZD saw the market drop quickly as the Kiwi pulled on the Oz and the market dipped quickly to the 0.7770 levels and held in the area into the London session. London followed through with some light selling and the market dipped to the 0.7740’s before running out of sleep and making the day’s lows. Yellen’s testimony sent the market quickly back to the opening levels and the market rose steadily from the 0.7820 levels into a close above the 0.7830’s

Yesterday’s premiership results

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%

EUR        German GDP Q/Q Q4 (F) A 0.70% | C 0.70% | P 0.70%

EUR        Eurozone CPI M/M Jan A -1.60% | C -1.60% | P -0.10%

EUR        Eurozone CPI Y/Y Jan (F) A -0.60% | C -0.60% | P -0.60%

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

USD       S&P/Case-Shiller Composite-20 Y/Y Dec A 4.50% | C 4.40% | P 4.31%

USD       Consumer Confidence Feb A 96.4 | C 100 | P 102.9

Good Luck,

Andy

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