Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 120.99 | EURUSD 1.0888 | AUDUSD 0.71141 | NZDUSD 0.65027 | USDCAD 1.39475 | USDCHF 1.01982 | GBPUSD 1.44341 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               121.04 | 120.355

EUR/USD             1.0920 | 1.0883

EUR/JPY               131.85 | 131.37

AUD/USD            0.7130 | 0.7068

NZD/USD             0.6556 | 0.6514

USD/CAD             1.4009 | 1.3940

EUR/CHF              1.11195 | 1.1100

USD/CHF             1.0201 | 1.01825

GBP/USD             1.4436 | 1.4403

EUR/GBP             0.75775 | 0.75495

 

For Today

• EUR: Opening around the 1.0890 levels saw the market start to edge higher as it moved through into the Tokyo session and a gradual push through the 1.0900 levels however, the market at that point never looked like extending the high prints, that is until the RBA announcement, no change, and although the Oz did rally the drop back saw light EURAUD buying moving through the market and the Euro managed to test to the 1.0920 levels before slipping slowly back and hold through to the grey hours, Topside offers likely to be weak through the 1.0920 levels however, last week’s action would suggest that the topside has progressively stronger offers as the market moves towards the 1.1000 levels with possibly strong levels through the 1.0940 area. A strong push through the 1.1020 levels could see stops triggered and the market opening to the 1.1100 areas. Downside bids light through the downside until the 1.0820 areas and those bids likely to continue through to the 1.0770 areas with the downside bids like the topside possibly building the closer to the 1.0720 levels the market moves.
• GBP: Cable traded quietly through the session ranging in the 1.4420-30 areas though too late into the session, RBA announcement saw GBPAUD selling and the Cable gradually slipped lower and once the slide started light EURGBP buying saw the Cable push through the 1.4400 levels. Topside offers light through to the 1.4440-50 areas where offers first appear in strength however, a push through the 1.4460 level is likely to open the 1.4500 areas and then limited into the 1.4550 areas. Downside bids light through the 1.4300 level and only a move into the low 1.4200 area will likely hold stronger bids.
• JPY: USDJPY slipped back from the 121.00 areas in early trading before slowly recovering however, the market early in the session was weak at best and the early hours and 121.00 seemed to be to strong a level for the market and USDJPY slowly drifted lower triggering weak stops on the second attempt through 120.80 and dipping through to the 120.60 levels only to repeat the move into the lows around 120.35 on the break through 120.60. Downside bids into the 120.20 areas are likely to see some tech sellers appearing through the 120.10 areas however, not being that much of a technical thinker the bids are likely to continue to the 119.80 areas and a push through there opens the market to a return to the 119.00 levels. Topside offers through the 121.30 areas are likely to strengthen on a move to the 121.50 areas with weakness through that level likely until 121.80 area and then likely offers beginning to increase into the 122.00.
• AUD: Early buying in USD weakness saw the Oz push to the 0.7115 from the opening 0.7105 areas, Tokyo entered the fray and the market traded back into the opening and then slipping to 0.7095 as the market adjusted before the RBA announcement, the move to the release saw the market more or less unchanged from the opening levels, unchanged saw the Oz quickly move to the 0.7030 levels before reversing sharply as the statement, somewhat reworded reiterated an easing bias with data watching the name of the game. Topside offers through the 0.7130 level and likely to continue through the 0.7160 areas with only limited weakness and 0.7180 levels opening the 72 cent level for a test with stops likely through the 0.7210 areas and the market then vulnerable to the 73 cent level. Downside bids light through the 0.7050 areas and only limited strength on the bid around the 70 cent areas with the bulk of the buying likely only as the market approaches the 0.6950 areas.

Overnight News

AUD:

RBA’s Stevens Keeps Benchmark Interest Rate at 2% (Full Text)

Australia ANZ Weekly Consumer Sentiment Falls 0.9% to 111.2

USD:

Ted Cruz Wins Iowa Caucus over Trump, Rubio

JPY:

Aso Says to Monitor Impact of BOJ Negative-Rate Policy on Banks

Ishihara: Continue to Expect BOJ Will Reach Inflation Target

Ishihara says Japan Needs to Monitor Moves of Open Market Rates

CNY:

SAFE Says No Change in China’s FX Policy for Overseas Investment

China Yuan Wouldn’t Fall ‘Too Far’ If Floated, Yu Writes: Daily

PBOC Academic Warns of ‘Abnormal’ Surge in China Jan. New Loans

Shanghai to Start Yuan Cross-Border Payment Centre: News

EUR:

Varoufakis Says Greek Debt Repayments Will Be Difficult: Bild

NZD:

N.Z. Export Commodity Prices Fall for a Third Month: ANZ Bank
Today’s data

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

JPY         Monetary Base Y/Y Jan A 28.90% | C 28.30% | P 29.50%

AUD       RBA Rate Decision A 2.00% | C 2.00% | P 2.00%

08:15     CHF        Retail Sales (Real) Y/Y Dec C -1.30% | P -2.10%

08:55     EUR        German Unemployment Change Jan C -10K | P -14K

08:55     EUR        German Unemployment Rate Jan C 6.30% | P 6.30%

09:30     GBP       Construction PMI Jan C 57.6 | P 57.8

10:00     EUR        Eurozone PPI M/M Dec C -0.40% | P -0.20%

10:00     EUR        Eurozone PPI Y/Y Dec P -3.20%

10:00     EUR        Eurozone Unemployment Rate Dec C 10.50% | P 10.50%

Harry Hindsight              

• EUR: A reasonable quiet day overall, with early trading seeing the Euro settling back from the opening 1.0830 levels to the 1.0815 level, Tokyo early traders saw the market recovering through the pre-Tokyo to the opening levels and the steady climb continued through the Asian session to test into the 1.0850 levels, the move through to the London session was unexciting and the market held the 1.0850 level through into the London opening, even then the market trade in a wider band around that levels until after all the PMI data was in the market place, with mixed results. As the market moved towards the NYK session the steady climb renewed and the market started to gradually move higher again and pushed into the 1.0880 levels into the NYK session, only a short pause at the level then the release of the ISM numbers saw the Euro jump to push through the 1.0910 areas as the numbers disappointed however, the push through left the market vulnerable to a small selloff and the market dipped back through the 1.0880 levels before trading sideways through the balance of the session gradually easing into a close around the 1.0890 levels.
• GBP: Cable moved through the session quietly with the market opening around the 1.4250 levels and gradually moving through to the London opening struggling around the 1.4260 levels for most of the Asian hours and into London, London bought Cable steadily and the 1.4300 level was pushed through before falling back on the back of the Money supply numbers and into the opening levels, the climb back higher was a slow affair and only once the 1.4320 level broke did the topside open, with EURGBP cross selling helping the movement of the Cable and the market pushed to the 1.4400 with only minor trouble, the level itself buckled quickly and weak stops were triggered on the break and Cable tested above the 1.4440 levels before holding the level to the close.
• JPY: A quick burst from the opening 121.10 levels saw the market move towards the 121.30 levels and then a steady rise to peak just below the 121.50 areas before the Sydney buyers ran out of steam and early Japan sold the market back to the opening levels, the rest of the session through London saw the market trading in a reasonably tight range with the market unable to push through the 121.00 levels and trapped by the offers into the 121.50 area, and so it remained until the weak ISM number in the US was released and the USD dropped quickly testing through to the 120.70 areas before finding sufficient support and a steady rise back above the 121.00 levels with the market closing just below the level in a weak trading session into the close.
• AUD: Early strength in USDJPY pushed the Oz to its lows having opened around the 0.7080 levels the market slipped back into the Tokyo session to trade into the mid 0.7040’s with the lows made after another less inspiring number in CNY with the headline PMI number slipping 0.2, however, while the USDJPY eventually started to struggle to make any further headway the Oz started to slowly rise through to the grey hours testing back to the opening levels, the move through the London session saw very little movement and ranged in the 0.7065-80 areas until the close in London and then the market slowly traded higher pushing through the 0.7090 and into the late part of the session eventually breaking the 71 cent levels again and peaking around the 0.7120 levels before closing just short of the level.

Yesterday’s premiership results

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 | P 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

CHF        SVME PMI Jan A 50 | C 51.2 | P 52.1

EUR        Italy Manufacturing PMI Jan A 53.2 | C 54.9 | P 55.6

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

EUR        Germany Manufacturing PMI Jan (F) A 52.3 | C 52.1 | P 52.1

EUR        Eurozone Manufacturing PMI Jan (F) A 52.3 | C 52.3 | P 52.3

GBP       Mortgage Approvals Dec A 71K | C 70K | P 70.4k

GBP       M4 Money Supply M/M Dec A -0.20% | C 0.30% | P 0.40%

GBP       PMI Manufacturing Jan A 52.9 | C 51.8 | P 51.9

USD       Personal Income Dec A 0.30% | C 0.20% | P 0.30%

USD       Personal Spending Dec A 0.00% | C 0.10% | P 0.30% | R 0.50%

USD       PCE Deflator M/M Dec A -0.10% | C 0.00% | P 0.00% | R 0.10%

USD       PCE Deflator Y/Y Dec A 0.60% | C 0.60% | P 0.40%

USD       PCE Core M/M Dec A 0.00% | C 0.10% | P 0.10% | R 0.20%

USD       PCE Core Y/Y Dec A 1.40% | C 1.40% | P 1.30% | R 1.40%

USD       ISM Manufacturing Jan A 48.2 | C 48.6 | P 48.2

USD       ISM Prices Paid Jan A 33.5 | C 35.5 | P 33.5

USD       Construction Spending M/M Dec A 0.10% | C 0.60% | P -0.40%

Good Luck,

Andy

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