Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 118.298 | EURUSD 1.08494 | AUDUSD 0.69549 | NZDUSD 0.64794 | USDCAD 1.42915 | USDCHF 1.01289 | GBPUSD 1.42479 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               118.36 | 117.965

EUR/USD             1.0859 | 1.0841

EUR/JPY               128.42 | 127.965

AUD/USD            0.6968 | 0.6935

NZD/USD             0.6470 | 0.6425

USD/CAD             1.4300 | 1.4263

EUR/CHF              1.09995 | 1.0986

USD/CHF             1.0143 | 1.0124

GBP/USD             1.4250 | 1.4207

EUR/GBP             0.7639 | 0.7615

For Today

• EUR: The Euro had a faint heartbeat but it was faint with the market moving around the opening 1.0850 levels through the session, with the market contained within a 20 pip range, Topside offers from the 1.0880-1.0900 with a push through the 1.0920 areas likely to see weak stops however, this is likely to be quickly followed with more offers on a push through to the 1.0940 and those offers strengthening as the market moves towards the 1.0980 levels, only a push through the 1.1020 area will see the Euro higher with some offers continuing through to the 1.1050-60 level and then the topside opens up for further tests higher, Downside has bids through to the 1.0800-1.0780 areas however once through the levels the market sees further weakness and the 1.0720 areas are the key to the market not testing through the 1.0700 areas and ultimately the low range from December.
• GBP: It would seem that Cable has stronger ties to the Oil market than the Euro, Opening around the 1.4250 level the market moved sideways into the Tokyo session and saw instant GBPJPY selling and EURGBP buying moving into the market and the Cable quickly tested to the 1.4210 levels where the market held for an hour or so before slowly rising higher through the session to the 1.4240 levels with little in the way of flow before holding in the 1.4230 level to the grey hours, Downside weakness through the 1.4200 level sees only light bids supporting the market into the 1.4200 level and those bids are likely to continue on a move through the level and then into the 1.4150 level and likely weak stops through that level and another attempt to the 1.4100 level with supportive bids likely to be around the level. Topside offer are thin on the ground until the approach to 1.4300 starts with light offers into the area and then strengthening through to the 1.4350 areas, 1.4400 will likely see plenty of congestive offers and stops however, each sentimental level is likely to be the same.
• JPY: BoJ seems to be in two minds as they continue to wonder about the last CPI number as an additional number to the much vaunted 2% target, given that the market saw the USDJPY sliding back on the comments and the USDJPY ran into the Tokyo opening moving from the static opening levels around the 118.30 levels and quickly pushed to the 118.10 areas, after a flat start with the Ozzies being away for the day only the timely Tokyo Fix managed to save the market from continuing however, once the fix was over the move renewed and the USDJPY tested to the 118.00 levels rejecting the levels the market again made its way to the 118.30 areas before slowly drifting through the session to test back to the 118.00 levels, Downside bids through the 118.00 level are likely not so strong and a push will likely open up a test back the 117.00 levels which one suspects is not that strong, with better bids moving in below the 116.50 areas with particularly strong bids suspected at the 116.00-115.80 level. Topside offers through the 118.50 areas and although there is some weakness to the 118.80 level from there the offers increase into the 119.00 levels with limited congestion to the 119.30 areas and then opening for a renewed test above the 119.50 areas.
• AUD: Early AUDJPY selling was tempered by the Tokyo fix and the Oz recovered from a dip below the 0.6940 level and with the Ozzies out for Australia day the market managed to recover to test the 0.6970 area in light trading before then slowly drifting to the opening levels to the grey hours. Downside bids into the 69 cent level are likely to be there however, the likelihood is a test through the level will see the better bids starting to appear on the 68 cent handle and specifically through the 0.6850-40 areas, with the bids possibly lessening for a brief period before standing in the way of the 68 cent level. Topside offers into the 0.6950-60 areas are likely to be light and a move through doesn’t improve the situation with the market possibly lightly offers until above the 70 cent level and increasing only once you reach the 0.7040-60 areas and continuing from 0.7080 onwards, however, technically according to some people there is a reverse Head and Shoulders pattern that some of the short term traders may be looking at on a break through those 0.7050-60 levels and this could trigger a move quickly higher if you like that sort of thing but for me while there is potential the pattern is too short dated.

Overnight News

JPY:

BOJ Mulls Own CPI Index as Additional Indicator for 2% Goal: Sankei

Amari Says Japan Government Shouldn’t Guide Monetary Policy

Aso: Hopes BOJ Keeps Making Efforts to Reach 2% Price Target

Japan Post Bank Seeks to Diversify Investments: Nikkei

Japan Health Ministry Website Down; Hacker Claims Responsibility

Japanese Govt. Has Said Amari Will Explain Graft Claims Jan. 28th

CNY:

China Able to Stand Currency Rate Fluctuations: People’s Daily

SGD:

Singapore December Factory Output -7.9% Y/y; Est. -7.2%

NZD:

Key Says Growing New Zealand Economy Is Main Priority for 2016

Today’s data

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

JPY         Corporate Service Price Y/Y Dec A 0.40% | C 0.20% | P 0.20%

07:00     CHF        Trade Balance (CHF) Dec C 3.33B | P 3.14B

14:00     USD       House Price Index M/M Nov C 0.40% | P 0.50%

14:00     USD       S&P/Case-Shiller Composite-20 Y/Y Nov C 5.70% | P 5.54%

15:00     USD       Consumer Confidence Jan C 96.8 | P 96.5

Harry Hindsight              

• EUR: A fairly quiet day overall with the Euro opening slightly lower on the official opening and testing to the 1.0800 for the first time, the move into Tokyo saw a limited move higher and the second push at 1.0800 before Tokyo attempted the move each attempt was rebuffed and the market started a steady climb to the 1.0815 and the move into the grey hours, London were steady buyers from the opening and the market gently pushed to the 1.0835 levels before slipping back on a poor set of IFO numbers in Germany, the move to the NYK session saw the market pushing to the 1.0810 areas before the opening and then starting a steady recovery through the session as the Oil market again started to drift lower and with USD falling quietly off on what in the end was a lacklustre day with reduced volumes, the market in Euro’s then finished the day testing just above the 1.0855 levels closing just off the levels.
• GBP: A slightly weaker EURGBP saw the Cable opening just above the closing on Friday and although the Cable drifted to the Tokyo session testing towards the 1.4250 levels before starting a steep climb to above the 1.4310 levels into mid-Tokyo and holding the level into the grey hours, EURGBP buying in the move into the London session again saw the Cable pushing back through the lows and eventually testing into early NYK just above the 1.4220 levels before NYK came in buying, however, the EURGBP buyers continued to buy and the cross moved steadily back through the 0.7600 levels with the Euro rise and GBP was unable to reply, Cable then traded around the 1.4250 levels for the most part with the widest range coming from the 1.4225 area to the 1.4285 area before narrowing the range as the market moved through late NYK to the close centring on that 1.4250 level.
• JPY: Early trading saw the market dip from the opening above the 118.70 levels into the 118.40’s once Tokyo moved into the market, downside pressure slowly drifted away and the continuing speculation of easing saw the market rallying back above the 118.80 levels as light cross buying moved into the market however, the move into the grey hours after several hours of testing above the 118.80 saw a quick sell back to the 118.50 and then continue through into the London session to test the 118.20 levels with Oil in particular doing most of the work at that point, a light recovery from the lows then moved the market gradually through the day and deep into the NYK session before a renewal of the selling towards the last couple of hours and the day ended around the 118.30 levels in quiet trading.
• AUD: Apart from some AUDJPY buying during the Asian session the Oz drifted having made highs just above the 0.7030 from the opening just above the 70 cent area, the move into the grey hours saw stronger selling as the early traders followed the Oil market, the market was unable to recover from the dip back and traded off the 0.6970 levels for several hours before finally drifting again to the 0.6950 levels into the close, with decent sellers showing in the market however, the day before Australia day probably led to a disappointing session for the Oz.

Yesterday’s premiership results

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

JPY         Trade Balance Total (JPY) Dec A 0.04T | C 0.08T | P 0.00T | R 0.02T

AUD       NAB Business Confidence Dec A 3 | P 5

EUR        German IFO – Business Climate Jan A 107.3 | C 108.5 | P 108.7 | R 108.6

EUR        German IFO – Current Assessment Jan A 112.5 | C 112.8 | P 112.8

EUR        German IFO – Expectations Jan A 102.4 | C 104 | P 104.7 | R 104.6

GBP       CBI Trends Total Orders Jan A -15 | C -10 | P -7

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.