Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 117.253 117.30-50 | EURUSD 1.09264 1.0885-1.0929 | AUDUSD 0.69526 0.6951-84 | NZDUSD 0.65424 0.6545-75 | USDCAD 1.41729 1.4153-80 | USDCHF 0.99482 0.9935-78 | GBPUSD 1.45177 1.4508-50 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               117.45 | 116.70

EUR/USD             1.0970 | 1.09075

EUR/JPY               128.27 | 127.65

AUD/USD            0.6983 | 0.6927

NZD/USD             0.6562 | 0.6509

USD/CAD             1.4188 | 1.4156

EUR/CHF              1.0880 | 1.0837

USD/CHF             0.9965 | 0.9880

GBP/USD             1.4560 | 1.4491

EUR/GBP             0.7555 | 0.7510

For today

• EUR: The Pre Market was quiet however, on the opening in Sydney the market saw USD selling as JPY buying kicked in as safe haven flows renewed with a vengeance, Euro’s pushed to the 1.0970 levels before drifting back to the Tokyo opening and the 1.0930 areas where the market opened, the move through the early part of Tokyo saw the market holding the 1.0930-40 areas before dipping back to the 1.0910 areas and holding quietly through to the grey hours as the USD slowly recovered after the quick opening. Topside offers into the 1.0980 levels and likely to continue to the 1.1020 areas and then some light congestion and mixture of order types through to the 1.1050 level, a strong break above the 1.1060 areas opens the market for a possible test of the 1.1100 areas and possibly strong offers to the 1.1120 levels. Downside bids light through the 1.0900 levels and not likely to increase too much until the 1.0830 areas and into the 1.0800 level, a break through the 1.0780 areas will likely see only small weak stops and the market opening for a further test of the stronger 1.0720-00 areas.
• GBP: Opening around the 1.4530 areas and then strong GBPJPY selling and then a snap back from early attempts to the 1.4500 level to touch above the 1.4550 area before settling down to a slow market around the 1.4520 levels with the Cable being buffeted by external pairings. The downside push through the 1.4500 level would suggest the market was caught on the break and quickly covered however, the downside is possibly open with no real levels showing until a move onto the 1.43 handle and congestion from the 2000-2002 period standing in the way to a move to the 1.4000 areas. Topside offers light through the 1.4550 areas and with the possibility of the 1.4600 level being similar with better offers moving in to the market just before the 1.4650 levels
• JPY: Rising tensions in Korea, economic problems in China and the great retail market of Japan is quickly revising its outside investments with strong JPY buying from the opening, 117.20 saw immediate selling move in and ZAR/JPY seemed to be the catalyst for the most part and 116.70 was quickly traded before holding, the move then through to the Tokyo session saw a steady recovery through to the 1.1710 areas and the market then limped along gaining as it went to trade to the 117.40 before moving into the grey hours little changed to Friday’s close, Topside offers possibly light through the 118.00 levels and no real strength on the topside until the market moves towards the 118.80 levels with possible weak stops on a move through the 119.20 area, downside see’s the market likely to open up for a greater move if the market can push firmly through the 116.70 levels with the market then open to just sentimental levels until closer to the 115 handle.
• AUD: The Oz opened higher but was quickly reversed as the AUDJPY selling moved in with the Oz pushed quickly through to the 0.6930 levels where the market saw reasonable bids moving into the market, while the weekends CNY commentary being supportive helping the Oz, the market moved into the Tokyo session moving steadily through to the 0.6970 levels and eventually into the 0.6980 area before slipping a little, one suspects the market could have been more volatile however, with a Holiday in Tokyo for Coming of age day the later part of the session slowed. Topside offers likely to be light through 70 cents and although there is congestion into the 0.7040-60 areas through the level could see any weak stops and the market open for a test of the 71 cent levels. Downside bids probably strong into and through the 69 cent levels and the lows of last year, a push through the 69 cent level is likely to open the market for a deep decline and less certainty until closer to the 65 cent levels.

Overnight News

CNY:

China FX Reserves Decline Due to Yuan Fall Expectation: Daily

China Can Adjust Local Govt. Debt Quota on Economic Conditions

PBOC Deputy Governor Pan Is Also Now SAFE Party Chief

KRW:

N.Korea Fall Would Be Bigger Threat to South than Bomb: Moody’s

USD/KRW:

U.S. May Deploy More Strategic Assets in S.Korea against N.Korea

ZAR:

South African President Says Response to Nene Firing Exaggerated

AUD:

Australia Dec. ANZ Job Ads Fall 0.1% vs 1.1% in Nov.

GBP:

U.K. Seen as Less Attractive by Manufacturers: EEF Survey

Today’s data

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

NZD       Building Permits M/M Nov A 1.80% | P 5.10% | R 5.40%

08:15     CHF        Retail Sales (Real) Y/Y Nov C 0.30% | P -0.80%

09:30     EUR        Eurozone Sentix Investor Confidence Jan C 11.5 | P 15.7

13:15     CAD       Housing Starts Dec C 213K | P 211.9k

15:30     CAD       BOC Business Outlook Survey

Weekend News

USD/KRW:

1. Korea, U.S., Deploy B-52 Over Korean Peninsula: Yonhap
   CNY:

China Premier Vows No More Strong Stimulus on Economy: BJ News
China Currency Regulator Says Foreign Exchange Reserves ‘Ample’
China’s Stabilizing Consumer Prices Leave More Room for Stimulus
Speed of China’s Capital Outflows Is Worrisome, Li Daokui Says
IMF Notes Widening Spread Between Onshore, Offshore Yuan Rates
China Says Nuclear Issue Should Be Brought Back to Negotiation
PBOC Approves Cross-Border Yuan Financing Trials in Xinjiang
HKD:

Hong Kong Capable of Dealing With Market Volatility, Tsang Says
Iran:

Iran Hopes Saudi Arabia Will Pursue Peace Path, Minister Says
JPY:

Asahi to Make Offer for Peroni, Grolsch Brands, Yomiuri Reports
Abe Will Impose ‘Severe’ Sanctions on North Korea: Kyodo
USD: Fed’s Lacker Says December Employment Report Was ‘Very Strong’
EUR:

Bundesbank’s Thiele Says China Turbulence No Threat for EU: NOZ
Greece Must Reform Pensions, ECB’s Rueffer Tells Proto Thema
EU to Rule Belgian Corporate Tax Deals Illegal Monday: Standaard
Germany AAA Affirmed by Fitch, Outlook Stable
Luxembourg Affirmed by Fitch at AAA with Stable Outlook
CHF:

SNB’s Jordan Tells SRF Radio Franc ‘Significantly Overvalued’
SNB’s Jordan Can’t Predict Negative Deposit Rate Duration
KRW:

1. Korea Seeks China Help on Treaty with U.S., S. Korea: Rtrs
   Tensions High on Korean Border as North Raises Threat of War
   U.S. Vice Admiral Says Korean Situation Keeps Him Up at Night
   North Korea Warns of War Over South’s Broadcasts, Yonhap Reports
   S. Korea Should Closely Monitor Financial Market: FSC Chairman Yim
   TRY:

Turkey Raises Max. FX Collateral Ratio for Interbank Borrowings
Turkey Deputy PM Simsek to Announce Medium-Term Program Monday
Turkey Sets Reserve Requirement for Development, Investment Banks

 

Harry Hindsight

• EUR: China announcing the suspension of the circuit breakers on the equity markets was sufficient to give the USD a boost into early trading in Tokyo, the market moved from the opening 1.0930 levels quietly through into Tokyo to trade to just above the 1.0910 level before quickly dropping to trade around the 1.0880 level through into the grey hours, where early eastern Europe selling moved in to test the 1.0860 levels before the official opening in London saw strong buying from the opening and the market moving to the 1.0900 level, from there though the market drifted lower as German numbers failed to inspire and the drift took the market back to the 1.0860 levels. The move into the NYK session saw a strong initial reaction to the NFP with the USD quickly rising across the board and this forced the Euro towards the 1.0800 levels however, although the recovery was not so quick as the decline the market did move back to the 1.0860 level in the next hour and gradually moved through to the 1.0900 level in the US session, with the London market out of the way the gradual rise for the Euro continued with the market moving to the opening levels for a quiet close.
• GBP: The move through the Asian session saw little movement through into early London with the market moving from the 1.4620 opening to touch through the 1.4640 levels after the CNY announcement and then hold in the areas for a short period before drifting back into the grey hours to test the lows below 1.4610, London was little different with the market holding steadily in an even tighter range through to the NFP release, with the market for Cable fining USD buying too much and a steady drift through the 1.4600 level and then continuing ever lower before finding support into the 1.4500 level and ranging quietly to the close. The basis for Cables weakness seemed to be interest in the EURGBP with buyers in NYK willing to push the cross higher and taking it steadily through the 0.7500 levels, having pushed through the 0.7490 levels the topside opened for the cross and the market continued its steady rise to trade to a close in the 0.7520 levels.
• JPY: USDJPY moved from the 117.60 level opening and pushed into the Tokyo session quickly rising to above 118.40 with a minor spike to the 118.60 level before trading quietly around the 118.20 levels through the Asian session and deep into London, even early buyers were unable to take the market much above 118.50 and until the NYK session and the release of the better than expected NFP numbers the market held around the 118.20 levels, on the release the market gapped and touched through 118.80 before dropping less quickly to the 118.00 levels with only light stops appearing but sufficient for the market to again start to buy the JPY as a safe haven as concerns with the Asian area continue. The market almost held the opening levels before dipping on the close with late sellers quickly forcing the market down towards the 117.20 levels.
• AUD: The Oz saw a slight rise before the Tokyo session however, with the CNY announcement the Oz quickly rallied and pushed to the 0.7075 levels from the opening around the 0.7020 areas, the market held above the 0.7050 levels for the most part in quiet trading through the session and the opening in London saw the quick sellers pushing the market back to the 0.7030 levels, through to the US session the Oz slowly drifted back to the 70 cent level and limited buying, the move through the level from the release of the NFP saw the market a little more steady than others and the Oz seemed to arrest the selling into the 0.6970 levels with good two way trading through towards the close however, the JPY buying that appeared towards the close was proceeded by carry trade AUDJPY selling moving into the market and the Oz settled on its lows towards the 0.6950 levels.

Friday’s premiership results

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

AUD       Retail Sales M/M Nov A 0.40% | C 0.40% | P 0.50% | R 0.60%

JPY         Labour Cash Earnings Y/Y Nov A 0.00% | C 0.70% | P 0.70%

JPY         Leading Index Nov (P) A 103.9 | C 103.9 | P 104.2

CHF        Unemployment Rate Dec A 3.40% | C 3.40% | P 3.40%

EUR        German Trade Balance (EUR) Nov A 19.7B | C 20.2B | P 22.3B | R 20.5B

EUR        German Industrial Production M/M Nov A -0.30% | C 0.50% | P 0.20% | R 0.50%

CHF        CPI Y/Y Dec A -1.30% | C -1.20% | P -1.40%

CHF        CPI M/M Dec A -0.40% | C -0.30% | P -0.10%

GBP       Visible Trade Balance (GBP) Nov A -10.6B | C -10.5B | P -11.8B | R -11.2B

CAD       Net Change in Employment Dec A 22.8K | C 10.0K | P -35.7K

CAD       Unemployment Rate Dec A 7.10% | C 7.10% | P 7.10%

CAD       Building Permits M/M Nov A -19.50% | C -3.00% | P 9.10% | R 9.90%

USD       Change in Non-farm Payrolls Dec A 292K | C 200K | P 211K | R 252K

USD       Unemployment Rate Dec A 5.00% | C 5.00% | P 5.00%

USD       Average Hourly Earnings M/M Dec A 0.00% | C 0.20% | P 0.20%

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

Stay lucky

Andy

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