Andy Harrison
Good morning,
LMAX Close
USDJPY 118.817 | EURUSD 1.0940 | AUDUSD 0.70843 | NZDUSD 0.64825 | USDCAD 1.40285 | USDCHF 1.0138 | GBPUSD 1.43607 |
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Interbank Ranges as of 6am London time
Highs   Lows
USD/JPYÂ Â Â Â Â Â Â Â Â Â Â Â Â Â 121.495 | 118.375
EUR/USDÂ Â Â Â Â Â Â Â Â Â Â Â 1.0950 | 1.0883
EUR/JPYÂ Â Â Â Â Â Â Â Â Â Â Â Â Â 132.45 | 129.595
AUD/USDÂ Â Â Â Â Â Â Â Â Â Â 0.7142 | 0.7068
NZD/USDÂ Â Â Â Â Â Â Â Â Â Â Â 0.6543 | 0.6463
USD/CADÂ Â Â Â Â Â Â Â Â Â Â Â 1.4055 | 1.3981
EUR/CHFÂ Â Â Â Â Â Â Â Â Â Â Â Â 1.1130 | 1.10775
USD/CHFÂ Â Â Â Â Â Â Â Â Â Â Â 1.0222 | 1.0134
GBP/USDÂ Â Â Â Â Â Â Â Â Â Â Â 1.4413 | 1.4334
EUR/GBPÂ Â Â Â Â Â Â Â Â Â Â Â 0.7622 | 0.7562
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For Today
- EUR: Opening around the 1.0940 levels the market drifted through into the Tokyo session testing the 1.0930 levels, the market held the level deep into the session until the release of the BoJ Monetary policy statement and a cut to negative interest rates, as the USDJPY rose the offers in EURJPY pushed the Euro leg quickly lower and the Euro traded quickly into the 1.0880 levels before bouncing back again as the buyers appeared and returned the Euro to its previous levels and extended the highs through towards the 1.0850 areas, the movement in USDJPY continued to cause limited movement in the Euro and the market eventually pushed into the 1.0920 areas and into the grey hours, Topside offers remain from the 1.0970 levels and into the 1.1010-20 areas before the market is likely to see stops appearing and the topside open to the 1.1050 levels and possibly stronger offers, even through this level the market is likely to continue only to the 1.1100 areas before further strong offers appear. Downside bids are light through the 1.0900 areas and are likely to quickly open up another test through to the 1.0800 levels and the stronger bids, a move through this level though is likely to be dominated by the EURJPY cross and the 1.0770 levels will likely see weak stops and the market opening to test the 1.0700 areas.
- GBP: Cable was quietly trading around the 1.4360-50 area for much of the session with very little movement in the pair, that is until the BoJ statement and the market dipped quickly into the 1.4330 levels before quickly bouncing to the 1.4380 areas and then slowed to drift back towards the 1.4360 levels, the move towards the grey hours saw an attempt to push through the 1.4400 levels with Tokyo Lunch allowing the move, and strong EURGBP selling moving into the market as the market listens to the counter view that the UK is not the only one that will suffer in a break from the EU, and the likelihood according to Barclays economists is that they are likely to struggle to hold together the various political parties within other countries, EURGBP cross had dipped on the BoJ with the cross dipping from the 0.7620 levels and pushing quickly to the 0.7585 level and having bounced back the downside had again been cleared and the market started a steady push lower through to the grey hours with the Cable benefitting from that move, as the market moves into the grey hours the Cable has initially failed the topside again however, it is a little more liquidity removed from that level, Topside offers into the 1.4400 level are likely to see weak stops behind the level and the market opening for a test of the 1.4450 areas and reversing the medium term trend with the 1.4500 level likely not to be as strongly defended on a test. Downside bids into the 1.4300 level are light but present and for the moment that again protects the 1.4250-00 areas where the market again looks vulnerable on a strong test with the 1.41 handle the strong area.
- JPY: Opening around the 118.80 levels the market made an early push for the 119.00 level failing in the pre-Tokyo market and drifting through the session as the market awaited the BoJ monetary policy, and it was a shock to the system, with the announcement of a split interest rate with all balances during 2015 maintaining the 0.1% while new deposits will be at -0.10%, earlier in the session there was a comment about a strong Yen undesirable and the market should probably have taken heed of the comment as the release saw the market initially spike to the 119.40 areas then rally very quickly to the 121.40’s before halting, the market then saw the drop back and the tumble to the 119.00 areas before a steady rise through the rest of the session to test back to the 120.60 levels into the grey hours. The damage was really done as the market pushed through the 119.50 levels on the second move as that was probably the key level for a short squeeze and the market managed then to push beyond the offers into the 120.00-50 as stops through 100 pips were stuck looking for firm prices in a move that I’ve not seen for several years, the extension through to the 121.40-50 areas was purely panic buying and once it was over with the market was devoid of firm orders and took time to repopulate at the new levels, Topside offers into the 121.50 levels are now possibly all the way through to the 122.00 areas and having pushed through the 121.00 level offers in that area are likely to be weak at best, Downside bids are likely to be light all the way down into the 119.00 were the likelihood of stronger bids is possible as the market adjusts to the potential of moving into the ranges from last year above the 121 level however, one has to suspect that weak stops are present on the way down and until the market has time to refresh the bids it is vulnerable to quick moves.
- AUD: The Oz opened around the 0.7080 levels and having already pushed through the 71 cent level on the previous session would have appeared to have room on the topside however, the movement was quiet through the session and only once the market moved into the Tokyo session did the market start to see light buying to take the market through the 71 cent level, the fact that the BoJ were due to comment curtailed the first move and only once the announcement was made did we see the Oz move initially weak longs covered and the market dipped to the 0.7070 levels before rising back to the 71 cent level then rising quickly to eventually test through yesterday’s highs around the 0.7130 level and then into the grey hours still pushing. Topside offers into the current levels and then likely to continue weakly through to the 72 cent level where there is likely to be some congestion around the level, the market could be dominated by fresh cross buying as cash looks for new areas however, the topside is likely to be slow going for the time being and it will be dominated by the JPY, downside bids light through to the 0.7050 areas and although there are likely to be bids in the area I would not suspect them being that strong and a break of the 70cent level will again open the 0.6950 and below for further testing.
Overnight News
JPY:
Kuroda: BoJ adopted negative rates to reach 2% quickly
Kuroda: BoJ will cut negative rate further if needed
Kuroda: Will add downward pressure on entire yield curve
Kuroda: won’t hesitate to add policy again if needed
Kuroda: See economy growing gradually
Kuroda: Oil prices to have downward effect on CPI till end FY16
Kuroda: CPI timing pushed back due to lowered forecast for oil
Kuroda: To reach 2% inflation target around 1h of
Kuroda: Financial market moves are unstable (wonder why)
Kuroda: Japan price trend is rising steadily
Kuroda: Declines to comment on resignation of Amari
Kuroda: Abenomics policy to continue with new Minister Ishihara
Kuroda: Negative rates don’t mean that can’t add to bond buys
Kuroda: Negative rate adds to the BoJ’s options
Kuroda: Negative rate doesn’t mean at limit of QE
Kuroda: Can ease now in quality, quantity and rates
JPY: Japan Dec. Core Consumer Prices Rise 0.1% Y/y; Est. +0.1%
JPY: Japan Dec. Industrial Production Falls 1.4% M/m; Est. -0.3%
JPY: Aso: Don’t Think Japan Eco Data Shows Early Signs of a Slowdown
JPY: Japan Regulator Begins Questioning Brokers Over HFT Practices
AUD:
PM Turnbull expects election to be set sometime between August and October 2016
Australia Dec. Credit to Business, Consumers Rose 0.5% M/M
Australia Loan Balances Rise 0.8% M/m to A$2.3t, APRA Says
Australian Fourth-Quarter Producer Prices Rise 0.3% Q/Q
KRW:
- Korea Launch Preparation Seen in Satellite Imagery: Analyst
CNY:
China Said to Limit Advance FX Purchases for Overseas Investment
TWD:
Taiwan’s Economy Shrank 0.28% Y/y in 4Q; Survey Est. -0.6%
NZD:
New Zealand 4Q Home-Building Approvals Rise to 11-Yr High
RBNZ: Recent Auckland, NZ House Price Divergence Unprecedented
EUR:
German FinMin Says Leading Indicators Suggest Recovery: Reuters
GBP:
U.K. Jan. GfK Consumer Confidence +4 vs Est. +1
CHF:
Ex-ECB’s Trichet Says SNB Was Right to Give Up Franc Cap: Bilanz
Today’s data
Actual = A | Consensus = C | Previous = P | Revised = R All timings GMT
NZDÂ Â Â Â Â Â Building Permits M/M Dec A 2.30% | P 1.80% | R 2.40%
JPYÂ Â Â Â Â Â Â Â Jobless Rate Dec A 3.30% | C 3.30% | P 3.30%
JPYÂ Â Â Â Â Â Â Â Household Spending Y/Y Dec A -4.40% | C -2.30% | R -2.90%
JPYÂ Â Â Â Â Â Â Â National CPI Core Y/Y Dec A 0.10% | C 0.10% | P 0.10%
JPYÂ Â Â Â Â Â Â Â Tokyo CPI Core Y/Y Jan A -0.10% | C 0.10% | P 0.10%
JPYÂ Â Â Â Â Â Â Â Industrial Production M/M Dec (P) A -1.40% | C -0.30% | P -0.90%
GBPÂ Â Â Â Â Â GfK Consumer Sentiment Jan A 4 | C 1 | P 2
AUDÂ Â Â Â Â Â PPI Q/Q Q4 A 0.30% | C 0.60% | P 0.90%
AUDÂ Â Â Â Â Â PPI Y/Y Q4 A 1.90% | P 1.70%
JPYÂ Â Â Â Â Â Â Â Housing Starts Y/Y Dec A -1.30% | C 0.50% | P 1.70%
06:30Â Â Â Â EURÂ Â Â Â Â Â Â French GDP Q/Q Q4 (A) C 0.20% | P 0.30%
08:00Â Â Â Â CHFÂ Â Â Â Â Â Â KOF Leading Indicator Jan C 95.9 | P 96.6
09:00Â Â Â Â EURÂ Â Â Â Â Â Â Eurozone M3 Y/Y Dec C 5.20% | P 5.10%
10:00Â Â Â Â EURÂ Â Â Â Â Â Â Eurozone CPI Estimate Y/Y Jan C 0.40% | P 0.20%
10:00Â Â Â Â EURÂ Â Â Â Â Â Â Eurozone CPI – Core Y/Y Jan (A) C 0.90% | P 0.90%
13:30Â Â Â Â USDÂ Â Â Â Â Â Employment Cost Index Q4 C 0.60% | P 0.60%
13:30Â Â Â Â USDÂ Â Â Â Â Â Advance Goods Trade Balance Dec C -60.0B | P -60.5B
13:30Â Â Â Â USDÂ Â Â Â Â Â GDP (Annualized) Q4 (A) C 0.50% | P 2.00%
13:30Â Â Â Â USDÂ Â Â Â Â Â GDP Price Index Q4 (A) C 0.80% | P 1.30%
13:30Â Â Â Â CADÂ Â Â Â Â Â GDP M/M Nov P 0.00%
13:30Â Â Â Â CADÂ Â Â Â Â Â Industrial Product Price M/M Dec P -0.20%
13:30Â Â Â Â CADÂ Â Â Â Â Â Raw Materials Price Index M/M Dec P -4.00%
14:45Â Â Â Â USDÂ Â Â Â Â Â Chicago PMI Jan C 45.4 | P 42.9
15:00Â Â Â Â USDÂ Â Â Â Â Â U. of Michigan Confidence Jan (F) C93.1 | P 93.3
Harry Hindsight             Â
- EUR: Opening around the 1.0890 levels early buying through to Tokyo saw the market test briefly above the 109.00 levels before spending the rest of the session slipping lower through the session to move into the grey hours holding the 1.0870 levels, London were steady buyers in front of the numbers and the market slowly moved ahead and pushed back through the 1.0900 levels with steady EURGBP buying again going through the market and the cross pushing into the 0.7660 levels, the Eurozone numbers failed to impress and the market quickly changed direction and the fall was limited moving back to just below the 1.0900 areas before holding around the 1.0910 areas into the NYK session and the release of German CPI and the US numbers, while the German CPI numbers were again disappointing this was balanced by an even worse Durable goods number and the Euro was able then to forge ahead to test above the 1.0960 areas as the market digested the implications and the news media therefore started to speculate on a recession for the US on the back of one number that is only part of the makeup of the GDP figure, once the highs were made and the media had done its sensationalising the market started to drift a little and the close was around the 1.0940 areas.
- GBP: Cable was again quiet through the Asian session moving to a high around the 1.4260 areas before drifting back to trade just below the 1.4240 areas however, it remained above the opening through into the grey hours and started a steady push through the 1.4260 areas holding into the 1.4280 range to the release of GDP numbers which were as expected and a little better than the 3rd, however, what it did show was a lagging manufacturing base and a lopsided number with retail buying driving the GDP number, the Cable was able to push ahead though and the market moved into the 1.4340 levels before finding offers sufficient to turn the flow and the market drifted back lower and held the 1.4300 levels into the NYK session, Durable goods was enough to set Cable loose again and this time the market only briefly struggled with the 1.4350-60 areas before triggering some weak stops and push lightly through the 1.4400 levels, the market held in the area for a period and attempted a second time failed and dipped back towards the 1.4350 levels which in the end was where it finished in a lightly traded evening.
- JPY: Having opened around the 118.70 levels the market in Sydney and the run into Tokyo saw steady selling from the levels with the market moving down into the low 118.40 levels as cross selling moved into the market, the opening in Tokyo saw that selling quickly reversed as the carry trade reappeared as attractive and the market through the first couple of hours pushed steadily towards the 119.00 levels stalling for the first time at the 118.95 area, the market rejected the level and slipped back to the 118.80 levels and then weak stops entered and the market dropped back to the opening levels and settled down to trade roughly below that level and into the 118.55 areas into the grey hours, London were early buyers and the market again was set to test the topside resistance and again failed at the same level however, the move back was limited to the 118.70 levels with a quick move lower as weak stops again were triggered before a steady climb back to test for the third time in the lead up to NYK, poor European numbers and then poor US numbers had little impact on the pair with the dip from Durable goods pushing only to the opening levels, with the bit between its teeth the market attempted the topside again into the NYK session extending the highs but still unable to push through the 119.00 level and this time the market fell back into the 118.50’s as the end of London saw the weak longs cutting out for the day, NYK pushed the market steadily higher however, it was unable to do much and the market ran out around the 118.80 areas in light trading.
- AUD: The Oz dipped on early carry trade selling with the NZD under pressure from the opening and then moving steadily with the Oz higher with the Oz touching the 0.7010 levels and then climbing to test the 0.7050 levels into the grey hours, talk of a reverse H+S (head and shoulders) pattern on the charts had the market talking and the move into the grey hours saw the early London market pushing quickly for the break higher, as it was the market ran into some strong offers around the 0.7080 levels and it wasn’t until NYK entered the market that there was sufficient momentum to push the market through the 71 cent levels and theoretically complete the pattern however, rather than triggering further gains the market had used to much energy in getting there and it dropped back quickly through the 71 cent levels to hold the 0.7080 line all the way through to the close with no further attempts to the topside.
Yesterday’s premiership results
Actual = A | Consensus = C | Previous = P | Revised = R All timings GMT
NZDÂ Â Â Â Â Â RBNZ Rate Decision A 2.50% | C 2.50% | P 2.50%
NZDÂ Â Â Â Â Â Trade Balance (NZD) Dec A -53M | C -130M | P -779M | R -799M
JPYÂ Â Â Â Â Â Â Â Retail Trade Y/Y Dec A -1.10% | C 0.20% | P -1.00%
AUDÂ Â Â Â Â Â Import Price Index Q/Q Q4 A -0.30% | C -0.80% | P 1.40%
GBPÂ Â Â Â Â Â GDP Q/Q Q4 (A) A 0.50% | C 0.50% | P 0.40%
GBPÂ Â Â Â Â Â Index of Services 3M/3M Nov A 0.60% | C 0.60% | P 0.50%
EURÂ Â Â Â Â Â Â Eurozone Economic Confidence Jan A 105 | C 106.6 | P 106.8 | R 106.7
EURÂ Â Â Â Â Â Â Eurozone Business Climate Indicator Jan A 0.29 | C 0.39 | P 0.41
EURÂ Â Â Â Â Â Â Eurozone Industrial Confidence Jan A -3.2 | C -2.4 | P -2
EURÂ Â Â Â Â Â Â Eurozone Services Confidence Jan A 11.6 | C 12.8 | P 13.1 | R 12.8
EURÂ Â Â Â Â Â Â Eurozone Consumer Confidence Jan (F) A -6.3 | C -6.3 | P -6.3
GBPÂ Â Â Â Â Â CBI Reported Sales Jan A 16 | C 18 | P 19
EURÂ Â Â Â Â Â Â German CPI M/M Jan (P) A -0.80% | C -0.80% | P -0.10%
EURÂ Â Â Â Â Â Â German CPI Y/Y Jan (P) A 0.50% | C 0.50% | P 0.30%
USDÂ Â Â Â Â Â Initial Jobless Claims (JAN 23) A 278K | C 281K | P 293K | R 294K
USDÂ Â Â Â Â Â Durable Goods Orders Dec (P) A -5.10% | C -1.10% | P 0.00%
USDÂ Â Â Â Â Â Durables Ex Transportation Dec (P) A -1.20% | C 0.10% | P 0.00%
USDÂ Â Â Â Â Â Pending Home Sales M/M Dec A 0.10% | C 1.00% | P -0.90% | R -1.10%
Good Luck,
Andy
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