Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 121.112 120.94-121.28 | EURUSD 1.08314 1.0829-38 | AUDUSD 0.70844 0.7081-95 | NZDUSD 0.64831 0.6460-0.6500 | USDCAD 1.39731 1.3985-1.4010 | USDCHF 1.02306 1.0220-50 | GBPUSD 1.4244 1.4240-60 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               121.49 | 121.00

EUR/USD             1.0852 | 1.0815

EUR/JPY               131.615 | 131.295

AUD/USD            0.7088 | 0.7043

NZD/USD             0.6498 | 0.6451

USD/CAD             1.4015 | 1.3967

EUR/CHF              1.1090 | 1.1052

USD/CHF             1.0250 | 1.0210

GBP/USD             1.4267 | 1.4230

EUR/GBP             0.76115 | 0.7598

For today

• EUR: Opening unchanged from Friday light selling into the Tokyo session saw the market move from the 1.0830 areas to test into the 1.0815 areas before finally seeing early Tokyo move in and start to buy cross JPY in sufficient numbers to take the Euro steadily higher through the session to move to the 1.0850 levels, Topside offers light into the 1.0900-20 areas with light possibly through the 1.0940 areas and opening up another move into the mid 1.09 level and a possible test to the 1.0980-1.1000 areas, a push through the level could initially see a mixture of stops and offers and a push through the 1.1010-20 areas is likely to open up the topside with a move into the 1.1040-60 areas possibly key to a move higher and the opening of the range from Sep-Nov last year. Downside bids into the 1.0800 areas and through to 1.0780, a solid push through the 1.0770 areas will open up the downside and into the 1.0720 levels and then stronger bids appearing to slow the market into 1.0700, a strong push through the 1.0680 level will likely open up a test lower with the 1.0650-1.0500 areas then vulnerable to a test.
• GBP: Cable was fairly static with the market moving from the opening 1.4250 areas and the early sellers were limited with the market starting to rise slowly from the early Tokyo buyers and the market moved to the 1.4260 areas and held through the rather dull session into the grey hours around that level, Topside offers light through the 1.4300 levels with limited stops on a push through and the market then struggling through 1.4350 and opening another test of the 1.4400 levels and strong offers, Downside bids light and there is likely to be very little to control another push through the 1.4200 levels and another test to the better bids into the 1.4150 areas.
• JPY: USDJPY opened a little higher from Friday around the 121.25 levels and then after a limited attempt to fill the gap before a steady rise to test the 121.50 levels before the Tokyo traders sat down, once they moved in though the market trade quietly lower and this time filled the gap on the charts having traded towards the 121.10 areas, Poor China numbers saw the market rise back the 121.35 levels and then range in a tightening pattern to the grey hours holding around the 121.25 levels. Topside offers from the 121.70 levels and limited offers through to 122.00 areas a move through the level could possibly see weak stops through the 122.10 areas and the market opens up to the 123.00 areas with strong offers likely into and through that level.
• AUD: The market drifted from the opening with limited profit taking in the AUDJPY and the opening Oz soon found itself test from the opening around the 0.7085 areas to the 0.7045 level into early Tokyo, the recovery was then a steady grind through the session to move back to the opening levels. Topside offers light into the 71 cent level and then increasing as the market moves towards the 0.7140 levels and into 0.7160, the topside offers though are likely to continue through the next big figure struggling to the 73 cent levels, downside bid light through the downside until the market starts to trade below the 70 cent levels and those bids increase.

Overnight News

CNY:

China Jan. Manufacturing PMI 49.4; Est. 49.6

China Non-Manufacturing PMI at 53.5 for Jan.

Caixin China Jan. Manufacturing PMI 48.4; Est. 48.1

China Should Keep Size of Forex Reserves Stable: Sec. News

China’s Economy Is ‘Basically Stable’: People’s Daily

JPY:

Japanese Voters Don’t See BOJ Negative Rates Helping Economy

Nikkei Japan Jan. Manufacturing PMI 52.3 vs 52.6 in Dec.

Japan Finance Min. Website Down; Hacker Claims Responsibility

AUD:

Australia Jan. Manufacturing Index Falls 0.4 Pt M/m to 51.5

Australia’s Jan. TD Monthly Inflation Gauge Rises 0.4% M/m

NZD:

New Zealand Net Immigration Rose to Record 64,930 in 2015

NZ Treasury Says Economy May Expand Faster-Than-Expected in 2016

Today’s data

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

AUD       TD Securities Inflation M/M Jan A 0.40% | P 0.20%

AUD       TD Securities Inflation Y/Y Jan A 2.30% | P 2.00%

CNY        Manufacturing PMI Jan A 49.4 | C 49.6 | P 49.7

CNY        Non-manufacturing PMI Jan A 53.5 | C 54.4

CNY        Caixin PMI Manufacturing Jan A 48.4 | C 48.1 | P 48.2

JPY         PMI Manufacturing Jan (F) A 52.3 | C 52.4 | P 52.4

08:30     CHF        SVME PMI Jan C 51.2 | P 52.1

08:45     EUR        Italy Manufacturing PMI Jan C 54.9 | P 55.6

08:50     EUR        France Manufacturing PMI Jan (F) C 50.1 | P 50

08:55     EUR        Germany Manufacturing PMI Jan (F) C 52.1 | P 52.1

09:00     EUR        Eurozone Manufacturing PMI Jan (F) C 52.3 | P 52.3

09:30     GBP       Mortgage Approvals Dec C 70K | P 70.4K

09:30     GBP       M4 Money Supply M/M Dec C 0.30% | P 0.40%

09:30     GBP       PMI Manufacturing Jan C 51.8 | P 51.9

13:30     USD       Personal Income Dec C 0.20% | P 0.30%

13:30     USD       Personal Spending Dec C 0.10% | P 0.30%

13:30     USD       Real Personal Spending Dec P 0.30%

13:30     USD       PCE Deflator M/M Dec P 0.00%

13:30     USD       PCE Deflator Y/Y Dec P 0.40%

13:30     USD       PCE Core M/M Dec C 0.10% | P 0.10%

13:30     USD       PCE Core Y/Y Dec P 1.30%

15:00     USD       ISM Manufacturing Jan C 48.6 | P 48.2

15:00     USD       ISM Prices Paid Jan C 35.5 | P 33.5

15:00     USD       Construction Spending M/M Dec C 0.60% | P -0.40%

Weekend News

JPY:

Support for Japan’s Abe Rises After Amari Resigns: Kyodo
EUR:

ECB Is Alert to Economic Data Ahead of March Meeting, Praet Says
Greece to Start Talks With Creditors Monday: Finance Ministry
Greek Debt Relief to Be Discussed Soon, Sapin Tells Kathimerini
USD:

Fed’s Williams Sees ‘Smidgen’ Slower Tightening than Previously
GBP/EUR:

U.K. Said to Ask EU to Ease Curbs on Bermuda Tax Haven: Observer
U.K. Poll Shows 54% Favour Staying in EU: Daily Mail
USD/CNY:

U.S. Warship Enters China Waters Without Approval: China MFA
CHF/MYR:

Swiss Probe of Malaysia Fund Sees $4 Billion Possible Misuse
MYR/CHF:

Malaysia Attorney General to Cooperate With Swiss on 1MDB: NST
OIL:

Iran’s New Oil Deals Spark Ire as London Summit Is Cancelled
SEK:

Sweden Moderates Can’t Rule Out Joint Alliance Budget Before ’18

 

Harry Hindsight

• EUR: A steady drift lower through the early part of the Asian session having opened around the 1.0940 level and testing the 1.0930 in very quiet that is until the BoJ monetary policy release and the cut to -0.10% for new deposits and the Euro dipped quickly to the 1.0880 areas and then snapped back higher and towards the 1.0950 before seeing steady selling through the balance of the session and moving again through the 1.0900 levels and holding into the London session around the 1.0890 areas, CPI figures from the Eurozone saw the YoY figure a little higher and the MoM number coming in as expected but better than Novembers number, and the Euro moved back above the 1.0900 levels into the NYK session, the market was expecting a poor GDP number and instead received one in line with consensus and the Euro dropped back quickly with the USD rallying. The move was reasonably deep and the market traded to the London close around the 1.0810 levels before a small recovery and a run to the close around the 1.0830 levels.
• GBP: Cable opened around the 1.4360 levels and quietly moved through the session to the BoJ announcement and while not as strong as the Euro move, the market rallied through to the London session testing above the 1.4400 levels, however, it didn’t last too long and the market rejected the level and started falling steadily lower, weak stops through the 1.4340 levels saw the market quickly trading 1.4300 areas and into the NYK session with the market continuing to fall and the market eventually pushed to the 1.4150 areas in a deeper move than we’ve seen for a while, the market bounced off the lows once London was out of the way and the market steadily rose over the course of the session to finish above the 1.4240 levels.
• JPY: A quiet run through the Sydney hours and into Tokyo testing towards the 119.00 levels from the opening around the 118.80 areas, Tokyo opened slowly drifting back to the 118.60 as the market adjusted before the announcement, the announcement of a rate cut saw the market quickly rise trading initially to the 119.00 levels before pushing through the level several minutes later and not stopping as it rose quickly to the 121.40’s before the offers that had been run over kicked in and the market dipped back to 119.20, however, the move was overdone to the downside and it was a steadier rise back to the 121.00 levels through into the London session and as NYK added more liquidity to the buy side and the market pushed to the 121.70 into the first half of the session with the help of the US numbers, the market at the end of London saw a slight dip back to the 121.00 levels and the market quietly ranged to the close between the 121.00-20 areas to the close.
• AUD: A choppy day for the Oz with the market trading quietly through to the Tokyo session, with the JPY seeing some position reduction the Oz slowly pushed from the opening levels around the 0.7085 areas and through the 71 cent levels, the release by the BoJ saw a quick dip lower for the Oz and the market touch through the 0.7070 levels before starting a steady rally as the USDJPY started to rise for the second time and the AUDJPY carry trade came into its own, the market eventually struggled into the 0.7140 levels and the move into the London session saw steady selling from the opening and while not as quick as the rise the market eventually tested through to the previous lows before starting a stuttering movement through the session with an overall bias to the downside extending the lows to the 0.7060 levels before closing taround the 0.7080 areas and hardly unchanged on the day.

Friday’s premiership results

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

NZD       Building Permits M/M Dec A 2.30% | P 1.80% | R 2.40%

JPY         Jobless Rate Dec A 3.30% | C 3.30% | P 3.30%

JPY         Household Spending Y/Y Dec A -4.40% | C -2.30% | P -2.90%

JPY         National CPI Core Y/Y Dec A 0.10% | C 0.10% | P 0.10%

JPY         Tokyo CPI Core Y/Y Jan A -0.10% | C 0.10% | P 0.10%

JPY         Industrial Production M/M Dec (P) A -1.40% | C -0.30% | P -0.90%

GBP       GfK Consumer Sentiment Jan A 4 | C 1 | P 2

AUD       PPI Q/Q Q4 A 0.30% | C 0.60% | P 0.90%

AUD       PPI Y/Y Q4 A 1.90% | P 1.70%

JPY         Housing Starts Y/Y Dec A -1.30% | C 0.50% | P 1.70%

EUR        French GDP Q/Q Q4 (A) A 0.20% | C 0.20% | P 0.30%

CHF        KOF Leading Indicator Jan A 100.3 | C 95.9 | P 96.6 | R 96.8

EUR        Eurozone M3 Y/Y Dec A 4.70% | C 5.20% | P 5.10% | R 5.00%

EUR        Eurozone CPI Estimate Y/Y Jan A 0.40% | C 0.40% | P 0.20%

EUR        Eurozone CPI – Core Y/Y Jan (A) A 1.00% | C 0.90% | P 0.90%

USD       Employment Cost Index Q4 A 0.60% | C 0.60% | P 0.60%

USD       Advance Goods Trade Balance Dec A -61.5B | C -60.0B | P -60.5B

USD       GDP (Annualized) Q4 (A) A 0.70% | C 0.80% | P 2.00%

USD       GDP Price Index Q4 (A) A 0.80% | C 0.80% | P 1.30%

CAD       GDP M/M Nov A 0.30% | C 0.30% | P 0.00%

CAD       Industrial Product Price M/M Dec A -0.20% | C -0.40% | P -0.20%

CAD       Raw Materials Price Index M/M Dec A -5.00% | C -3.80% | P -4.00% | R -4.10%

USD       Chicago PMI Jan A 55.6 | C 45.4 | P 42.9

USD       U. of Michigan Confidence Jan (F) A 92 | C 93.1 | P 93.3

Stay lucky

Andy

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