Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 118.42 | EURUSD 1.08693 | AUDUSD 0.70041 | NZDUSD 0.65029 | USDCAD 1.41193 | USDCHF 1.0169 | GBPUSD 1.43502 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               118.45 | 118.045

EUR/USD             1.0872 | 1.0851

EUR/JPY               128.725 | 128.28

AUD/USD            0.7042 | 0.6992

NZD/USD             0.6516 | 0.6475

USD/CAD             1.4134 | 1.4107

EUR/CHF              1.10585 | 1.10435

USD/CHF             1.0190 | 1.01615

GBP/USD             1.4350 | 1.4331

EUR/GBP             0.75795 | 0.75675

 

For Today

• EUR: The Euro’s overall has been very quiet, opening around the 1.0865 levels and ranged in a 10 pip movement into the Tokyo session, the release of better than expected CPI numbers in Australia saw the Euro gap lower to the 1.0855 levels as strong EURAUD selling materialized and the Euro traded to the 1.0850 areas from there before steadily recovering through the session to again move into the 1.0865-70 areas moving into the grey hours, Topside offers through the current highs and into the 1.0900 areas seem to be a little stronger than they were with the likelihood of weak stops on a move through the area, and then further offers in a move through to the 1.0920-40 areas with possibly a mixture of stops with the 1.0960 seeing offers, a move through the level will likely see stronger offers moving in as the market approaches the 1.0980 areas and those are likely to continue through the 1.1000 levels. Downside bids light through to the 1.0820 areas and the bids are beginning to form in the area down through the 1.0800 area and only a break below the 1.0770 level will really negate the steady recovery so far this week with bids likely to reappear once the market closes in on the 1.0720 levels.
• GBP: A very quiet day for the Cable with the market holding the 1.4340 levels for the most part with very little movement around the Australian CPI numbers with that tight range defined to 20 pips. Topside offers from the current highs and into the 1.4400 level with congestion then seen through that level, a push though would see the clutter removed above 1.4400 and 1.4500 becomes vulnerable to a test. Downside bids light through the 1.4300 levels and the 1.4250 is likely to be similar and offering little protection to a move to the 1.4200 level and possibly stronger bids around the level.
• JPY: Selling through the first half of the session with the market opening above the 118.40 level and slowly drifting into Tokyo and testing lower from that point onwards in a steady movement to test the 118.00 levels again, AUDJPY buying through the second half of the session saw the USDJPY slowly recapturing much of those losses however, once the 118.40 level was again reached the market slowed and has been static, Topside offers through the 118.60 level are likely to be light and the stronger offers are likely to appear from the 118.80 level onwards and through the 119.00 areas a push above the 119.20-30 area could see stops triggered and the market open to a test through to the 119.60 areas before the 120.00 becomes vulnerable. Downside bids into the 118.00 level continue to hold the market for the moment however, one suspects that they are not particularly strong even if they’ve now held a couple of times and a test through the 117.70 areas could open up the downside to the 117.20 levels with those levels protecting a deeper move for the moment. And with no expectations for a rate rise in the US the market will possibly be slow till that release.
• AUD: A quiet start with the market drifting a little lower from the opening and testing below the 70 cent levels, noise around the Tokyo opening saw the market remain static if a little busy as the market adjusted before the release of the CPI numbers, as it was the numbers were better than expected or worse depends on how you look at it, with the normal being reversed in the event CPI was a little stronger and therefore alleviates some concerns of disinflation and so the market gapped higher from 70 cents to the 0.7040 level before the market saw consistent pricing appear, the market then spent a good proportion of the session trading around the 0.7uy030 areas before the market filled the gap on the charts and then renewed the move higher remaining around the 0.7030 levels into the grey hours. Topside offers through the current highs and likely to be lighter than they were into the 0.7060 levels and through there the possibility of weak stops and a test to above the 71 cent area with offers likely to appear from the 0.7120 level and becoming stronger as the market moves into the 0.7150 area. Downside bids into the 0.6950 level are light however, a move through will still find more of the same bids in the 69 cent area and then growing supportive strength on a move lower.

Overnight News

JPY:

Japan’s Economy Minister Amari Said to Remain in Post: Kyodo

Japanese Cos Urge Cap to Check GPIF Influence: Nikkei

Abe: Think Amari Will Fulfil Responsibility to Explain Scandal

BOJ Delaying Price Goal Would Spell Defeat, Ex-Official Says

CNY:

PBOC’s Zhang Xin Sees No ‘Abnormal’ Capital Flow Yesterday: Daily

China Needs to Cut Reserve Requirement: Info Daily Commentary

AIIB President Rules Out China Veto: China Daily

China’s Dec. Industrial Companies’ Profit Falls 4.7% Y/y

Ex-PBOC Adviser Yu Suggests China Adopts Large Stimulus Policy

Moody’s Sees China Monetary Policy to Support GDP Growth This Yr

CNY/USD:

China Hopes Kerry’s Visit Will Enhance Mutual Trust: Xinhua

HKD:

HKMA Ready to Safeguard Stability of Monetary, Financial System

TWD/CNY:

Taiwan to Continue China Trade Policies, Executive Yuan Says

AUD:

Australian 4Q Trimmed Mean CPI Rose 0.6% Q/Q; Est. 0.5% Gain

Australia ANZ Weekly Consumer Sentiment Falls 0.9% to 112.2

NZD:

Key Says New Zealand Economy Well Placed Looking Into 2016

Key Says He’s ‘Pretty Happy’ With New Zealand Credit Ratings

USD/KRW:

U.S. May Deploy Unmanned Combat Air Vehicle to S. Korea: Chosun

IDR/CNY:

Indonesia Seeks to Export More, Attract More FDI from China

Today’s data

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

23:30     AUD       Westpac Leading Index M/M Dec A -0.30% | P -0.20% | R -0.30%

0:30        AUD       CPI Q/Q Q4 A 0.40% | C 0.30% | P 0.50%

0:30        AUD       CPI Y/Y Q4 A 1.70% | C 1.60% | P 1.50%

0:30        AUD       CPI RBA Trimmed Mean Q/Q Q4 A 0.60% | C 0.50% | P 0.30%

0:30        AUD       CPI RBA Trimmed Mean Y/Y Q4 A 2.10% | C 2.10% | P 2.10%

0:30        AUD       CPI RBA Weighted Median Q/Q Q4 A 0.40% | P 0.30%

0:30        AUD       CPI RBA Weighted Median Y/Y Q4 A 1.90% | P 2.20% | R 2.10%

7:00        GBP       Nationwide House Prices M/M Jan A 0.60% | P 0.80%

7:00        EUR        German GfK Consumer Sentiment Feb C 9.3 | P 9.4

7:00        CHF        UBS Consumption Indicator Dec P 1.66

9:30        GBP       BBA Mortgage Approvals Dec C 45.5K | P 45.0K

15:00     USD       New Home Sales Dec C 505k | P 490k

15:30     USD       Crude Oil Inventories P 4.0M

19:00     USD       FOMC Rate Decision C 0.50% | P 0.50%

20:00     NZD       RBNZ Rate Decision C 2.50% | P 2.50%

Harry Hindsight              

• EUR: A reasonably quiet session for the Euro through the Asian session with the market well contained and trading around the 1.0850 levels into the grey hours, early buyers saw the market rise to test through the 1.0870 levels however, with little data or news the market in London opened with renewed selling of the Euro and early and steady buying of Oil, with the focus being more on ECB’s talk of easing and can it be accomplished, the market traded into the NYK session having tested the other side or the range around the 1.0820 levels and as NYK moved in the market had started to rise and gradually made its way back to its opening levels for the day, and late into the session the market again tested towards the day’s highs.
• GBP: A quiet start to the day with the Ozzies out for Australia day saw the market moving into the Tokyo session unchanged, some GBPJPY selling moved through the market and this took the market down into the 1.4210 areas however, the market steadily made its way back to the 1.4240 opening areas and a quiet session then through to the grey hours, some early buying of EURGBP saw the cross make its highs above the 0.7660 levels however, that was it for the cross and from that point it was all selling as the market moved in a tight channel through the sessions to test to the 0.7550 levels into the London close and from there settled around the 0.7570 levels, with the cross being heavily sold through the session the Cable steadily rose in the same fashion struggling initially around the 1.4240-60 areas before moving into the NYK session and the action continuing as USD was forced lower as the Oil steadily rose through the session, the move to the close once the London session was over saw the market pushing at the 1.4360 levels and close to the highs through to the close.
• JPY: USDJPY moved towards the Tokyo opening holding the 118.30 levels with early cross/JPY selling moving in and the USDJPY found itself quickly testing to the 118.10 level, fixing supply added to the pressure shortly after and the market pushed towards the 118.00 as the market struggled to cope with the will we or will we not on the question, the market did recover a little and at one point heading into Lunch the market almost regained its losses however, as soon as lunch began the sellers reappeared and the USDJPY was again forced to the 118.00 and then into the grey hours and early selling saw the lows of the day produced before the London opening with the market pushing to the 117.70 levels triggering only a small proportion of stops before London jumped on the market and the USDJPY steadily moved through to the 118.50 levels into the opening in NYK, the NYK market extended the highs but only just pushing through the 118.60 levels before holding around the 118.50 levels to the close in a quiet afternoon.
• AUD: The Oz opened around the 0.6950 areas and slipped a little lower in a very quiet market trading through the 0.6940 areas before slowly rising higher as the Oz moved in line with the recovering USDJPY and the Oz sloly pushed to the 0.6960 levels before again slipping to the opening levels as it moved into the grey hours, quick AUDJPY selling followed through and with the Bank Holiday in Australia the market was a little week until the 0.6920 areas where it held going into London and the market started a steady rise through the session to the 0.7015 areas late into NYK, finishing the day just below the 0.7010 level.

Yesterday’s premiership results

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%

CHF        Trade Balance (CHF) Dec A 2.54B | C 3.33B | P 3.14B | R 3.16B

USD       House Price Index M/M Nov A 0.50% | C 0.40% | P 0.50%

USD       S&P/Case-Shiller Composite-20 Y/Y Nov A 5.80% | C 5.70% | P 5.54%

USD       Consumer Confidence Jan A 98.1 | C 96.8 | P 96.5

Good Luck,

Andy

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