Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 121.149 | EURUSD 1.08521 | EURJPY 131.471 | AUDUSD 0.77031 | NZDUSD 0.7368 | USDCAD 1.26058 | EURCHF 1.06985 | USDCHF 0.98593 | GBPUSD 1.5128 | EURGBP 0.71736 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               122.04 | 121.14

EUR/USD             1.0855 | 1.0785

EUR/JPY               131.87 | 131.38

AUD/USD            0.7707 | 0.7630

NZD/USD             0.7358 | 0.7278

USD/CAD             1.2648 | 1.2598

EUR/CHF              1.0705 | 1.0678

USD/CHF             0.9915 | 0.98605

GBP/USD             1.5129 | 1.5071

EUR/GBP             0.7179 | 0.7155
For today

• EUR: Relations between the Greeks and the European paymasters continues to worsen with each side picking fault with each other and some of the rhetoric and banging of drums likely to raise tensions far beyond the current levels, while this and a combination of QE kicking in the market was limited during the previous day however, todays start saw the market drift ever lower from the opening 1.0850 areas where it opened. USD continued to rise with USDJPY leading the way and while the USD was not the driving force the fact that several pairings were now at technical break out levels left the Euro looking vulnerable, Comments from Fisher were the catalyst for a stronger USD with USDJPY pushing through 121.60 and light stops and then an hour after the release the Euro dropped with less support than expected and weak stops taking the market to the 1.0810 level and a slower decent through the figure level and a peak through 1.0790. The market held with the sudden pressure removed as USDJPY failed the topside and EURJPY selling subsiding. Euros moved back to the 1.0800 areas and holds as we move into the grey hours. Light bids remain to the 1.0780 level however, chances of stops through the levels are likely to be only weak from the light buyers from the 1.0800 levels however, it does leave the market vulnerable to further falls with the 1.0700 area opening to larger declines, 1.0720-40 is likely to provide the next support areas and option plays into the 1.0700 areas. Topside offers less likelihood of a short squeeze with light offers and a reasonable distant to the 1.0900 areas and the point where a break higher to 1.0960-1.1000 levels, offers likely from 1.0860 and again into the 1.0900 level a stronger level.
• GBP: The Fisher comments set the USD buying from early in the session with DXY rising quickly and 99.50 now exposed and plenty of open sky above that level. Cable moved lower from the opening around the 1.5130 areas dipping to the 1.5100 level as Tokyo opened and then continuing in a slow manner through to below the 1.5080 areas and keeping pace with the Euro in a less spectacular fashion. Downside shows limited bids into the 1.5040-1.500 level with most of the strength towards that low end and a push through will see light options coming into play and the market opening to further declines and exposing the lows from the middle of last year. Topside offers into the 1.5140-50 levels would seem to hold the key to a move through to above 1.5220 levels however from that point on the going becomes a little tougher and the market is likely to be stuck for a while.
• JPY: USDJPY started to move higher as soon as the Asian market moved in, trading through the 1.2140’s and triggering light stops and moving to 121.60 before the Tokyo market opened. Tokyo continued the move over the course of the session and the Fisher comments added to the movement and the market moved to the 121.80 levels and an opening to test the topside highs from December last year however, like that move the market failed on the first attempt and dipped back in weak trading to the 121.60’s and then a slower rise as we moved into the grey hours. Topside offers around that 122.00 levels are likely to continue into the 122.20 however, through that level the topside is likely to open up to another one of those strong runs and 124.00-125.00 and the ranges pre-2008. Light bids into the 121.50 levels and then an opening to test back through the 121.00 level with stops probably through 120.80-60 and the next big figure becomes vulnerable however, the way the market is that downside is limited.
• AUD: The early market saw the market drifting lower from above the 77 cent level and the market continued in that fashion tripping stops on a suspected attempt to push into stops below the 0.7640’s however, having breached the level 0.7640 the market was unable to make it for new lows for the year and holds just above the level with the market unable to press lower. Downside bids remain into the 0.7630 level and suspected option plays are likely to be protecting the 76 cent level however, through that level 75 cent becomes the target and vulnerable, topside offers around the 0.7660 levels are likely to be weak and open up light stops for a push to 77 cent, and then better offers all the way to the 0.7740 levels. While CPI figures showed a better than expected increase it had little impact on the direction of the Oz and little to do with market movements.

Overnight News

USD:

Fisher Says Fed Risks Recession If Waits Too Long to Raise Rates

Fisher Says Dollar Gaining From Confidence in U.S. Economy

CNY:

China Feb. Consumer Prices Rise 1.4% Y/Y; Est. 1.0% Gain

PBOC’s Yi Sees China CPI in Positive Territory in Near Future

China at No Risk of ‘Hard Landing,’ PBOC Adviser Writes: Daily

China Feb. M2 Money Supply Growth May Remain Low: Sec. Journal

NZD:

N.Z. Ministry Says No 1080 Found in Infant Formula

Fonterra Seeks Halt on Police, Ministry News Conference

New Zealand Retail Card Spending Rises First Time in Four Months

AUD:

Australia Feb. Business Confidence Falls 3 Pts M/m to 0

Australia ANZ Weekly Consumer Sentiment Falls 2.0% to 110.3

EUR:

Greece Postpones Payments to State Suppliers: Ekathimerini

ECB’s Coeure Says Europe Must Respect Current Budget Rules: FT

DKK:

Denmark Lifts Euro-Peg ‘Tsunami Warning’ as Speculators Defeated

GBP:

U.K. LFL Feb. Retail Sales Up 0.2 Y/y, BRC Says

Today’s data

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

JPY         Japan Money Stock M2+CD Y/Y Feb A 3.50% | C 3.50% | P 3.40%

GBP       BRC Sales Monitor Y/Y Feb A 0.20% | C 0.50% | P 0.20%

AUD       NAB Business Confidence Feb A 0 | P 3

CNY        CPI Y/Y Feb A 1.40% | C 1.00% | P 0.80%

CNY        PPI Y/Y Feb A -4.80% | C -4.30% | P -4.30%

JPY         Machine Tool Orders Y/Y Feb (P) A 28.90% | P 20.40%

06:45     CHF        Unemployment Rate Feb C 3.20% | P 3.10%

14:00    USD       Wholesale Inventories Jan C -0.10% | P 0.10%

Harry Hindsight              

• EUR: An opening below Friday’s close saw the market quickly rise to fill the gap and the market into the Asian session however, the move up from the 1.0820’s and into the 1.0850’s was ll the movement we had with the topside gradually giving into a slow slide to the 1.0840 levels and into the grey hours, light buying during the period saw the market push through the 1.0860 levels as early Europeans took advantage to push into the London opening and a little short squeeze to the 1.0900 level. German trade fingers disappointed a little but remain healthy and Sentix investor was a better confidence numbers helped to keep the market above the 1.0880 levels. The move into the NYK session saw a reversal of Euro’s fortune and the start of QE had the Euro falling back in a steady decline to the opening levels and again testing the 1.0840 level before ranging from that area to the 1.0860 level for the rest of the session.
• GBP: Cable moved steadily higher from the opening 1.5040 levels, moving quickly to above 1.5060 and holding around that level into the grey hours and then light buying to take the market through to the 1.5080 levels. From the opening of London EURGBP cross came under pressure and the selling continued throughout the session with the Euro not giving ground the GBP was forced higher and through the 1.5100 levels before running out of steam through the 1.5130 levels into late NYK.
• JPY: USDJPY traded fairly quietly moving around the 120.80 level and for the early part into Tokyo unable to break back above the 121.00 levels. Final 4^th Qtr. GDP failed to inspire however, as the market moved on the move to the topside continued slowly pushing through light offers to top around the 121.10 levels and then drifting around that level into the grey hours. USD started the London session weaker and the USDJPY slipped back to the opening levels into London and remained quiet for the first few hours of trading, one suspects that after the strong USD last week the market saw profit taking moving in and a rejection of the topside for the moment. The downside was limited and so was the profit taking, the move higher was a gradual affair moving steadily into the NYK session to the 121.00 levels again and with the topside now empty of short term profit taking the rally continued to the 121.40 levels before drifting back to 121.20 once the London market closed and a slow evening to the close.
• AUD: While the movements in the market were fairly mixed with the USD was not having its own way and the Euro dominating the market to some extent or influencing the rest. AUD rose in pre-Tokyo from the opening 0.7710 levels and pushed slowly to above the 0.7720 levels before slumping a little and moving through the 77 cent level in mid-session, the dip was limited and the market was unable to move below the 0.7680 levels. Grey hour buying saw the short term players move in and buying took the market to the previous 0.7720 areas and then London pushed it a little further however, the market was unable to push beyond the 0.7740 levels and the story remained the same throughout the session drifting away from the level and back towards the 77 cent level.

Yesterday’s premiership results

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

NZD       Manufacturing Activity Q4 A -0.70% | P -1.20% | R -1.10%

JPY         Current Account (JPY) Jan A 1.06T | C 1.16T | P 0.98T | R 0.85T

JPY         GDP Q/Q Q4 (F) A 0.40% | C 0.50% | P 0.60%

JPY         GDP Annualized Q4 (F) A 1.50% | C 2.20% | P 2.20%

JPY         GDP Deflator Y/Y Q4 (F) A 2.40% | C 2.30% | P 2.30%

JPY         Eco Watchers Survey: Current Feb A 50.1 | C 46.5 | P 45.6

EUR        German Trade Balance (EUR) Jan A 19.7B | C 20.4B | P 21.8B | R 21.6B

EUR        Eurozone Sentix Investor Confidence Mar A 18.6 | C 15 | P 12.4

CAD       Housing Starts Feb A 156K | C 175.0K | P 187.3K

Good Luck,

Andy

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