Daily FX Market Commentary

Andy Harrison

Good morning and Happy New Year,

LMAX Close Wellington open

USDJPY 120.269 120.20-40 | EURUSD 1.08564 1.0853-58 | AUDUSD 0.72893 0.7275-90 | NZDUSD 0.68404 0.6820-40 | USDCAD 1.38358 1.3820-45 | USDCHF 1.00276 1.0010-25 | GBPUSD 1.47366 1.4725-40 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.465 | 119.23

EUR/USD             1.0905 | 1.0827

EUR/JPY               130.75 | 129.97

AUD/USD            0.7308 | 0.7207

NZD/USD             0.6844 | 0.6747

USD/CAD             1.3919 | 1.3815

EUR/CHF              1.0880 | 1.0838

USD/CHF             1.0025 | 0.9939

GBP/USD             1.4760 | 1.4694

EUR/GBP             0.7395 | 0.73585

For today

• EUR: A New Year begins with plenty of movement in the Euro as the market gyrates on limited volume with the market opening in line with the close on Friday and facing steady EURJPY selling through into the Tokyo session and continuing into the early part to the 1.0830 areas before finding sufficient bids to hold the market and the Euro finding a second lease of life as the USD started to buckle under the weight of the JPY buying, the market moved back through the 1.0850 areas and triggered weak stops and moved steadily through the session to above the 1.0880 levels before finding resistance and a quiet move to the grey hours. Topside offers likely into the 1.0940 levels with a push through the 1.0950 areas likely to see weak stops open and the market quickly testing into the 1.0980-1.1000 levels with limited congestion through the area and possibly strong offers to the 1.1020 areas before the topside opens further, Downside bids light through to the 1.0860 levels with the bids likely to improve and then getting stronger the closer to the 1.0820 levels and through to the 1.0800 areas.
• GBP: Last week’s chatter of no rate rise in the near future led the Cable to its present levels and having opened in line with Fridays close the market drifted to the 1.4730 areas before moving into the Tokyo session and then steady cross selling in GBPJPY was strong enough to push the market through the 1.4700 levels to open the year with lows not seen since April of last year, as with the Euro though it found a second wind as the USD started to weaken a little in the face of the JPY buying and Cable managed to push back towards the opening levels. Downside bids into the 1.4700 levels still remain to be cleared and with a full market this should be a little more resistant into the London session however, a solid push will expose the downside with the market likely to find better bids on a move through the 1.4650 levels and into the 1.4600 area and the lows from last April, however, a push through the level will see the market possibly seeing strong selling as the market opens up for tests to the post Lehmans period. Topside offers light from the current levels with possibly stronger offers through the 1.4800 levels and into the 1.4850 areas before the market possibly triggers weak stops and a short squeeze possible through to the 1.4900-50 areas.
• JPY: Early Cross selling initially failed to dent the USDJPY and the Euro and GBP were taken lower however, once the weakness in the other majors disappeared the USDJPY then started to drop quickly back taking the market from the 120.40’s and dropped quickly through the 120.00 levels stalling a little on the move through the 119.80 areas and then struggling over the next 30 pips as the market pushed into the 119.40 levels and further bidding appearing to slow the market as it heads into the grey hours. Nikkei newspaper reported on the 1^st Jan that the BoJ would lower its core expectations for 2016 inflation to 2016 from the previous 1.4% and would push back further if crude oil prices continued to be depressed so this is really the first time the market could react to that news however, until the Monetary policy meeting at the end of the month before this becomes fact. USDJPY having now broken back down from the danger of pushing into the 124.00-125.00 range see’s bids from the 119.40 areas continuing through toe the 118.80 areas as the yield players possibly move in again, a test through the 119.00 level could again see a quick move lower similar to the one in October however, one would suspect the 119.00 will perform as it did over the early part of 2015 and stops while present possibly limited. Topside offers light to the 120.00 levels and although the likelihood of stops are limited the topside through the 120.40-60 areas could see a little bit of a squeeze if it can make its way there.
• AUD: The early cross JPY selling had little effect on the Oz with the market opening in line with Fridays close, testing steadily to the 73 cent level before drifting as the JPY buying started to impact sharply and the AUDJPY selling with the move through the 87.00 levels triggering some stops and the move towards the 86.00 level opening towards the run to the grey hours, the Oz saw most of the movement from the 0.7290 levels to the mid 0.7220’s in a short period of time before testing backwards and forwards to the 0.7210 levels over the course of the session and not quiet able to push through the downside however, while volumes have been fairly brisk the actual strength of the market has been limited as the market remains only partially formed, Topside offers are probably strongest through the 0.7280 levels and building to the 0.7320 areas with weak stops through the level and then stronger offers in patches about every 20 pips or so through to the 74 cent level, downside bids into the 72 cent level will likely give way to limited congestion on a move below the level with no real stops likely until the market tests through the 0.7120 areas and suspected limited bids around 71 cent.

Overnight News

USD:

FED’s Mester says she prefers steeper rate hike pace Reuters

FED’s Fischer says new rate hike tools passed key test

CNY:

Two speed China with factories slumping but services gaining

Shares dropped 7% and the market was halted for the day

EUR:

Greece comes back into view with BoG governor Stournaras giving warnings to Tsipras about pensions, a bone of contention for the EU

Oil:

Oil jumps 2% on Saudi Arabia, Iran tensions

Today’s data

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

JPY Nikkei Japan PMI Manufacturing Dec (F) A 52.6 | P 52.5

CNY Caixin China PMI Manufacturing Dec A 48.2 | C 48.9 | P 48.6

08:30     CHF SVME-Purchasing Managers Index Dec C 50.1 | P 49.7

09:30     GBP Net Consumer Credit Nov C 1.3B | P 1.2B

09:30     GBP Net Lending Sec. on Dwellings Nov C 3.6B | P 3.6B

09:30     GBP Mortgage Approvals Nov C 69.8K | P 69.6k

09:30     GBP M4 Money Supply MoM Nov P 0.6%

09:30     GBP M4 Money Supply YoY Nov P 0.2%

09:30     GBP Markit UK PMI Manufacturing s.a. Dec C 52.8 | P 52.7

13:00     EUR German Consumer Price Index MoM Dec (P) C 0.2% | P 0.1%

13:00     EUR German Consumer Price Index YoY Dec (P) C 0.6% | P 0.4%

13:00     EUR German Consumer Price Index – EU Harmonised MoM Dec (P) C 0.2% | P 0.1%

13:00     EUR German Consumer Price Index – EU Harmonised YoY Dec (P) C 0.4% | P 0.3%

14:30     CAD RBC Canadian Manufacturing PMI Dec P 48.6

15:00     USD Construction Spending MoM Nov C 0.7% | P 1.0%

15:00     USD ISM Manufacturing Dec C 49 | P 48.6

15:00     USD ISM Prices Paid Dec C 36 | P 35.5

Friday’s premiership results

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

CNY        Manufacturing PMI Dec A 49.7 | C 49.9 | P 49.6

CNY        Non-manufacturing PMI Dec A 54.4 | P 53.6

Stay lucky

Andy

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