Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 118.864 | EURUSD 1.13611 | EURJPY 135.036 | AUDUSD 0.78859 | NZDUSD 0.75412 | USDCAD 1.24386 | EURCHF 1.07754 | USDCHF 0.94849 | GBPUSD 1.55282 | EURGBP 0.73159 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.095 | 118.825

EUR/USD             1.13735 | 1.1358

EUR/JPY               135.36 | 135.025

AUD/USD            0.7888 | 0.7836

NZD/USD             0.7577 | 0.7549

USD/CAD             1.2446 | 1.2425

EUR/CHF              1.07985 | 1.0772

USD/CHF             0.9500 | 0.9482

GBP/USD             1.5554 | 1.5524

EUR/GBP             0.7320 | 0.7309
For today

• EUR: As with yesterday the market traded reasonably quietly range wise however, the volumes would suggest otherwise with a slight better amount of trading going through, opening around the 1.1360 levels the market managed a slow rise to above the 1.1370 levels before holding and moving towards the London session. Limited offers into the 1.1380 levels open the topside only to the 1.1440 areas where stronger offers start to make an appearance, a push through the 1.1460 area may seem weak stops before the market runs into the 1.1500 level and strong offers again a push through the level may attract tech type buyers for the break however, there is a chance that further offers may slow the ascent to 1.1520 before the market opens up for the potential of a larger move to 1.1600.
• GBP: The market moved slowly from the opening around the 1.5530 areas and dipped only a little into the Tokyo session to the 1.5520 areas, the market then steadily rose to the 1.5540 areas before triggering small stops and a run to just above the 1.5550 areas where the market currently holds after several hours. Weak offers in the 1.5550 area currently hold the market and once through the 1.5590-00 is likely to be the strong point and is the point where the market broke down at the beginning of the year, a push through the level will see larger break out trades with the threat of a larger reversal in the market for the GBP. Downside is a little less defended however, for the moment the short term trend has switched, downside bids are limited at best though and the market is vulnerable to a short term correction if it fails at any point, 1.5450 and 1.5400 are immediate turning points with only light bids suspected, a push through the 1.5400 area again opens up a possible return to the 1.52 handle and suspected strong bids.
• JPY: After a dull session for the USDJPY yesterday the market today has started in the same vein moving slowly from the opening 118.85 areas into the Tokyo fix and a move back above the 119.00 level not quiet break above the 119.10 levels before slowly drifting with little impetus to push the market through light offers. Light offers through to the 119.20 areas before giving way to some limited open range, 119.50 sees stronger offers in the area, a push through here leaves the market still offered from the 119.80 areas and until the market breaks through the 120.20 areas it looks like a tough nut to crack. Downside is a little bit more open with bids into the 118.00-117.80 levels a push through 117.70 will likely see stops triggered and the market then opens only to the 117.50 levels and bids all the way down in a very congested area.
• AUD: Having broken through the 0.7840-50 areas where the market struggled for several weeks the run to the 79 cent level was simple enough but was unable to push through, today the market opened around the 0.7885 levels and traded quietly into the Tokyo session, a very poor CAPEX number coming in at -2.2% vs. and expected -1.6% saw the market drop quickly to bounce off the 0.7840 level and then drift between 0.7850-60 for the balance of the session. Offers in size around the 79 cent level and seems suggestive of option plays in the area, some light congestion above the area and while there are likely to be stops above one would suspect a balance between the offers and stops, if the market bakes it through 0.7950 then the market does open up to the 0.8050 levels with a possible option play around the 80 cent. Downside bids are light around the 0.7840 areas however, the congestion in the 0.7750-0.7840 area is considerable now and the market is likely to see bids moved in on any move below 0.7750 as addition to what is already in the areas.
• Plenty of numbers today with the US numbers of most importance however, with the Bundestag to vote on the bailout plan and tension increasing in Greece on the political side with some members of government split on whether there has been a sell out or its inevitable.

Overnight News

JPY:

BOJ’s Ishida: Japan Seeing Virtuous Cycle Under Weak Yen State

BOJ’s Ishida Says the Weakening of the Yen Was Quite Fast

BOJ Needs to Switch Main Inflation Gauge, Abe Adviser Says

GPIF Should Consider Courting External Managers, Minutes Say

Japanese Bought Net 166.3 Billion Yen Overseas Debt Last Week

Japan Minister Shimomura Says Funding Allegations ’Defamatory’

Suga: Minister’s Funding ‘Not Illegal,’ Explanation Sufficient

Mizuho Said to Pay Several Billion Dollars for RBS Loan Book

AUD:

Australia 4Q Business Investment Fell 2.2% Q/Q; Est. 1.6% Fall

NZD:

English Says N.Z. Benefits From Stable, Low Interest Rates

N.Z. Government Sees 5,000 New Houses in Auckland Suburb by 2025

New Zealand Central Bank Says It Bought Net NZ$6M in January

NZD/AUD:

N.Z. Exports to Australia Fall to Eight-Year Low on Oil

CNY:

China Has Room to Cut Interest, RRR in This Year: Sec. Journal

PBOC Should Cut RRR for Appropriate Liquidity: Financial News

Yuan Was 5th Most-Used Global Payments Currency in Jan.: Swift

China Credit Rating Affirmed by S&P; Outlook Stable

EUR:

German Economist Calls on Govt. to Clarify Greek Aid Plan: Bild

EUR/PHP:

France Can Help Fill Philippine Infrastructure Gap: Hollande

Today’s data

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

NZD       Trade Balance (NZD) Jan A 56M | C -183M | P -159M | -195M

07:00     EUR        German GfK Consumer Sentiment Mar C 9.6 | P 9.3

09:00     EUR        Eurozone M3 s.a. Y/Y Jan C 3.80% | P 3.60%

09:30     GBP       GDP Q/Q Q4 (P) C 0.50% | P 0.50%

09:30     GBP       Index of Services 3M/3M Dec C 0.70% | P 0.80%

10:00     EUR        Eurozone Business Climate Indicator Feb P 0.16

10:00     EUR        Eurozone Industrial Confidence Feb C -4.6 | P -5

10:00     EUR        Eurozone Consumer Confidence Feb (F) P -8.5

10:00     EUR        Eurozone Economic Confidence Feb C 101.7 | P 101.2

10:00     EUR        Eurozone Services Confidence Feb P 4.8

13:30     USD       CPI M/M Jan C -0.60% | P -0.40%

13:30     USD       CPI Y/Y Jan C -0.10% | P 0.80%

13:30     USD       CPI Core M/M Jan C 0.10% | P 0.00%

13:30     USD       CPI Core Y/Y Jan C 1.60% | P 1.60%

13:30     CAD       CPI M/M Jan C -0.40% | P -0.70%

13:30     CAD       CPI Y/Y Jan C 0.70% | P 1.50%

13:30     CAD       BoC CPI Core M/M Jan C 0.10% | P -0.30%

13:30     CAD       BoC CPI Core Y/Y Jan C 2.10% | P 2.20%

13:30     USD       Durable Goods Orders Jan C 1.80% | P -3.40%

13:30     USD       Durables Ex Transportation Jan C 0.50% | P -0.80%

13:30    USD       Initial Jobless Claims (FEB 21) C 285K | P 283K

14:00    USD       House Price Index M/M Dec C 0.40% | P 0.80%

Harry Hindsight              

• EUR: The Euro’s rose to the 1.1350 levels from the 1.1340 opening areas and struggled on through the session with volumes better than previous sessions but a limited movement, the grey hours saw the market eventually break as early London sat at their desks pushing quickly to the 1.1385-90 areas before running out of steam and drifting back to the 1.1360 levels into the official opening. With no tier 1 data for the Euro the market again settled back to the 1.1350-40 areas to trade quietly into the NYK session, the market remained stunningly quiet through the session and traded around the 1.1360 levels into the close.
• GBP: Cable moved from the opening levels from the 1.5455 levels and pushed quickly into the Tokyo session to the 1.5470 levels before holding the 1.5470-80 level into the grey hours. The market moved higher as with the Euro as early London sat down and the Cable moved to the 1.5500 level, while the market stalled for a short period the official opening saw the level completely broken and the market topped above the 1.5530’s before spending the rest of the session drifting lower into the NYK session. The market dipped to the 1.5470 levels again however, that was the low for NYK and the market moved steadily back to the highs with little to stop the movement holding into a close 1.5530 areas.
• JPY: A flat day over all for the USDJPY moving from the opening 119.00 levels the market dipped into the Tokyo opening moving to the 118.70 areas and trading around the area into the London session, Trading in London had a little more range too it however, it wasn’t until the NYK session stepped in that the market again moved to push above the 119.00 areas before drifting back and settling down to trade in a tight 118.80-90 range for the close, although the ranges don’t suggest it the volumes were reasonable given the non-event of movement.
• AUD: The exception to the rule, a quiet opening around the 0.7830 areas before jumping higher as the Tokyo session began and quickly overcoming the offers into the 0.7850 level and triggering only light stops through the area and holding then at the 0.7850-60 level, the release of CNY PMI numbers saw the market gap higher on the better than expected numbers and it quickly moved to the 0.7880 level and then held for the day trading between 0.7880-0.7900 figure with several pushes through 79 cents but each time only by a pip or two before backing off to finish only just above the 0.7880 levels.

Yesterday’s premiership results

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

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

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

CHF        UBS Consumption Indicator Jan A 1.24 | P 1.42

GBP       BBA Mortgage Approvals Jan A 36.4K | C 36.2K | P 35.7K | R 35.8K

USD       New Home Sales Jan A 481K | C 475K | P 481K | R 482K

USD       Crude Oil Inventories A 8.4M | C 3.6M | P 7.7M

Good Luck,

Andy

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