Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 121.139 | EURUSD 1.06984 | EURJPY 129.602 | AUDUSD 0.76251 | NZDUSD 0.72718 | USDCAD 1.26875 | EURCHF 1.06922 | USDCHF 0.99934 | GBPUSD 1.50686 | EURGBP 0.70998 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               121.505 | 120.85

EUR/USD             1.07185 | 1.06655

EUR/JPY               129.95 | 129.23

AUD/USD            0.7645 | 0.7588

NZD/USD             0.7298 | 0.7231

USD/CAD             1.2705 | 1.2671

EUR/CHF              1.06875 | 1.06605

USD/CHF             1.0000 | 0.997

GBP/USD             1.5087 | 1.5053

EUR/GBP             0.7106 | 0.70815
For today

• EUR: The market took hold of weakness on the changeover of days and the opening was around the 1.0680 level triggering weak stops before gradually rising back through the 1.0700 levels and pushing into the high teens and spending the early part of Tokyo, once the fix had passed the market started to weaken again and given that the downside had roughly been cleared the move down to the 1.0680 level was free and the market moved to the 1.0670 levels before running out of steam and the market moves around the 1.0680 levels. Downside bids are likely to be profit taking and lightening of positions however, these are not so strong and only once the market moves towards the 1.0620 areas does the market start to strengthen somewhat and the next big figure should show a little more metal than we’ve seen from 1.1000 onwards. Topside potential for a short squeeze is now limited somewhat and the ongoing discussions with the Greeks likely to continue to underpin the weakness, limited offers into the 1.0740 areas. With only light stops through the area and into the 1.0750 area, a push through the level will likely see two way flows until the 1.0800 area where offers are likely to increase until a push through the 1.0820-30 areas, but even then the chances of offers every 20 or 30 pips seem highly probable.
• GBP: Cable moved off the opening around the 1.5060 areas and traded to the 1.5080 before settling back and trading from then on in a range between 1.5065-85 with very little independent movement and more to do with the vagaries of JPY and Euro movements. Downside bids through the 1.5050 level and continuing to the 1.5000 where they are likely to be strong, even through that level there would need to be some earth shattering economic news to break Cable to new 2yr lows and the bids are likely to continue well into the 1.49 level with only minor stops. Topside offers likely light into the 1.5100 level before giving way to stronger offers as the market moves towards the 1.5150 level, a break here will likely see weak stops triggered and a move through to light offerings in the 1.5200 level and a similar pattern with offers then moving in around the 1.5250.
• JPY: USDJPY initially tested the downside as profit taking in the Euro moved the USD lower however, the sell off from the 121.10 area into 120.90 was limited and the move into Tokyo saw the market rising steadily through the 121.20 levels and pushing deep into the session to stall at 121.50 before drifting back into the grey hours and the 121.30 areas. Topside offers are possibly light until the 121.80 level and then speculative offers are likely to be seen in front of the 122.00 offers holding the topside, a move through will see a congregation of weak stops and it will be a toss of a coin which side wins as one suspects an option barrier being responsible for the previous failures. Downside bids for the moment through to 120.80 and then light bids from there into the 120.00 area where the bids start to increase from that level down into the 119.50 areas.
• AUD: The market having broken down over the past couple of days remains weak however, the opening showed only limited interest on the downside and the market rose from the 0.7825 to around the mid 0.7840’s before dropping back steadily and pushing through the 0.7600 area to trade around 0.7590 in quiet trading for the Oz. Topside offers into the 0.7650 areas are likely to be weak and open the market to a move through to above the 77 cent level if it can get through the areas, beyond the 77 cent area through the market starts to see better offers especially above the 0.7740 areas. Downside should start to see bids appearing from the 0.7550 areas and the next big figure or so could well contain some reasonable buying levels as the market moves into the ranges from pre-crash periods and a more comfortable level economically.

Overnight News

CNY:

China’s Factory Production Data Shows Weakest Start in Six Years

China Jan.-Feb. Property Dev. Investment Rises 10.4% Y/y

JPY:

Shirai: More Uncertainty in Timing of Nearing BOJ’s 2% Target

Japan Jan. Core Machine Orders Fall 1.7% M/m; Est. -4%

Yen at 140 Needed for BOJ to Reach Inflation Goal, Survey Shows

Japan Govt. Condemns Former Premier Hatoyama’s Visit to Crimea

Japan to Extend Economic Sanctions on N. Korea for 2 Yrs: Kyodo

AUD:

RBA’s Kent Says A$ Remains High Given State of Overall Economy

RBA’s Kent Says Confidence Will Build, Tends to Rise Slowly

Australia March Consumer Sentiment Falls 1.2% to 99.5

Australia Jan. Home-Loan Approvals Fell 3.5% M/M; Est. 2% Fall

NZD:

Key Says New Zealand Inflation Is Probably Headed Lower

N.Z. Government Introduces Tighter Controls on High Purity 1080

N.Z. Baby Formula Exporters Say Some Orders Reduced, Halted

Today’s data

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

AUD       Westpac Consumer Confidence Mar A -1.20% | P 8.00%

JPY         Domestic CGPI Y/Y Feb A 0.50% | C 0.50% | P 0.30%

JPY         Machine Orders M/M Jan A -1.70% | C -4.00% | P 8.30%

AUD       Home Loans Jan A -3.50% | C -2.00% | P 2.70%

CNY        Industrial Production YTD Y/Y Feb A 6.80% | C 7.70% | P 7.90%

CNY        Fixed Assets Ex Rural YTD Y/Y Feb A 13.90% | C 15.00% | P 15.70%

9:30        GBP       Industrial Production M/M Jan C 0.20% | P -0.20%

9:30        GBP       Industrial Production Y/Y Jan C 1.30% | P 0.50%

9:30        GBP       Manufacturing Production M/M Jan C 0.20% | P 0.10%

9:30        GBP       Manufacturing Production Y/Y Jan C 2.60% | P 2.40%

14:30     USD       Crude Oil Inventories P 10.3M

15:00     GBP       NIESR GDP Estimate Feb P 0.70%

18:00     USD       Monthly Budget Statement Feb C -187.3B | P -17.5B

20:00    NZD       RBNZ Rate Decision C 3.50% | P 3.50%

Harry Hindsight              

• EUR: Euro’s moved through the session from an opening above 1.0850 offered, the market had already pushed through the 1.0830 areas into the Tokyo session with Fisher comments hitting the market and sending the USD higher over the rest of the session this led to several levels breaking during the session and having impact on various others in the process but suffice it to say that the Euro penetrated the 1.0800 levels fairly easily but struggled on the level for the remainder of the session into the Grey hours. Early London bought the Euro back pushing the market back to above the 1.0820 levels very briefly before solid selling reappeared and this time the drive lower triggering weak stops through the 1.0780 levels and dropping to the 1.0740 levels and near term support. London remained stuck at the level, trading quietly for the most part until moving into the NYK session and a brief attempt lower, then some profit taking as the downside into 1.0720 remained strong and pushing quickly to 1.0780 before again testing the downside. Late into the London session and with the help of NYK the bids were cleared out to the 1.0700 areas and holding into the end of the session.
• GBP: A very choppy day for the Cable with the market opening around the 1.5130 areas and then dropping into the Tokyo opening to hold the 1.5100 levels and a slow drift lower as USD dominated the session once Fisher made his comments, Tokyo eventually posted a low just above the 1.5070 level with decent volume going through. Initially the EURGBP didn’t move however, once the market moved into Tokyo EURGBP was actively sold off and the Cable started to hold and a quiet move into the grey hours rising back towards the 1.5100 level. From the opening though in London the market started to move around erratically dipping to the 1.5030 level and back again never breaking above the 1.5100 level but always returning after deep moves that became shallower as the day wore on, London closed with the market pushing at the 1.5100 level again and the support disappeared and the market moved to the 1.5060 levels and held around that area into the close. EURGBP drifted lower over the course of the day dropping into the London session to hold in a tight 0.7130-40 range only to move again lower into the NYK session as fund selling moved in to take the market to the 0.7100 levels and tight range plays around the level.
• JPY: As with the other currencies USD dominated the USDJPY with not only the Fisher commentary but the fixation of the market to run at the 122.00 levels and the market didn’t really disappoint pushing to the 121.60 and the opening in Tokyo, once the Fix was over with the really renewed itself and the rise pushed steadily through the offers with good two way flows impacting the market and then a sharp move to touch just through the level and set the high for the day at 122.04 before pulling back to rest around the 121.70 areas. The move into the grey hours again saw fresh and steady pressure building and once the London market was officially open it pushed again to the 122.00 level and the waiting offers, there was a second attempt shortly afterwards however, the failure to push through the level had the longs quickly cutting out and the run to NYK saw the market fall back quickly to the 121.00 areas and then range in a tight area 121.00-30 before narrowing over the rest of the session.
• AUD: CPI numbers in China supported the Oz however, the general USD strength outweighed any other support and gradually pushed lower to come to rest on the supportive 0.7640 levels from the opening above 77 cent. The move into the London session saw the market stab lower as the as speculative and technical trading kicked in and the market pushed to the 0.7610 areas before failing for the first time, unable to push the bids out of the way the market moved back to the 0.7640 areas and eventually through to 0.7650 into the NYK session triggering weak stops and a short squeeze that could only make it to just above the 0.7680 level. The market then started to ignore pure trading and looking more at the fundamentals and renewed the test lower, again the option barriers held and the market remained stuck in the 0.7630-10 range to the close.

Yesterday’s premiership results

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%

CHF        Unemployment Rate Feb A 3.20% | C 3.20% | P 3.10%

USD       Wholesale Inventories Jan A 0.30% | C -0.10% | P 0.10% | R 0.00%

Good Luck,

Andy

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