Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 118.054 | EURUSD 1.0866 | AUDUSD 0.69833 | NZDUSD 0.64729 | USDCAD 1.43691 | USDCHF 1.00506 | GBPUSD 1.44129 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               118.28 | 117.59

EUR/USD             1.0890 | 1.0855

EUR/JPY               128.40 | 128.06

AUD/USD            0.7003 | 0.6939

NZD/USD             0.6492 | 0.6428

USD/CAD             1.4393 | 1.4345

EUR/CHF              1.09315 | 1.0915

USD/CHF             1.00555 | 1.0035

GBP/USD             1.4429 | 1.4400

EUR/GBP             0.7558 | 0.7526

For Today

EUR: A very quiet start to the day with the Euro moving quietly from the lows around the 1.0855 levels to push against the 1.0890 levels in lacklustre trading and what looks to be a market looking to finish early for the day, Topside offers very light through the 1.0900 levels however, through to the 1.0940 level those offers will likely improve and continue in strength to 1.0960, from there the market is likely to see stronger offers into the 1.1000 levels but again while there may be some weak stops through the level the topside is likely to continue to be offered so for the moment each move higher is likely to see strong offers every 30-50 pips and dominated for the moment. A decent trade balance or a weaker retail sales number in the US could upset the market. Downside bids light through the 1.0850 areas and increasing as the market pushes towards the 1.0800 level however, a solid break there will open the market for a test through the 1.0750 levels and possibly quickly with better bids likely to be hanging around just below and into the 1.0720 areas.

GBP: As with the Euro really with the Cable seeing early buyers into the Tokyo session to set the highs however, the market eventually drifted away from the 1.4428 areas and gradually eased back to test into the 1.4400 levels on light EURGBP buying moving through the market, Topside offers not so meaningful until the market again attempts to push through the 1.4480 areas and however, the offers are likely to reappear on a test through the 1.4500 level and are likely to increase on a push at the 1.4520 area, movement through that level will likely be slow however, weak stops are possibly on a push through the 1.4560 levels and 1.4600 becomes quickly vulnerable, Downside has probably small but plentiful bids moving down through the 1.4400 areas and into the 1.4360/50 level where they are likely to get stronger, nothing in the UK is likely to effect the Cable and so the market will be focusing on the US numbers and a push through the lows of the week will open up further downside potential.

JPY: A reasonably quiet day for the USDJPY with the market giving up much of the gains from yesterday and slipping from an early attempt at the 118.30 levels to trade steadily back through the 118.00 levels with weak stops triggered on a quick move through the 117.70 level only to recover to hold around the 117.80 levels into the grey hours, Topside offers into the 118.30 levels are likely to continue through to the 118.50 areas before weak stops appear and a push to the 118.80-119.00 areas opens up here however, the market is likely to see some stronger bids showing and the market struggling to push through to the 119.20 areas, Downside sees very little until it moves to below the 117.40 areas and then bids start to increase as the market moves towards the 117.00 levels with those bids likely to be fairly strong through the level, with only a break below the 116.50 areas having any opportunity of opening the downside as the market runs for a long weekend with Martin Luther King day on Monday in the US.

AUD: Yesterday AUDJPY buyers in Tokyo were the ones to move the market as the Long weekend ahead triggered those traders to cut and run for the day and the Oz having made its way above the 70 cent level briefly started its steady trend lower as the market moved into the Tokyo session, with the market finding only momentary pauses on its way to the 0.6940 levels. Downside bids into the 0.6920 levels still attract attention and while there maybe some option barriers still standing a move through the 69 cent level could see a sharp move lower and the downside opening up, Topside offers limited to the 70 cent levels and continuing to the 0.7050 areas before the potential for a small short squeeze moves into the market with the last week of tests towards 69 cent, with only light offers likely in a run through sentimental areas and 72 cent likely to be a stronger level.

Overnight News

KRW/CNY:

1. Korea Finance Minister Yoo to Meet with China’s Lou This Week

China Willing to Participate in N.Korea Sanction Talks: S. Korea

CNY:

China’s Dec. New Loans 597.8b Yuan; Est. 700b Yuan

China End-Dec. Yuan Positions at PBOC Balance Sheet 24.9t Yuan

China’s FX Reserves to fall at Slower Pace: Eco Info Daily

JPY:

Japan’s Aso: FX Special Accounts Not a Permanent Revenue Source

Japanese Bought Net 323.1 Billion Yen Overseas Debt Last Week

Amari Says State of Japan’s Economy Is Getting Stronger

Toyota Unions to Seek 3,000 Yen or More Monthly Base Pay Rise

SGD:

Singapore November Retail Sales +4.7% Y/y; Est. +3.4%

IDR/JPY:

Indonesia Weighs Lower Import Tax on Japanese Cars: Jakarta Post

AUD:

Australia Nov. Home-Loan Approvals Rise 1.8% M/M; Est. 0.5% Fall

Today’s data

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

AUD       Home Loans Nov A 1.80% | C -0.40% | P -0.50% | R -0.30%

09:30     GBP       Construction Output M/M Nov C 0.50% | P 0.20%

10:00     EUR        Eurozone Trade Balance (EUR) Nov C 21.1B | P 19.9B

13:30     USD       Advance Retail Sales Dec C 0.20% | P 0.20%

13:30     USD       Retail Sales Less Autos Dec C 0.30% | P 0.40%

13:30     USD       PPI M/M Dec C -0.10% | P 0.30%

13:30     USD       PPI Y/Y Dec C -1.00% | P -1.10%

13:30     USD       PPI Core M/M Dec C 0.10% | P 0.30%

13:30     USD       PPI Core Y/Y Dec C 0.30% | P 0.50%

13:30     USD       Empire State Manufacturing Index Jan C -4 | P -4.6

14:15     USD       Industrial Production Dec C -0.10% | P -0.60%

14:15     USD       Capacity Utilization Dec C 76.90% | P 77.00%

15:00     USD       Business Inventories Nov C 0.00% | P 0.00%

15:00     USD       U. of Michigan Confidence Jan (P) C 93 | P 92.6

Harry Hindsight              

• EUR: A reasonably quiet Asian session for the Euro saw the market move off the opening 1.0880 levels and test repeatedly into the mid 1.0890’s before giving ground to trade just below the 1.0880 levels and repeating the move higher to fail a second time, the move into the grey hours saw the Euro pushing through the lows and although it was orderly the market moved into the London session pushing at the 1.0860 levels with early Europeans the bulk of the sellers, into the London market though the buyers of EURGBP reappeared and the cross was quickly higher with and the Euro pushing through the 1.0900 levels and testing to the stronger offers into the 1.0950 areas, the Euro seemed to be strong across the board with EURAUD showing strong buying and although the Euro eventually ran into trouble above the 1.0940 levels it remained solid until the ECB MPM meeting was concluded, with little of substance from the meeting the Euro dropped back quickly to below the 1.0900 levels and held for the most part into the NYK session, one suspects option expiry’s on the futures then saw the market dropping quickly in the Euro’s with no real reason and the market quickly pushed through the 1.0850 levels from above the 1.0900 levels however, once the cut was over the market started a slow rise back into the 1.0870 levels and continued in a 20 pip 1.0850-70 range to the close.
• GBP: A bit of movement over the day with the Asian session being fairly quiet and the Cable dipping down to the 1.4400 levels from above 1.4420, and extending to the 1.4390 level into the Tokyo session however, for the most part the market remained around the 1.4400 levels and moved into the grey hours again testing the highs as early buyers moved in with expectations of maybe some hawkish commentary however, with the current numbers coming out upsetting the exporters to support the GBP is not going to work and so although there was a move lower to touch to the 1.4360 levels the market leading into the BoE decision saw the market already starting to rise and weak stops through the 1.4390 level were triggered and the market quickly pushed to the 1.4440 areas on the release, commentary saw some choppy movement however although the market did make a second attempt higher it was quickly absorbed and the market returned to the 1.4400-10 areas to play out the day, Early London buying in EURGBP saw the cross move healthily higher and eventually push through the 0.7600 levels before the no change in the BoE’s stance saw the GBP recapture the losses and more to eventually take the market back through the 0.7550 levels, NYK option cuts in the Euro then did the rest with the Euro quickly dipping to take the cross to 0.7520 areas and then range to the close in a 20 pip move around those 0.7525-45 area.
• JPY: USDJPY had a reasonable range throughout the day, with the crosses playing more of a role than straight USDJPY however, having started the day quietly the market moving off the opening 117.65 areas and then dipping through to the 117.30 and basing through Asia off that level to late in the session, strong buying in AUDJPY saw the USDJPY slowly making headway into the grey hours and the move towards London finally saw the market back above the 118.00 levels, with London opening the market saw more cross interest firstly with EURJPY and then GBPJPY however, while the market chopped a little with the movement it remained below the 118.00 level through the morning session in London and only as the NYK session moved in did it awaken and move quickly towards the 118.20 levels with the movement being towards the Option cut in NYK however, unlike the early part of the session the market held broadly its highs remaining above the 118.00 level and extending towards 118.30.
• AUD: The Oz had its moments with a knee jerk reaction to the Employment numbers eventually tipping the market towards the 0.6920 levels and being so close to the breakout the pressure resumed through the session with the market unable to push beyond the 0.6950 levels despite a better employment result than the headline number suggests with a revision outstripping the negative 1k number however, once the market moved towards the grey hours stronger AUDJPY buying moved in and the market pushed through to the 0.6970 levels before seeing strong EURAUD buying sending the Oz back lower and another test through the 0.6920 levels only to hold the level repeatedly through to the NYK session and a steady rise back higher triggering weak stops through the 0.6970 levels and falling only just short of the 70 cent level into the back end of NYK.

Yesterday’s premiership results

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

JPY         Machine Orders M/M Nov A -14.40% | C -7.30% | P 10.70%

JPY         Domestic CGPI Y/Y Dec A -3.40% | C -0.40% | P -3.60%

AUD       Employment Change Dec A -1.0K | C -10.3K | P 71.4K | R 74.9K

AUD       Unemployment Rate Dec A 5.80% | C 5.90% | P 5.80%

JPY         Machine Tool Orders Y/Y Dec (P) A -25.80% | P -17.70%

GBP       BoE Rate Decision A 0.50% | C 0.50% | P 0.50%

GBP       BoE Asset Purchase Target Jan A 375B | C 375B | P 375B

GBP       MPC Official Bank Rate Votes A 1–0—8 | C 1–0—8 | P 1–0–8

GBP       MPC Asset Purchase Facility Votes A 0–0—9 | C 0–0—9 | P 0–0–9

USD       Import Price Index M/M Dec A -1.20% | C -1.40% | P -0.40% | R -0.50%

CAD       New Housing Price Index M/M Nov A 0.20% | P 0.30%

USD       Initial Jobless Claims (JAN 9) A 284K | C 278K | P 277K

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.