Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 119.446 | EURUSD 1.08319 | AUDUSD 0.71905 | NZDUSD 0.67435 | USDCAD 1.39517 | USDCHF 1.00208 | GBPUSD 1.4717 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.70 | 119.1

EUR/USD             1.0840 | 1.0815

EUR/JPY               129.47 | 129.08

AUD/USD            0.7215 | 0.7175

NZD/USD             0.6757 | 0.6729

USD/CAD             1.3955 | 1.3898

EUR/CHF              1.08595 | 1.08365

USD/CHF             1.0030 | 1.0008

GBP/USD             1.4725 | 1.4708

EUR/GBP             0.7362 | 0.73485

For Today

• EUR: A lacklustre day for the Euro with the market moving around the 1.0830 levels for the most part with the move into Tokyo seeing some light cross/JPY buying taking the Euro to above the 1.0835 areas before struggling, it then drifted lower as the early Japanese buyers drifted away from the market and the Euro tested 1.0815 and then a slow move back to the opening levels. Light offers to the Topside and those offers are likely to continue to the 1.0860 levels before the stronger offers start to appear into any push at the 1.0900 levels, even so these offers are not particularly strong and the market is likely to run to stronger offers into the 1.0940-60 levels with the possibility of weak stops on any challenge of the 1.0980 resistance and likely to become active on a strong push for the 1.1000 areas, Downside bids are likely to be found again on a push through the 1.0800 areas and a break below the 1.0780 levels will likely see the market opening as those stops open the downside and the bids likely to be weak until the 1.0700 areas. From that point on the market is likely to find congestive bids through the downside however, the downside bids are likely to be in patches and possibly dependent on the employment figures in Germany.
• GBP: For the moment the Cable has traded quietly through the session trading around the opening 1.4720 levels and lacking direction, with the equity markets stable and the general market more or less inclined to reposition the Cable has been on the back burner, Topside offers light through the 1.4750 level and the better offers are not likely until beyond the 1.4810 areas with those offers likely to extend to the 1.4850 area before any weakness appears however, while there is a slight chance of a short squeeze it’s not likely to be initiated by Cable and the going is likely to be difficult as the market pushes through the 1.4900 areas. Downside bids through the 1.4700 levels and into the 1.4650 area are likely to continue through to the 1.4600-1.4580 levels however, a break here could see break out stops appearing and the market vulnerable to a greater fall with only limited congestion into the 1.4500 areas.
• JPY: The market moved into the New session trading around the 119.40 levels and slowly drifted to the 119.30 area, rising steadily as early Tokyo moved to the 119.50 levels and the official opening fix selling and possibly exporters moving in to hedge their risk saw the market testing a to the 119.10 levels before state controlled funds intervened to support the Chinese stocks after yesterday’s slide, this had the effect of bringing the USD back higher pushing the USDJPY to the 119.70 level after a quick move to 119.50 however, once the market had repositioned itself and the market had run out of steam the market drifted to the grey hours testing back to the 119.40 levels. Topside offers light through the 119.80 areas and then possible exporter offers standing in the way however, if the market can push through the level it is still not likely to trigger anything major with the 120.50-121.00 levels likely to be congested and awaiting something major to help it through. Downside bids into the 118.80 levels sees the market technically supportive with a push through the level likely to see sharp stabs lower and possibly passing the bids which will see the market snap back from those lows however, the question is if it were to occur where would the bottom be, 118.20-117.80 is likely to see some importer bids however, as was pointed out to me the costs for the importers has dropped significantly with the fall in oil/commodity prices so likely to be far less than 12 months ago.
• AUD: The Oz drifted from the opening to set up the lows just below the 0.7180 levels before a steady rally saw the market move back above the 72 cent level but unable to push much beyond the 0.7210 levels, Topside offers through the 0.7230 levels before a possibility of weak stops appearing and the market opening to the 0.7280-0.7300 areas with stronger offers likely in the area, downside bids through the 0.7160 areas are likely to continue to 0.7140 before the bids become lighter into 71 cents however, this does open up the possibility of a test further to the lows in November and possibly stronger bids into the 0.7050 areas.

 

Overnight News

EUR:

EU is to look into new Polish laws limiting its Media

CNY:

Rumours of official intervention to support Chinese stocks

Today’s data

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

JPY         Monetary Base Y/Y Dec A 29.50% | C 33.20% | P 32.50%

08:55     EUR        German Unemployment Change Dec C -8K | P -13K

08:55     EUR        German Unemployment Rate Dec C 6.30% | P 6.30%

09:30     GBP       Construction PMI Dec C 56 | P 55.3

10:00     EUR        Eurozone CPI – Core Y/Y Dec (A) C 1.00% | P 0.90%

10:00     EUR        Eurozone CPI Estimate Y/Y Dec C 0.40% | P 0.20%

13:30     CAD       Industrial Product Price M/M Nov C 0.00% | P -0.50%

13:30     CAD       Raw Materials Price Index M/M Nov C -2.50% | P 0.40%

Harry Hindsight              

EUR: The session started quietly for the most part with cross/JPY selling dominating early trading with the Euro opening unchanged from Friday and steadily dipping to the 1.0830 levels from the opening around the 1.0870 areas, the release of the CNY PMI numbers disappointed although the service side remained buoyant, from that point it was risk off and the USD started to drop more of a mechanism of USDJPY selling than anything else, coupled with equity selling across the Asian region, the Euro surged back to the opening levels and then continued the move into the grey hours and tested quickly through the 1.0880 levels before initially holding the 1.0900 areas, London opening saw the market rallying quickly again and the market pushed into the session testing towards the 1.0950 levels before running out of steam the move through to the NYK session was a little less troubling with PMI results in Europe generally a little better however, this was countered late in the session by weaker CPI numbers from Germany and this tipped the market lower with Euro’s dropping quickly through the 1.0900 levels and taking out weak longs, the market stalled for a short period around the 1.0850 levels however, the US market continued the move as it took several hours for the equity markets to settle down and although the US numbers were less impressive than the European numbers at this point it mattered not as the Euro continued to push to the 1.0780 areas and enough support to hold and turn the market to push back above the 1.0830 and hold the level to the close.

GBP: Cable was little different with early trading dominated with GBPJPY selling pushing the market lower from the opening 1.4740 areas and testing into the Tokyo session below 1.4700 the CNY numbers saw the Cable quickly above the 1.4720 level and although it struggled through to the Grey hours making its way to the opening levels early London were quick buyers and the market moved to the 1.4770 levels before finding minor resistance before pushing steadily through to test above the 1.4810 level with generally weaker numbers, the market having topped started a long and drawn out selling as EUR dragged on the market and USD started to recover some of the early losses, Cable pushed through the 1.4700 levels after a long steady drop and this time weak stops entered the market as the downside support disappeared and the market traded to the 1.4660 levels, profit taking saw some light as the buyers slowly reappeared for Cable however, it was a long drawn out affair with much of the day’s volume completed in the London session and the rise though steady was back to the 1.4720 levels and only just short of the opening levels.

JPY: The year started with a bang, strong cross/JPY selling saw the USDJPY actually rising slightly as the other major currencies taking the pressure and the USDJPY slowly pushed from the 120.30 areas to above the 120.40 before the release of the CNY PMI number sent the USDJPY quickly to the 119.80 areas from the high, it took time to push through the level and the move through Asia saw the market struggling every 20 pips on the move lower and into the grey hours just holding the 119.40 level however after a brief respite it dipped again and through the 119.20 level and dipped quickly to the 118.80 level into the London opening and the waiting support line held more or less, the move through the early London session saw the market testing the level several times before the move into the NYK session and the market recovered to the 119.40 areas before settling into a quiet trading range holding the 119.40 level to the close.

AUD: The early cross/JPY selling was limited to some extent that is until the release of the CNY numbers and then the combination of a stronger JPY and a weaker manufacturing economy in China saw the Oz drop quickly having initially approached the 73 cent level and then dipped to the 0.7210 levels before holding the level in the move into the grey hours, at this point the market tested the 72 cent levels for the first time and held into London’s official opening but was never able to stretch far beyond the 0.7220 levels and the move into the NYK session saw steady but persistent selling through to the 0.7160 levels before the market ran out of steam. The later part of the session saw limited buying from the lows taking the market slowly to the closing rate around 0.7190.

Yesterday’s premiership results

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

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

CHF        SVME PMI Dec A 52.1 | C 50.1 | P 49.7

EUR        Italy Manufacturing PMI Dec A 55.6 | C 54.9 | P 54.9

EUR        France Manufacturing PMI Dec (F) A 51.4 | C 51.6 | P 51.6

EUR        Germany Manufacturing PMI Dec (F) A 53.2 | C 53 | P 53

EUR        Eurozone Manufacturing PMI Dec (F) A 53.2 | C 53.1 | P 53.1

GBP       PMI Manufacturing Dec A 51.9 | C 52.8 | P 52.7

GBP       Mortgage Approvals Nov A 70.4K | C 69.8K | P 69.6K | R 69.8K

GBP       M4 Money Supply M/M Nov A 0.40% | C 0.50% | P 0.60%

EUR        German CPI M/M Dec (P) A -0.10% | C 0.20% | P 0.10%

EUR        German CPI Y/Y Dec (P) A 0.30% | C 0.60% | P 0.40%

USD       ISM Manufacturing Dec A 48.2 | C 49 | P 48.6

USD       ISM Prices Paid Dec A 33.5 | C 36 | P 35.5

USD       Construction Spending M/M Nov A -0.40% | C 0.70% | P 1.00%

 

Good Luck,

Andy

Any opinions, news, research, analyses, prices or other information contained on this Blog, whether by LMAX, its employees, partners or contributors, does not constitute investment advice nor has it been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the material contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. Whilst information provided on this Blog may help with your investment research you must consider carefully whether you should make (or refrain from making) investment or other decisions based on what you see without doing further research on the investments you are interested in. Participating in this Blog cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you. LMAX has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

LMAX will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the material produced in this Blog was obtained from sources deemed to be reliable, LMAX does not provide any guarantees about the reliability of such sources.

Consequently any person acting on it does so entirely at his or her own risk.

If you currently hold an account with LMAX for the purposes of trading FX and CFD’s, you are encouraged to use a different Username and Password to access the Blog or any other online systems. The Blog is a place to learn, discuss and share information and ideas with Blog followers. It is not a place to slander, use unacceptable language or to promote LMAX or any other FX, Spread Betting and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.