Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 117.351 | EURUSD 1.08922 | AUDUSD 0.68655 | NZDUSD 0.64437 | USDCAD 1.45593 | USDCHF 1.00521 | GBPUSD 1.42424 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               117.71 | 117.23

EUR/USD             1.0905 | 1.0880

EUR/JPY               128.10 | 127.795

AUD/USD            0.6893 | 0.6839

NZD/USD             0.6471 | 0.6417

USD/CAD             1.4559 | 1.4499

EUR/CHF              1.0962 | 1.09435

USD/CHF             1.0072 | 1.0048

GBP/USD             1.4263 | 1.4239

EUR/GBP             0.7653 | 0.7630

For Today

• EUR: A very quiet session with early selling unable to push through the 1.0880 during the early part of the session, the market di recover once it couldn’t break lower and slowly moved to above the 1.0900 levels once the release of the CNY numbers disappointed the market however, the rally was short lived before dipping back to the previous levels and holding the 1.0880 areas into the grey hours, Topside offers has possibly light offers through to the 1.0950 areas then the offers are likely to get stronger building to the 1.0980-1.1000 areas with likely strong offers, a push through the level could possibly see weak stops appearing on a move through the 1.1020 areas however, the 1.1040-60 is likely to hold strong offers with the topside becoming more vulnerable on a push through that level. Downside bids light through to the 1.0800 areas with the market well penetrated however, a move through the 1.0800 level is likely to start to see stronger bids through the 1.0750 areas and into the 1.0700 area and as with the topside the market becomes vulnerable.
• GBP: A quiet range bound day with the market moving a little more than the Euro however, the steady weakness in the Euro did allow the EURGBP to slip lower and the Cable benefited from the movement eventually with the market moving from the opening to test lightly above the 1.4260 areas and although it tested the opening 1.4240 if was short lived before the market again steadily move through the highs into the mid 1.4260’s late into the session. Topside offers light into the 1.4300 levels with slightly stronger offers on a move through to the 1.4320 areas with the market then open to the 1.4350 areas, a quick and strong move could see the market quickly move back to above the 1.4500 areas however, a steady move would see resistance at each sentimental level and a stop start movement to the market however, those levels are likely to be weak and with relevant weak stops on a move through the levels, downside bids light through the 1.4250 areas and the market is likely to have support into the 1.4200 levels however, the current levels are likely to have been distorted by the US bank holiday but with a decent set of numbers through the session the market could find movement available in either direction, with the downside open beyond the 1.4200 levels the market is likely to see only weak bids before reaching the 1.40 handle and stronger bids likely.
• JPY: Opening around the 117.30 levels the market edged slightly higher into the Tokyo session and then pushed steadily to the 117.70 areas and into the CNY releases, weaker numbers saw a brief splurge of safe haven flows as the market sold the USDJPY and then having moved back to the opening levels it started a steady rise again this time exceeding the previous and testing to the 117.80 levels and the grey hours. Topside offers light through the 118.00 levels and likely to increase through the 118.20 areas, a move through this level will see light stops and then only slight freedom as the next levels around the 118.60-80 move into the market, even through this level the offers are likely to continue into the 119.00 areas. Downside bids steady into the 117.00 areas and increase in size on a move through the level and into the 116.80 areas with the downside bids likely to extend to the 116.60 before opening for a test of the 116.20-00 areas however, a push here and the downside opens to the 110-112 range and the market could see a quick stab lower with very little in the way of bids likely from the usual places at the moment, with the movement of the market more tied with the WTI $30 levels than anything else.
• AUD: The Oz opened around the 0.6860 levels and slowly moved into the Tokyo session with light AUDJPY carry trade buying moving into the market and the Oz moved to range in the 0.6880-90 area that is until the CNY releases which disappointed the market a little and the Oz dropped back to test the 0.6840 levels again, the market held in the area for couple of hours before starting a reasonably fast rise back to the 0.6880 levels and after an hour or so pushed through the level to trigger weak stops and the market touched back through the 69 cent levels on its way to the grey hours. Downside bids into the 0.6840 levels are beginning to look a little tired with the market repeatedly testing the 0.6840-30 areas last week, and this week was no different, so while the bids may be present we have been there sufficient times to have weakened the area however, saying that the bids do have the feel of possibly option barriers in play and there is likely to be continuing strength on a move into the 0.6805-20 areas before all pretence disappears, and a move through the levels and 67 cent level becomes the immediate target. Topside offers light through to the 0.6940 levels and likely to continue through to the 0.6960 levels however that still leaves 0.6980-0.7000 as likely to hold offers and while it has been through the 70 cent levels the level of buyers over the last few days could see short term profit taking especially if it is option related.

Overnight News

CNY:

China GDP Misses Forecast for First Time Since Early 2013

China Economy to Remain Stable in 2016, Stats Bureau Head Says

Consumption Contribution to China’s GDP Exceeds 60% in 2015: NBS

Yuan Depreciation Won’t Be a Long-Term Trend, NBS Head Says

CNY: Ex-PBOC Adviser Says Yuan’s Crawling Peg Is Flawed: 21st Herald

CNY: Ex-China FX Official Says Mgmt of Mkt Expectations Vital: News

JPY:

Kuroda: BOJ Will Do Whatever It Takes to Achieve Price Target

Oil Nation Wealth Funds Seen Selling Risky Assets: Nikkei

Tokyo Gas to Invest 200b Yen Overseas Over 5 Yrs., Nikkei Says

CNY/JPY:

Chinese Foreign, Finance Ministers May Visit Japan, Sankei Says

APAC:

APAC Sovereign Rtg Trends Expected to Stay Mostly Stable: S&P

NZD:

New Zealand Business Confidence Rebounded in 4Q, NZIER Says

AUD:

Australia ANZ Weekly Consumer Sentiment Falls 0.8% to 113.2

Today’s data

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

CNY        GDP Y/Y Q4 A 6.80% | C 6.90% | P 6.90%

CNY        Industrial Production Y/Y Dec A 5.90% | C 6.10% | P 6.20%

CNY        Retail Sales Y/Y Dec A 11.10% | C 11.30% | P 11.20%

CNY        Fixed Assets Ex Rural YTD Y/Y Dec A 10.00% | C 10.20% | P 10.20%

07:00     EUR        German CPI M/M Dec (F) C -0.10% | P -0.10%

07:00     EUR        German CPI Y/Y Dec (F) C 0.30% | P 0.30%

08:15     CHF        Producer & Import Prices M/M Dec C 0.20% | P 0.40%

08:15     CHF        Producer & Import Prices Y/Y Dec P -5.50%

09:00     EUR        Eurozone Current Account (EUR) Nov C 19.3B | P 20.4B

09:30     GBP       CPI M/M Dec C 0.10% | P 0.00%

09:30     GBP       CPI Y/Y Dec C 0.20% | P 0.10%

09:30     GBP       Core CPI Y/Y Dec C 1.20% | P 1.20%

09:30     GBP       RPI M/M Dec C 0.10% | P 0.10%

09:30     GBP       RPI Y/Y Dec C 1.10% | P 1.10%

09:30     GBP       PPI Input M/M Dec C -1.40% | P -1.60%

09:30     GBP       PPI Input Y/Y Dec C -11.40% | P -13.10%

09:30     GBP       PPI Output M/M Dec C -0.20% | P -0.20%

09:30     GBP       PPI Output Y/Y Dec C -1.20% | P -1.50%

09:30     GBP       PPI Output Core M/M Dec P -0.20%

09:30     GBP       PPI Output Core Y/Y Dec C -0.10% | P -0.10%

10:00     EUR        German ZEW (Economic Sentiment) Jan C 9 | P 16.1

10:00     EUR        German ZEW (Current Situation) Jan C 54 | P 55

10:00     EUR        Eurozone ZEW (Economic Sentiment) Jan C 27.9 | P 33.9

13:30     CAD       International Securities Transactions (CAD) Nov C 12.1B | P 22.1B

15:00     USD       NAHB Housing Market Index Jan C 61 | P 61

Harry Hindsight              

• EUR: Early trading in the pre-market saw the banks pushing the Euro into the 1.0940’s with USDCAD causing the movement as the pair saw a single ticket quickly taking the market to the 1.4650 level before the official opening opened around the 1.4600 levels, Euro’s there for opened around the 1.0920 levels and little changed from Friday’s close and after an early attempt to move higher drifted into the Tokyo session holding those levels, the reversal of the early moves then saw the Euro drifting lower and the market tested through the 1.0900 levels eventually and into the 1.0880 area into the grey hours, London did very little with the Euro and the market continued trading around the 1.0900 levels with little interest shown and the lack of a US market saw light trading off the lows near 1.0870 and back towards the 1.0900 in lacklustre trading.
• GBP: Light EURGBP selling from the opening in Tokyo saw the Cable manage meagre gains over the course of the early part of the session with the cross moving from the opening 0.7660 levels down to the 0.7625 area into the London opening, this allowed the Cable to rise steadily through the Asian session to above the 1.4280 from the opening around the 1.4250, the move into the grey hours saw the market again drop as early sellers moved into the market and the market pushed lightly through the 1.4250 level before bouncing quickly into the official opening and a quick rally to the 1.4320 levels as EURGBP sellers stepped in however, the market drifted from that point on with the market holding the 1.4300 levels for a period before trading back to the 1.4270 into the end of London, the end of the session saw the market again under pressure as the market thinned into the late session and without the US there was little to stop the market drifting to the end of the session dipping through the previous lows and into the 1.4240 levels to the close.
• JPY: Most of the action was in the Asian session as you would expect with the early market dipping on the opening in Tokyo to push through the 116.80 levels before regaining some measure of composure and slowly moving higher through to the 117.35 areas and then trading in a narrow band of 117.10-35 through to the London session, the opening in London saw the market again testing the highs and pushing into the 117.40 levels and then nothing the market remained trapped between the 117.30-40 levels for the most part to the close.
• AUD: An active market, with the opening down from Fridays close with AUD/CAD movement causing the worst of it however, from the opening the market slowly moved higher and the move into the Tokyo session saw the carry trade buyers move in for the bargains and the Oz pushed steadily higher through the early part of the session moving off the 0.6850 levels and eventually testing the 0.6930 areas before running out of steam and interest, the move into the grey hours had seen the Oz again move back through the 69 cent levels however, although the market drifted lower over the course of the day the market was never able to test back to the lows and ended the day trading around the 0.6860 levels for several hours to the close.

Yesterday’s premiership results

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

AUD       TD Securities Inflation M/M Dec A 0.20% | P 0.10%

GBP       Rightmove House Prices M/M Jan A 0.50% | P -1.10%

JPY         Industrial Production M/M Nov (F) A -0.90% | C 1.40% | P 1.40% | R -1.00%

JPY        Tertiary Industry Index M/M Nov A -0.80% | C -0.60% | P 0.90% | R 0.70%

Good Luck,

Andy

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