Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 117.637 | EURUSD 1.09076 | AUDUSD 0.69079 | NZDUSD 0.64908 | USDCAD 1.45795 | USDCHF 1.00348 | GBPUSD 1.41577|

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               117.70 | 116.79

EUR/USD             1.09605 | 1.09055

EUR/JPY               128.345 | 128.015

AUD/USD            0.6924 | 0.6858

NZD/USD             0.6417 | 0.6366

USD/CAD             1.4644 | 1.4554

EUR/CHF              1.0958 | 1.0944

USD/CHF             1.00365 | 1.0002

GBP/USD             1.4179 | 1.4134

EUR/GBP             0.7742 | 0.7693

For Today

• EUR: Early trading in the Euro saw the market holding the 1.0907 opening areas until the opening in Tokyo, and the oil below the $30 level, the Oil then dipped as the retail sellers in Japan cut their positions and the USD followed and Euro’s rose to the 1.0920 levels, the movement from there was a steady rise through the session pushing into the 1.0955 areas as the oil continued falling to below $29 this may have been the catalyst however, the EURGBP offers to the 0.7710 level and sellers were caught off guard as the market moved through the 0.7710 levels and a quick move to the 0.7730 and continued the movement higher. Topside offers into the 1.0980-1.1000 levels with a move through the level likely to see weak stops moving the market to the 1.1040-60 areas with possibly better offers into the 1.1100 areas. Downside bids light through to the 1.0860-40 areas and the possibility of some stronger bids however, we’ve been back and forth to 1.0800 and that is likely to be a stronger area with weak stops through the 1.0780 areas and a return to test the 1.0750 area and the lows of the year just below that level.
• GBP: The market opened around the 1.4150-60 area and immediately pushed to the 1.4180 areas into the Tokyo opening however, that was all it managed before the selling pressure in Oil started a general Oil producer sell off and Cable didn’t escape dipping back sufficiently for the EURGBP cross to move through yesterday’s highs and trigger weak stops and Cable pushed to below the 1.4140 areas again, the market extended the lows slightly through the session however, the Cable became a secondary currency as the movements of USD and Euro dominated the market and the market moves into the grey hours holding the mid 1.4150 areas. Topside offers light through to the 1.4300 levels and then stronger offers likely to be building into the 1.4350 areas before the market opens to 1.4400 and these are likely to be stronger and more persistent on a push through the level, downside has bids into the 1.4100 areas however, while there may be option barriers they are likely to be light and the 1.4000 is likely to be a stronger level and a move through 1.4100 is another level out of the way and the weak longs will likely have stops just below the level, from the 1.4050 levels the market is likely to start seeing better support through to the 1.4000 with that now being the sentimental target,
• JPY: USD selling from Tokyo onwards with the market opening around the 117.65 areas and moving to Tokyo with an unusually low range, Oil then dropped into the opening and USD’s went with it and the selling was constant through the session, with weak stops on the move through the 117.20 areas and the move through 117.00 only causing a minor stir before grinding through the bids to the 116.80 areas, and steadying for the move into the grey hours, Topside offers into the 117.50 areas are likely to again slow the market however a move to the 117.80-118.00 will see stronger offers and while there may well be stops beyond the 118.20 levels those offers are likely to continue in patches through to the 119.00 areas with the area to 119.20 probably being problematic to break through for the time being, however, another set of numbers today and it’s the US turn for inflationary news and given the Oil markets move to below $29 and the next level looming it could be a busy day, downside bids into the current levels and through to the 116.50 areas and the lows from early in the week are now vulnerable and a push through the 116.20-115.80 support areas is likely to open the market for a deeper move and a only weak bids into 115.00 and more or less sentimental levels all the way through to the 110.00 area.
• AUD: Oil down USDJPY down equities down, so Oz down, the market opened with the Oz finding early buyers on Asia finding it back above the 69 cent and the market peaked above the 0.6920 just before the Tokyo opening and as we’ve seen the movement in Oil then saw USD dropping and the Oz had little strength to hold the AUDJPY sellers and the Oz in general as the commodity currencies again suffered and the Oz moved in a tight channel back to the 0.6850 areas into the grey hours. Downside bids into the 0.6840 level and likely continuing from the 0.6820 areas and into 68 cent before opening up to a deeper move to the 0.6710 areas and possibly the last stop to 65 cents. Topside offers light until the 0.6940-60 areas where there is light congestion before opening to a further move towards 70 cents and several days of range plays around the level to protect the 0.7050 area and stronger offers.

Overnight News

JPY:

Japan Projects 5.8t Yen Primary Deficit for FY2020: Nikkei

GPIF Mulls Changing External Asset Managers More Often: Minutes

Japan Primary Balance Deficit to Continue to FY2020: MOF

Japan Parliament Passes 3.5t Yen Extra Budget for FY2015

Japanese Mega Banks Stable despite Challenges Ahead: Fitch

CNY:

PBOC Economist Ma Says MLF May Mean Substitute of RRR Cut: CCTV

China Dec. FDI Falls 5.8% Y/y in Yuan Terms

China Dec Trade Improvement Not Due to Fake Invoicing: Shen

China Jan. Exports Numbers ‘May Not Be That Pretty’: Mofcom

USD/CNY:

American Companies Feel Less Welcome in China: AmCham Survey

HKD:

Hong Kong Monetary Authority Says IMF Supports HKD Peg

NZD:

New Zealand Non-Tradable Prices Rise, Gasoline Slumps

N.Z. December Median House Price Rises 3.3% Y/Y, REINZ Says

RBNZ Sectoral Factor Model Inflation Accelerates to 1.6% in 4Q

AUD:

Australia Jan. Consumer Sentiment Falls 3.5% M/m to 97.3

OECD:

Situation Worse Than 2007, OECD’s William White Tells Telegraph

Today’s data

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

NZD       CPI Q/Q Q4 A -0.50% | C -0.20% | P 0.30%

NZD       CPI Y/Y Q4 A 0.10% | C 0.40% | P 0.40%

AUD       Westpac Consumer Confidence Jan A -3.50% | P -0.80%

07:00     EUR        German PPI M/M Dec C -0.20% | P -0.20%

07:00     EUR        German PPI Y/Y Dec C -2.20% | P -2.50%

09:30     GBP       Jobless Claims Change Dec C 2.0K | P 3.9K

09:30     GBP       Claimant Count Rate Dec P 2.30%

09:30     GBP       Average Weekly Earnings 3M/Y Nov C 2.10% | P 2.40%

09:30     GBP       ILO Unemployment Rate (3M) Nov C 5.20% | P 5.20%

10:00     CHF        ZEW (Expectations) Jan P 16.6

13:30     CAD       Wholesale Sales M/M Nov P -0.60%

13:30     CAD       Manufacturing Shipments M/M Nov C 0.40% | P -1.10%

13:30     USD       Housing Starts Dec C 1.19M | P 1.17M

13:30     USD       Building Permits Dec C 1.20M | P 1.28M

13:30     USD       CPI M/M Dec C 0.00% | P 0.00%

13:30     USD       CPI Y/Y Dec C 0.80% | P 0.50%

13:30     USD       CPI Core M/M Dec C 0.20% | P 0.20%

13:30     USD       CPI Core Y/Y Dec C 2.10% | P 2.00%

15:00     CAD       BoC Rate Decision C 0.50% | P 0.50%

16:00     USD       Crude Oil Inventories P 0.2M

Harry Hindsight              

• EUR: Opening around the 1.0890 levels and limited in range over the Asian session making its way to the 1.0880 levels into the Tokyo session and then reversing to test above the 1.0900 level for a brief period before again drifting back to test the lows as the market moved into the grey hours, the early London part of the grey hours saw some strong selling and the market was pushed into the 1.0860 level but given the movements elsewhere remained in a tight range with the drag of Cable leaving the market unable to make its way above the 1.0900 levels until into the NYK session, with Zew numbers by passed as more or less inconsequential to the markets, US numbers were few and far between on the day and the real movement for the Euro was based on a weakening WTI market again and having clawed its way through the early London session to above the 31.40 areas dropped steadily as the market moved towards NYK and then quickly to push through the $30 level and USD weakened from that point onwards and the Euro quickly moved to the 1.0900 levels and continued to push the level until the close of London, at this point the market broke through the 1.0910 areas and triggered weak stops for a run to the 1.0940 levels before drifting back to hold just below the 1.0910 levels through the session to the close.
• GBP: Asian trading saw the Cable push away from the opening 1.4240 levels and gradually move through to the 1.4280 areas as the market moved into the grey hours, however, this was predominantly sellers in the EURGBP cross entering the market more than anything else and the cross gradually moved off the 0.7650 areas to test to the 0.7600 with some strong sellers either taking profit or looking to trade off the level for a return lower, and if you’d had asked me I’d have given it the thumbs up, how wrong can you be, the move into London saw Cable pushing easily through the 1.4300 levels and spiking to the 1.4340 areas as weak stops were triggered, this coincided with the cross moving through the 0.7600 levels and the release of the inflationary data, and on the face of it were better numbers overall than expected however, the weakness still persists and once the data was over with the market held above the 1.4300 levels, BoE’s Carney then entered the fray and all of a sudden the market turned as the expectations of interest rate rises were dashed, expectations had been for this year in some areas however, it would seem that as long as the slowdown in the world economy continues to impact on the UK then the rates are likely to remain the same with no definitive time period and it was all over apart from the shouting and I’m sure there were plenty out there who did, Cable dropped through the 1.4300 level and briefly stopped around the 1.4260 before moving again into the NYK opening, fresh bids into the 1.4220-00 area seemed to have held the market from the NYK opening, EURGBP of course followed with the cross moving swiftly back to the 0.7650 levels and weak stops in the cross saw the cross move quickly to the 0.7700 levels and hold around the level to the close, with Euro unable to move below the 1.0860 levels then add the combination of EURGBP buying, Cable had nowhere to go other than down and another quick move saw the market down to the 1.4130 levels before finding some bids and the EURGBP offers into 0.7700 and probably the only reason that Cable held, and while the market tried to push the EURGBP firmly through 0.7700 the resultant resistance saw the Cable gradually moving back to the 1.4200 levels, of course while the commentary from Carney may have caused the moves the drop in oil didn’t help matters either and as with any other oil producer the local currency came under the microscope.
• JPY: USDJPY saw the day recovering from outside interests dominating the JPY, initially the USDJPY moved off the opening 117.30 levels and looked set on a decent rise pushing gradually into the Tokyo session pushing the 117.70 levels before the release of the CNY numbers, which the market was not overly concerned however, the USDJPY dipped back to the 117.30 levels on a knee jerk reaction and then spent the rest of the session into London pushing in a narrow channel to move through to the 118.00 levels and reasonable offers, the market eventually pushed to the 118.10 areas before the NYK opening and the push in the Oil market down through $30 saw the USD weaken against most of the major currencies and the USDJPY was no difference and the move back to the opening levels was no less frightful than the rise with a tight channel move before running out of steam and holding those opening levels and a light rise into the close.
• AUD: A reasonable range overall with the market opening around the 0.6870 areas and making early gains to the 0.6890 level and the move into the Tokyo session while a little hesitant in front of the CNY numbers dropped quickly back on the release of disappointing numbers and dipped to the 0.6840 area before finding its legs, the move back was a little slower however, the move through the 0.6880 level caught a few shorts out and weak stops triggered a quick move to the 69 cent level and into the grey hours, a tentative beginning with the Oz pushing those highs to 0.6930 however, the movement in the GBP was sufficient to see GBPAUD sellers appear and the Oz again pushed higher and into the mid 0.6950 to post the highs for the day, while there was a little movement on the Oil dip Oz is more or less in the same hole as the USD and held its place through the balance of the session and holding above the 0.6900 levels and into the 0.6930 area.

Yesterday’s premiership results

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%

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

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

CHF        Producer & Import Prices M/M Dec A -0.40% | C 0.20% | P 0.40%

CHF        Producer & Import Prices Y/Y Dec A -5.50% | P -5.50%

EUR        Eurozone Current Account (EUR) Nov A 26.4B | C 19.3B | P 20.4B | R 25.6B

GBP       CPI M/M Dec A 0.10% | C 0.10% | P 0.00%

GBP       CPI Y/Y Dec A 0.20% | C 0.20% | P 0.10%

GBP       Core CPI Y/Y Dec A 1.40% | C 1.20% | P 1.20%

GBP       RPI M/M Dec A 0.30% | C 0.10% | P 0.10%

GBP       RPI Y/Y Dec A 1.20% | C 1.10% | P 1.10%

GBP       PPI Input M/M Dec A -0.80% | C -1.40% | P -1.60%

GBP       PPI Input Y/Y Dec A -10.80% | C -11.40% | P -13.10%

GBP       PPI Output M/M Dec A -0.20% | C -0.20% | P -0.20%

GBP       PPI Output Y/Y Dec A -1.20% | C -1.20% | P -1.50%

GBP       PPI Output Core M/M Dec A 0.20% | P -0.20%

GBP       PPI Output Core Y/Y Dec A 0.10% | P -0.10%

EUR        German ZEW (Economic Sentiment) Jan A 10.2 | C 9 | P 16.1

EUR        German ZEW (Current Situation) Jan A 59.7 | C 54 | P 55

EUR        Eurozone ZEW (Economic Sentiment) Jan A 22.7 | C 27.9 | P 33.9

CAD       Intl Securities Transactions (CAD) Nov A 2.58B | C 12.1B | P 22.1B | R 19.1B

USD       NAHB Housing Market Index Jan A 60 | C 61 | P 61 | R 60

USD       Net Long-term TIC Flows Nov A 31.4B | P -16.6B | R -17.7B

Good Luck,

Andy

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