Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 119.188 | EURUSD 1.08842 | EURJPY 129.731 | AUDUSD 0.78289 | NZDUSD 0.75618 | USDCAD 1.24813 | EURCHF 1.04818 | USDCHF 0.9630 | GBPUSD 1.48488 | EURGBP 0.73301 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.41 | 119.06

EUR/USD             1.0896 | 1.0865

EUR/JPY               129.85 | 129.55

AUD/USD            0.7835 | 0.7791

NZD/USD             0.7608 | 0.7568

USD/CAD             1.2508 | 1.2468

EUR/CHF              1.0502 | 1.0475

USD/CHF             0.9653 | 0.9625

GBP/USD             1.4867 | 1.4842

EUR/GBP             0.7331 | 0.7320
For today

• EUR: A lot of today’s research hitting the market is more to do with the strength of the USD and its impact on the GDP for the US with a 10% move higher equating to 1% drop in GDP however, while one model shows that type of movement the connection is loose and the USD has been much stronger with GDP being just as strong. However, whether you take that in effect the recent commentary is more likely a limiting factor in the rise of the USD and as long as verbal intervention works then the US politicians will employ the rhetoric. Euro’s with the movement of yesterday testing through the 1.1000 level and doing a lot of work has really removed liquidity for today and it shows in the numbers today with the market opening around the 1.0880 and ranging around the level for much of the session pushing above 90 and into the 70’s to the downside but not really stepping out of the 20 pip range, early trading was reasonable but the volumes dropped back over the course of the session as the Asian session runs out of interest to move into the weekend. Topside offers are now a little weaker however, the market is likely to see weak offers around the sentimental areas and better offers from the 1.0980 level again but any truly decent offers are likely to be above the 1.1050 levels and stops are likely through that and an opening for the market to move towards the 1.1200 areas. Downside bids into the 1.0850 levels with only minor stops likely and the downside bids increasing into the 1.0800 levels with congestion every 50 pips or so from then on and looking stubborn, however, this is all dependent on the Q4 GDP numbers which should not surprise will define the day.
• GBP: The BoE warns of a global liquidity storm that could endanger the financial stability if a Greek default were to happen, and while the ECB discounts the risk to some degree however, what will be will be and the world tics on for the moment, Cable continues to hold the 1.4850 areas having close there, as with the Euro movement has been limited and the market seems to have lost its appetite in Asia. Light offers into the 1.4900 level are truly light and possibly non-existent and the topside is open to weak offers into the 1.4940-50 areas and then stronger above the 1.4980 level with weak stops now likely through that level and opening up a push into the 1.5200 levels. Downside is congested from the current levels and into the 1.4800 level and bids likely to increase in size the further you push into the 1.4700 handle.
• JPY: USDJPY is again back in its ranging mode that we’ve seen most of the week holding around the 119.20 levels with only brief attempt to push through the 119.40 level and holding the 119.10 for the most part, with volumes low again one can only hope for movement in the London/NYK session again however, with time running out for the Abenomics and talk of increasing the time frame one has to wonder if it stood a chance of working in the first place. Offers into the 119.40-50 areas and with a break here the market will run only a short way to the next trench of offerings into the 119.80-120.00 levels and the market likely to remain stuck for today anyway notwithstanding a change in US GDP. Downside bids likely to be reasonably strong on a move into the 118.20 areas and only a decent break below 117.80 is likely to see any squeeze on retail margins and some movement lower.
• AUD: The Oz held its levels into the early part of the session and into Tokyo around the 0.7830 levels before falling Iron prices saw the market drop back, this took out the 78 cent level with the market pushing into the 0.7790’s before holding and moving back to trade around the figure level. Topside offers are light into the 0.7850 levels and stronger as the market pushes to the 0.7880-0.7900 areas, stops are likely to make an appearance on a push through 0.7910 areas however, the selling pressure is likely to regain strength from then on and into likely stronger offers from 0.7940. Downside bids remain into the 0.7780 level with likely weak stops through the 0.7770 areas and opening a test to the 77 cent level and then patches of support before the 0.7660 levels.

Overnight News

JPY:

Aso: Japan Is Cautious About Participating in China-led AIIB

Takenaka Says Japan May Join China’s AIIB If Governance Is Good

Bank of Japan’s Key Inflation Gauge Grinds to a Halt in February

Japan Household Income Falls at Slowest Pace in 13 Months

Japan Feb. Unemployment Rate at 3.5%, Matching Estimate

JPY/USD:

Abe to Be First Japan Premier to Address Joint Congress Session

JPY/CNY:

Japan LDP’s Nikai to Meet China’s Xi in Hainan, Kyodo Says

CNY:

China Hasn’t Used Up Its Growth Potential, Ex-PBOC Adviser Says

GBP:

Cameron Beat Miliband in U.K. Pre-Election Program, Poll Finds

NZD:

N.Z. Household Wealth Exceeds NZ$1 Tln, New RBNZ Statistics Show

John Key’s National Party Faces Loss in New Zealand By-Election

Today’s data

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

JPY         Unemployment Rate Feb A 3.50% | C 3.50% | P 3.60%

JPY         Household Spending Y/Y Feb A -2.90% | C -3.10% | P -5.10%

JPY         National CPI Core Y/Y Feb A 2.00% | C 2.10% | P 2.20%

JPY         Tokyo CPI Core Y/Y Mar A 2.20% | C 2.20% | P 2.20%

JPY         Retail Trade Y/Y Feb A -1.80% | C -1.40% | P -2.00%

12:30     USD       GDP (Annualized) Q4 (T) C 2.40% | P 2.20%

12:30     USD       GDP Price Index Q4 (T) C 0.10% | P 0.10%

14:00     USD       U. of Michigan Confidence Mar (F) C 92.1 | P 91.2

Harry Hindsight              

• EUR: Quiet trading through the Asian session even though commodities traded steadily higher as news that Saudi Arabia had sent some 100 warplanes to hit the Yemen rebels and thus set oil climbing quickly higher, the Euro moved from the opening 1.0975 areas to push steadily higher and into the 1.0980’s until the grey hours when the USD came under pressure as early London entered the market and the Euro pushed through the 1.1000 level with plenty of two way action and volumes quickly doubling over the course of half an hour or so that of the Asian session. The commodities stabilized into the London session and although the market made a move towards the 1.1050 level it was unable to push any further and soon started to drift back having been unable to break higher. The move into the NYK session saw the market quickly back to the starting level with a better than expected Initial claims number and it was only time before weak stops were triggered with a break of the days lows around the 1.0960 level dropping quickly to the 1.0920 supportive areas and then breaking through on the London close to push below 1.0900 and touching the 1.0860 levels and further support, the end of the session saw several hours of ranging around the 1.0870 level.
• GBP: With the Cable basing off the 1.4880 level through the Asian session it was unable to gain traction until the early London players entered the market and there was a tight channelled move higher pushing to the 1.4960 level before stalling and then gapping slightly on the better retail sales numbers to stall just below 1.5000 and keeping pace with the Euro rally. EURGBP remained in a reasonably quiet range to this point and the decline in the Euro with the US numbers saw EURGBP retreating and while the USD gained across the board the move lower for Cable was tempered somewhat by the EURGBP selling. However, weak stops through the 1.4940 level and again through the 1.4880 quickly moved the market to just below the 1.4810 before bouncing a little and then ranging in the 1.4850 levels into a quiet close.
• JPY: The USDJPY opened quietly and traded steadily to the 119.30 level as commodities moved and USDJPY was one of the first to react moving quickly to the 119.00 levels and then dropping steadily over the remainder of Asia into the London session and willing buyers into the 118.30’s holding the market for a couple of hours before steadily moving back towards the 118.70 areas, Initial jobless claims then took the market quickly through the 118.90 levels and it was a short time later that the market again moved above 119.00 holding around 119.20 before pushing to the 119.40 level and then a drift to the close.
• AUD: A fairly decent range given the past few months with the market dropping back a little over the course of the Asian session dropping from the 0.7850 levels and down into the 78 cent area as AUDJPY selling as well as straight Oz drifted, with mixed movement the market eventually turned quickly as commodities started to rise quickly into the London session pushing the Oz quickly into the London session to test above the 0.7880 level before stalling as speculative plays finished and market started to drift a little, the Oz held its levels into the NYK session and only the release of the Initial claims number changed the tone with the market moving steadily off to below the opening levels and holding just above the 78 cent level again into a quiet close.
• Oil + Gold: With the announcement on the situation in the Middle east the Energy products leapt higher with the WTI crude moving of the 49.50 levels and quickly pushing towards the 52.50 levels before finding resistance and profit taking, the move into the London session saw another push higher and close to 53.00 before slipping back as the market in London curbed the movement with nothing tangible for the rally other than speculation of doom and gloom merchants, Golds move was less substantial over the early period rising from the 1196 levels to push to the 1200. Areas and struggling to move through until the grey hours and like the energy products was more speculative than substantial in its movement and Gold leapt on the London FX opening from 1205 areas to touch the 1220 level before quick profit taking started to move in and a steady decline over the rest of the day to the 1205 areas. While the market bought the rumour of a widening conflict in the Middle East one sustained mission against the Yemen rebels does not make a regional war and the consequences and missions success could just as easily be the limiting factor for the region.

Yesterday’s premiership results

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

EUR        German GfK Consumer Sentiment Apr A 10 | C 9.8 | P 9.7

EUR        Eurozone M3 Y/Y Feb A 4.00% | C 4.30% | P 4.10%

GBP       Retail Sales M/M Feb A 0.70% | C 0.40% | P -0.30% | R 0.10%

GBP       CBI Reported Sales Mar A 18 | C 20 | P 1

USD       Initial Jobless Claims (MAR 21) A 282K | C 295K | P 291K

Good Luck,

Andy

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