Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 118.685 | EURUSD 1.0893 | AUDUSD 0.70261 | NZDUSD 0.65223 | USDCAD 1.40944 | USDCHF 1.01503 | GBPUSD 1.42333 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               118.935 | 118.41

EUR/USD             1.0907 | 1.08835

EUR/JPY               129.50 | 129.145

AUD/USD            0.7048 | 0.7008

NZD/USD             0.6451 | 0.6419

USD/CAD             1.4120 | 1.4071

EUR/CHF              1.1072 | 1.1055

USD/CHF             1.0173 | 1.0144

GBP/USD             1.4267 | 1.4233

EUR/GBP             0.7654 | 0.76355

 

For Today

• EUR: A quiet session with a steady drift for the Euro away from the 1.0910 areas which were threatened during the Sydney session, Tokyo were steady sellers of the Euro as the USDJPY rose however, the general drift lower continued through the session with the market steadily moving to the 1.0880 levels, Topside offers remain through the 1.0900 levels and into the 1.0920 areas, there is possibly less chance of the usual weak stops and the market through to the 1.0960 is likely to see offers dominating the topside with a push through those levels likely to see only stronger offers into the 1.0980-1.1000 level with stops likely to appear through the 1.1030 areas mixed with further offers, before the market is likely to see stronger stops on a decent push through the 1.1050 areas. Downside bids light through to the 1.0850 areas where its possibly a little stronger but not that noticeable with better bids moving in towards the 1.0820-1.0800 areas, these bids are likely to extend a little through the level however, the likelihood of stops through 1.0770 areas are likely to open a test of the 1.0700 levels it there is sufficient movement, inflationary German numbers and the US initial claims goods numbers to watch for.
• GBP: Cable managed to move off the closing lows and steadily rise to the 1.4260 levels before slipping back as the GBP was dominated by the EURGBP cross through the lightly traded session, Topside offers in Cable light through the 1.4300 levels with possible weak stops through the level, better offers are likely into the 1.4350 areas however, yesterday’s range around the area was more to do with the 0.7550 EURGBP level and a solid push through the 1.4360 level will likely open a test to 1.4400 and possibly enough offers to slow the market, a move through the level will open the 1.4500 level for a test with minor interference likely around the 1.4450 areas, downside bids light through to the 1.4200 level and from there the bids start to get stronger with the move through to the 1.4150 area likely to be stronger than the previous move, a push at the 1.4100 level though and below could see weak stops joined by those looking for a breakout, with the likelihood of strong selling through the 1.4080-70 areas to open up a test through 1.4000 and lows from 2008.
• JPY: Early Talk into the Tokyo session from Abe adviser Honda had the market reversing the early losses having slipped from the opening 118.70 areas back towards the 118.40 level, the recovery on comments about easing in the Nikkei were sufficient to chase the market back higher and into the 118.90’s but given its Thursday the market did not have the impetus to take the market through the offers (spot is Monday), having really not challenged the topside the market has drifted since slowly slipping back to the opening levels and trading in a narrow 118.60-70 range into the grey hours, Topside offers remain through the 119.00 levels and the market is likely to continue being offered through to around the 119.50 areas with a possibility of weak stops on the break through the 119.30 area but mixed at best however, a push through the 119.50 will likely see a quick move towards the 120.00 level with offers into the level but very vulnerable. Downside bids light through the 118.50 areas and some bids likely to be moving into the 118.00-20 areas the downside is possibly weakly defended and the 117.50 areas are likely to be a stronger area with congestion around that level over the past month, only a break below 117.00 threatens any instability.
• AUD: From the opening the market was quiet with limited profit taking in the AUDJPY carry as the market moved into the TKY opening however, once the initial selling was over the USDJPY started to move higher and the Oz was dragged along with it as the cross buying moved in probably only moments after it was needed, AUDNZD was particularly quiet considering the rate announcement in NZ and the Oz moved off the early lows around 0.7010 to trade steadily through to the 0.7050 areas again and trading around the 0.7040 for half the session in the run to the grey hours, topside offers from the 0.7080 level are likely to extend through the 0.7100 level with stops likely to appear on move through the 0.7110 level and the formation of the reverse H+S pattern, (head and shoulders) opening up a possible move through the 72 cent level in the medium term however, I treat technical levels differently to most and would expect some fundamental information to complete the move. Downside bids light into the 0.6950 areas and only really strengthens the closer you get to the 0.6900 areas and increasing from there into the 0.6850 levels and the lows of last week.

Overnight News

JPY: Abe Adviser Honda Says He’s for More Easing, Nikkei Reports

Abe’s Adviser Honda: BOJ Should Add to Stimulus on Friday

Japanese Bought Net 475.3 Billion Yen Overseas Debt Last Week

Japan’s GPIF to Favour More Active Stock Managers, Nikkei Says

Japan Dec. Retail Sales Fall 0.2% M/m; Est. +1%

Japan Needs 30 Nuclear Restarts to Reach 10% of Energy Mix: METI

JBIC’s Watanabe Sees BOJ on Hold as Yen Set in 115-125 Range

CNY:

China Doesn’t Limit Repatriation of Foreign Cos. Earnings: SAFE

China Economy Won’t See ‘Hard Landing’: People’s Daily

Yuan Global Payments Share Rose to 3-Month High in Dec: Swift

NZD:

RBNZ Says Further Easing May Be Needed to Boost Inflation

New Zealand Trade Deficit Widened to NZ$3.55b in 2015

New Zealand Central Bank Says It Bought Net NZ$3M in December

NZD/CNY: Fonterra Doubts China Will Suddenly Lift Import Requirements

AUD:

Australian 4Q Export Prices Fall 5.4% Q/Q; Est. 3.9% Drop

KRW:

North Korea May Be Preparing Missile Launch, Kyodo Reports

Iran Considers Withdrawing Won Deposits in S. Korea: JoongAng

Iran Hasn’t Notified It Will Withdraw Won Deposits in S. Korea

CHF:

SNB’s Zurbruegg Says Negative Rate an ‘Essential Tool’: CdT

PHP/USD:

Philippines Wants More U.S. Patrols in Disputed Sea: Ambassador

Today’s data

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

NZD       RBNZ Rate Decision A 2.50% | C 2.50% | P 2.50%

NZD       Trade Balance (NZD) Dec A -53M | C -130M | P -779M | R -799M

JPY         Retail Trade Y/Y Dec A -1.10% | C 0.20% | P -1.00%

AUD       Import Price Index Q/Q Q4 A -0.30% | C -0.80% | P 1.40%

09:30     GBP       GDP Q/Q Q4 (A) C 0.50% | P 0.40%

09:30     GBP       Index of Services 3M/3M Nov C 0.60% | P 0.50%

10:00     EUR        Eurozone Economic Confidence Jan C 106.6 | P 106.8

10:00     EUR        Eurozone Business Climate Indicator Jan C 0.39 | P 0.41

10:00     EUR        Eurozone Industrial Confidence Jan C -2.4 | P -2

10:00     EUR        Eurozone Services Confidence Jan C 12.8 | P 13.1

10:00     EUR        Eurozone Consumer Confidence Jan (F) C -6.3 | P -6.3

11:00     GBP       CBI Reported Sales Jan C 18 | P 19

13:00     EUR        German CPI M/M Jan (P) C -0.80% | P -0.10%

13:00     EUR        German CPI Y/Y Jan (P) C 0.50% | P 0.30%

13:30     USD       Initial Jobless Claims (JAN 23) C 281K | P 293K

13:30     USD       Durable Goods Orders Dec (P) C -1.10% | P 0.00%

13:30     USD       Durables Ex Transportation Dec (P) C 0.10% | P 0.00%

15:00     USD       Pending Home Sales M/M Dec C 1.00% | P -0.90%

Harry Hindsight              

• EUR: Opening around the 1.0865 areas the market eased into the Tokyo session holding those levels, a surprise Australian CPI improvement saw EURAUD sold quickly and the market dipped to the 1.0850 areas before steadily recovering through the session to the opening levels, before slowly drifting into the grey hours, early London pushed the market higher whether as a consequence of a better GfK number for consumer sentiment is immaterial as the first push to the 1.0880 was quickly squashed and the market pushed down into the 1.0850’s almost as quickly as it moved up, the market then settled down to trade around the opening levels through to the opening in NYK. Early buyers in NYK saw the market test above the 1.0910 levels and into the waiting offers with good two way trading through the early part of the session before slipping back again and holding around the opening levels again into the FOMC, the rate decision was as expected however, the communique afterwards put across the position the Fed finds itself in with the need and want to higher rates as the global volatility in the Financial markets and domestic slowdown stymie their moves to do so, with no change the market dipped into the 1.0860 levels before rallying quickly to again push the 1.0910 levels and all though there was some chop and the high was extended it was unable to break through the topside offers and eventually slipped back to the 1.0890 levels into the close.
• GBP: Cable pushed through the Asian session and into the early London little changed from the opening with the market remaining in a tight range through out, the movement in the Oz after the CPI number had little effect on Cable and the market traded around the 1.4340 areas till the official opening in London, a weaker house price number saw the market slip lower and steadily trade through to the 1.4300 level before holding in the area until the NYK session and Cable buyers moving into the market and again taking the market back to those 1.4340 areas, EURGBP buying had been steady through the session with a reluctance to test the 0.7550 from the previous session and once the market broke through the 0.7610 levels weak stops were triggered and the Cable was the leg that suffered with the market again on the back foot and the Cable dropping quickly back to the 1.4240 levels and then basing on the level to the close with brief attempts to push higher thwarted by the 1.4280 areas.
• JPY: USDJPY remained fairly quiet through the Asian session drifting off the opening 118.45 areas to test below 118.10 level in early trading with the market seeing limited action through to those lows, as the market was unable to push through the lows it was squeezed a little higher in the move into the lunch period and again returned to the opening levels, comments from Abe stirred the markets somewhat but the day was limited by the upcoming FOMC meeting, the move into the London session again saw the market testing the lows through the grey hours before struggling through the morning session holding the 118.20-30 levels, the closer the market moved to the NYK session the higher the market moved with a steady rise to the 118.50 levels into early NYK and then a better move to the 119.00 areas before running into sufficient offers to slow the market, the FOMC release with USDJPY jumping initially towards the 119.10 level before quickly retreating and testing back to the 118.50 areas and then quietly hold around 118.70 from there into the close.
• AUD: The Oz opened around the 70 cent level and moved into the TKY session have moved either side in a quiet period, the release of a surprise improvement in the CPI numbers saw the Oz gap to the 0.7040 levels and hold for a few hours before the market was able to fill the gap on the chart, and then a steady rise through to the grey hours to test the 0.7050 areas, the market moved into the London session holding those levels and trading a 20 pip range for the most part unable to break with any conviction, the move into the NYK session saw fresh input and the market found itself triggering weak stops and testing the 0.7070 levels before drifting to the London close and then slowly trading through to the FOMC meeting, the Oz dipped lower with the USD as the release impacted the oil market and the Oz tested eventually back to the opening levels and negated the CPI news before finishing the day in those post CPI ranges.

Yesterday’s premiership results

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

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

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

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

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

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

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

AUD       CPI RBA Weighted Median Y/Y Q4 A 1.90% | C 2.20% | P 2.10%

GBP       Nationwide House Prices M/M Jan A 0.30% | C 0.60% | P 0.80%

EUR        German GfK Consumer Sentiment Feb A 9.4 | C 9.3 | P 9.4

CHF        UBS Consumption Indicator Dec A 1.62 | P 1.66 | R 1.55

GBP       BBA Mortgage Approvals Dec A 44.0K | C 45.5K | P 45.0K | R 44.5K

USD       New Home Sales Dec A 544K | C 505K | P 490K | R 491K

USD       Crude Oil Inventories A 8.4M | C 3.8M | P 4.0M

USD       FOMC Rate Decision A 0.50% | C 0.50% | P 0.50%

Good Luck,

Andy

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