Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 121.459 | EURUSD 1.05464 | EURJPY 128.108 | AUDUSD 0.75958 | NZDUSD 0.72032 | USDCAD 1.2750 | EURCHF 1.06454 | USDCHF 1.0092 | GBPUSD 1.4930 | EURGBP 0.70639 |

 

Interbank Ranges as of 6am London time

Highs    Lows

EUR/USD             1.0555 | 1.0494

EUR/JPY               128.26 | 127.67

AUD/USD            0.7637 | 0.7573

NZD/USD             0.7338 | 0.7273

USD/CAD             1.2768 | 1.2734

EUR/CHF              1.06485 | 1.0626

USD/CHF             1.0128 | 1.0076

GBP/USD             1.4950 | 1.4912

EUR/GBP             0.7065 | 0.70355
For today

• EUR: The Euro made new lows over the course of the session with the market pushing into light option barriers and dipping briefly through the 105.00 level before pushing eventually back to the 105.30 areas in light trading over the session in an attempt to get back to the opening areas. Downside bids likely to the 1.0470 areas before likely stops make an appearance however, a full spectrum of types have been selling into the market with no major areas seen until the market makes a move below 1.0350 and fairly open. Profit taking will be the only possibility and that is likely to be in patches. Topside offers likely close to the 1.0600 areas if it can manage a run there, with only comments from the US likely to cause that much movement, with IP numbers unlikely to startle the market too much but a potential nonetheless. Through the 1.0600 level weak shorts may be likely to cut some positions and a strong run through 1.0630 opens a test of 1.0700 and a short squeeze.
• GBP: Cable has been reasonably quiet with an early selling more attributable to the falling Euro, todays FT runs with the story of concerns for the Feds next rise with a strong USD causing some concern however, without some rise in interest rate the cupboard is bare if they run into trouble in a year or so, so a balanced picture at best. Cable managed to move off the lows just above the 1.4910 levels and return to the opening levels running into the grey hours. Topside offers probably very light into the 1.4950-60 areas and the market then facing a short squeeze, Euro permitting on a push for the 1.5000 areas with downside bids likely in the EURGBP possibly providing some support for the market. Through 1.5000 will likely quickly move to the 1.5060-80 areas and weak resistance and possibly stronger through the level however, a decent visible trade number could help that move. Downside bids into the 1.4900-1.4880 remains with profit taking and new Longs willing to test the water, a push through though does expose the lows from July last year and the close we get the more likely for a quick attempt at the level.
• JPY: USDJPY moved from an opening around the 121.50 and continued a slow rally to just below the 121.70 level as the market seemed to be dominated by the Euro today however, with the market again moving towards the 122.00 level the sellers appeared late into the session and the market was never able to push through the topside and spent some 3hrs attempting too, of course this left the market stale and when the market turned lower there was a sudden movement that increased as it found little support and tested to the 121.40 levels into the grey hours and continued until the 121.30 level. Topside offers from 121.70 seemed to have been refreshed from this weeks attempt higher and apart from the day traders there is likely to be light exporter offers into the level. A push through the 122.00 level will still likely find it difficult going until the market moves through the 122.30 areas and triggers light stops and then a mixed area of trading until closer to the 123.00 area and further offers. Downside is now open with the market seeing a little congestion around the 120.90-121.20 area and only a strong push through the 120.70 level sees any likelihood of stops.
• AUD: Today was and employment/unemployment release day so that meant a mad minute of trading as everyone’s EA’S performed as you’d expect on a more complicated set of numbers than the programs were built for. Moving from the 0.7590 level the market didn’t move to much until the release with a quick spike higher followed by the move back before rising steadily to the 0.7610 level and never looking like it could beat that spike to 0.7635 area that was seen in the interbank arena. The drop back late into the session saw the market again move to the 0.7580 areas seen yesterday and trade quietly in that area for a couple of hours before starting a steady rise to the opening levels into the grey hours. Topside offers light into the 0.7630-40 areas and a push through 0.7650 likely to see weak stops today before running into probably a stronger level of offers into 77 cents. Downside bids 0.7560-40 are not likely to prove too difficult however, the chances of stops through to 75 cent are not really likely and the market would need to push through the level to see an appearance.

Overnight News

JPY:

Abe: GPIF Portfolio Needed Change as Japan Exits Deflation

Japanese Bought Net 270.4 Billion Yen Overseas Debt Last Week

Dai-Ichi Life Looks to Expand in Europe, Asia: Nikkei

Japanese Insurers May End 20-Yr Pay Freeze: Nikkei

AUD:

Australian February Employment Rose 15,600 M/M; Est. 15,000 Rise

NZD:

RBNZ’s Wheeler Less Sure That Neutral Cash Rate Is About 4.5%

RBNZ Governor Graeme Wheeler Keeps Rates on Hold: Statement

New Zealand February House Price Index Rises 6.1% Y/Y: REINZ

CNY:

China Reserve Ratio Cut Is ’Imperative’: Sec. Journal Commentary

EUR:

Greece Needs Financing to Exit Crisis, Finance Minister Says

CHF/GBP:

SNB Probably Gave Up Cap Anticipating ECB QE Effect: BOE Report

Swiss Turmoil Shows Machines May Deepen Currency Shock, BOE Says

GBP:

U.K. Self-Employment Surge May Not Mean Greater Level of Slack

Today’s data

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

NZD       RBNZ Rate Decision A 3.50% | C 3.50% | P 3.50%

JPY         Tertiary Industry Index M/M Jan  A 1.40% | C 0.50% | P -0.30% | R 0.00%

JPY         BSI Large Manufacturing Q/Q Q1 A 2.4 | C 5.7 | P 8.1

AUD       Consumer Inflation Expectation Mar A 3.20% | P 4.00%

GBP       RICS House Price Balance Feb A 14% | C 6% | P 7%

AUD       Employment Change Feb A 15.6K | C 15.0K | P -12.2K | R -14.6K

AUD       Unemployment Rate Feb A 6.30% | C 6.40% | P 6.40%

JPY         Consumer Confidence Feb A 40.7 | C 39.8 | P 39.1

7:00        EUR        German CPI M/M Feb (F) C 0.90% | P 0.90%

7:00        EUR        German CPI Y/Y Feb (F) C 0.10% | P 0.10%

9:30        GBP       Visible Trade Balance (GBP) Jan C -9.7B | P -10.2B

10:00     EUR        Eurozone Industrial Production M/M Jan C 0.20% | P 0.00%

12:30     CAD       Capacity Utilization Rate Q4 C 83.40% | P 83.40%

12:30     CAD       New Housing Price Index M/M Jan C 0.10% | P 0.10%

12:30     USD       Advance Retail Sales Feb C 0.40% | P -0.80%

12:30     USD       Retail Sales Less Autos Feb C 0.60% | P -0.90%

12:30     USD       Import Price Index M/M Feb C 0.20% | P -2.80%

12:30     USD       Initial Jobless Claims (MAR 7) C 306K | P 320K

14:00    USD       Business Inventories Jan C 0.10% | P 0.10%

Harry Hindsight              

• EUR: Today differed only in the dominance of the USD rather than weakness of the Euro, as the USD gained broadly across the board. The market drifted through Asia with the opening being a little lower and early trading filling the gap and taking the market just short of the 1.0720 levels before starting the steady drift back through the opening and into the 1.0670’s, the push through the 1.0680’s for the second time generated some reasonable volumes before the market moved through the grey hours with no real direction an unusual event leaving the early professional traders stuck for something to focus on. London were quick sellers on the open, triggering weak stops through the 1.0670 level and quickly to 1.0640 before holding for a short period and continuing in a steady fall to the 1.0560, while I earlier said that the USD overshadowed the Euro this was not entirely true as the crosses against the Euro continued trade lower. The market traded initially around the 1.0600 levels with the range narrowing into the NYK session and falling quickly lower once the London market closed and traded to the 1.0510 areas before recovering a little into the later part of the session and a close around the 1.0550 areas.
• GBP: While Cable has been able to hold over the past few days with the Euro declining quickly since Monday today changed as the USD saw broad increases. Now while the US and UK introduced QE early after the crash in 2008 the EU has taken its time and especially for the UK this may distort the balance and after two years of expansion the continuing weakness in EURGBP will undoubtedly impact on exports to the EU its largest export market and while exports to the US or the rest of the world will improve the cost to manufacturing of changing from its normal designated market will take time and money they are currently trying to avoid using. Today’s market saw the Cable holding through the Asian session rising from the opening 1.5060 levels to trade around the 1.5080 into the London session before the drag of the drag of the Euro moved in and pulling the at the Cable, this took the market to the 1.5040 levels and into the NYK session were the USD took its lead and Cable dropped steadily over several hours cutting through the 1.5000 level easily and down to the 1.4950 area where the market traded around for a couple of hours before weak stops through 1.4940 were triggered and a low below 1.4900 was posted on strong volumes across the market and then once the London market had left a quiet run to the close holding around the 1.4930 areas.
• JPY: While the USD was the focus of the day USDJPY struggled in early trading with the market still caught a little long from the previous 24hrs move higher and early trading saw light attempts to test the downside and squeeze out some more of those longs, the market pushed to just below the 120.90 areas before moving towards the Tokyo session saw the market squeeze higher and once the opening was over the market was moving off from the 121.20 areas and heading steadily to the 121.50 levels before reaching Tokyo lunch and a drift into the London session and fresh buying, the move this time was no less intense if slower and the market moved to above the 121.60 levels before steadying and unable to make any progress over the session. The market ended the day trading the 121.40-50 levels in a less active session.
• AUD: The Oz slowly succumbed to the USD over the course of the day, however, the market hit pockets of support as it moved lower. The opening saw the market testing higher initially pushing from the 0.7620 levels only to fail into the 0.7640’s unlike the levels I mistakenly typed yesterday, a resurgent USDJPY forced the market back to the opening levels and once the 0.7610 level broke weak stops chased the market to 0.7590 were reasonable bids appeared in the market and held into the London session, London did little with a brief attempt higher before pushing back to the 76 cent level and a break through the 0.7580 level and stops triggered to the 0.7560 levels while the USD remained reasonable strong through the session the market in Oz started to recover late into the session and a push back to above the 76 cent level and finishing the day close to the level.

Yesterday’s premiership results

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%

GBP       Industrial Production M/M Jan A -0.10% | C 0.20% | P -0.20%

GBP       Industrial Production Y/Y Jan A -0.10% | C 1.30% | P 0.50%

GBP       Manufacturing Production M/M Jan A -0.50% | C 0.20% | P 0.10%

GBP       Manufacturing Production Y/Y Jan A 1.90% | C 2.60% | P 2.40% | R 2.60%

USD       Crude Oil Inventories A 4.5M | C 4.5M | P 10.3M

GBP       NIESR GDP Estimate Feb A 0.60% | P 0.70% | R 0.60%

NZD       RBNZ Rate Decision A 3.50% | C 3.50% | P 3.50%

Good Luck,

Andy

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