Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 117.884 | EURUSD 1.11035 | AUDUSD 0.71683 | NZDUSD 0.66617 | USDCAD 1.37797 | USDCHF 1.00428 | GBPUSD 1.46002 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               118.24 | 117.65

EUR/USD             1.11165 | 1.1075

EUR/JPY               131.095 | 130.635

AUD/USD            0.7191 | 0.7153

NZD/USD             0.6685 | 0.6642

USD/CAD             1.3797 | 1.3720

EUR/CHF              1.1153 | 1.1141

USD/CHF             1.00615 | 1.0037

GBP/USD             1.4604 | 1.4572

EUR/GBP             0.7614 | 0.7594

 

For Today

• EUR: A quiet session overall as the market takes a breather from yesterday’s breakout in the majors, with the USD seeing a large depreciation over a broad spectrum of currencies, dipping from the opening 1.1100 levels the market dipped into the 1.1080 levels and moved to the Tokyo session rising from those lows to push back towards the 1.1115 areas before finding too much interest to penetrate the 1.1120 areas however, the push was weak and the resultant fall back was again limited by the 1.1080 level with a quiet market from that point onwards through to the grey hours, Topside offers through the 1.1140 levels are likely to be weak and strengthening into that area with congestion then through to above the 1.1200 levels and likely to require a strong move similar to yesterday, downside bids light through to the 1.1000 level with possible bids building into that area with plenty of congestion likely through the level and the USD now not looking so polished as it was however, given that world economics is biting into the US numbers is possibly not likely to be any different for any economy and the doom and gloom merchants are already talking of an impending downturn to match that of 2008 however, the numbers as yet do not support the talk and as I said it effects every economy. Push through the 1.0970 level will likely open the downside 1.0900 areas in a limited action turning the current longs.
• GBP: To Brexit, or not to Brexit that is the question, with the media totally unimpressed with the limited results from negotiations the status quo for politicians remains in place if somewhat strained until the final meetings are out of the way and the final result is released, whether this will be in time for the planned June election on the subject remains to be seen however, given the current result I doubt that will be the case, in the meantime the bearish Brexit chatter has been reversed for the time being with the market breaking the downtrend and opening further upside potential however, today was not the day for any sudden moves and the market has seen limited movement from the opening with the move into the Tokyo session producing a small push above the 1.4600 levels before drifting through the session to test into the 1.4570 areas. Topside offers through the 1.4600 levels are likely to be light building into the 1.4640 levels seeing stronger offers for the moment and a push through the level opening another decent move available to the 1.4800 in the medium term, downside bids light and open to the 1.4400 levels with possibly strong bids into the level however, before the market reaches that point a push through the 1.4550 level is likely to open up that weakness and with nothing really expected or than a dovish comment on a weaker economic world data impacting the UK economy leaves that downside vulnerable however, the USD has plenty of numbers once the BoE announcement is out of the way and initial jobless and factory orders of import.
• JPY: USDJPY opened below the 118.00 levels and gradually moved to the 118.20 into the Tokyo opening before running into light offerings and the Tokyo opening, with late comers selling into the limited buying and trading through to the 117.65 areas before returning to trade around the 118.00 levels in a long drawn out session and limited action. Topside offers likely to be weak through the 118.20-40 areas with possible weak stops and a breakthrough of the level and opening the 119.00 areas for a quick test however, ECB economic bulletin will possibly see further talk of easing to counterbalance yesterday’s Dudley comments and so on, BoE is not likely to through in to many surprises and then we come to the US data numbers with initial claims numbers and Labour costs the ones to watch early on and Factory orders expected to show strong declines, Downside bids into the 117.20 levels are possibly fairly strong and with strong congestion through the level and into the 116.50-20 lows of the year likely to bring out buyers. Several are pointing out the neckline of a a head and shoulders pattern for the technical minded however, I struggle to see it clearly but worth watching the 116.60 areas for the pattern to be completed and the market opening the downside.
• AUD: Early light sellers of AUDJPY saw the market dip into the 0.7150 areas before recovering into the Tokyo session with the Oz again testing towards the 72 cent levels and then trading in the 0.7165-85 range through to the grey hours. Topside offers into the 72 cent level and given the movement around the NYK option cut yesterday suggests option interest around the 72 cent levels and if the barrier breaks with the possibility of offers into the 0.7250 areas and leaving the 73 cent level vulnerable for a test through if only a limited move. Downside bids are likely to be light through to the 0.7120 areas with no really strong levels likely until the market moves back to the 70 cent areas.

Overnight News

NZD:

McDermott: RBNZ Forward Guidance Aids Effective Monetary Policy

RBNZ’s McDermott Says Kiwi Needs to Be Sustainably Lower

JPY:

BOJ’s Kuroda: Doesn’t See Negative Rate on Retail Bank Deposits

Japanese Sold Net 85.4 Billion Yen Overseas Debt Last Week

BOJ Negative Interest Rate Scope Seen Capped at 30t Yen: Nikkei

TPP:

Trans Pacific Partnership Trade Agreement Signed in New Zealand

CNY:

China Should Eliminate Zombie Firms through Mergers: China Daily

KRW:

North Korea Rocket Launcher Sighted Moving Near East Coast: NHK

1. Korea Says It will Shoot Down Any Stray N. Korean Rocket

CAD:

BoC’s Murchison Says Canada ‘Must Have a Floating Currency’
Today’s data

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

AUD       NAB Business Confidence A 4 | P 0 | R 1

06:45     CHF        SECO Consumer Confidence Jan C -15 | P -18

09:00     EUR        ECB Economic Bulletin

09:10     EUR        Eurozone Retail PMI Jan P 49

12:00     GBP       BoE Rate Decision C 0.50% | P 0.50%

12:00     GBP       BoE Asset Purchase Target C 375B | P 375B

12:00     GBP       MPC Official Bank Rate Votes C 1–0-8 | P 1–0-8

12:00     GBP       MPC Asset Purchase Facility Votes C 0–0—9 | P 0–0–9

12:00     GBP       BoE Inflation Report

12:30     USD       Challenger Job Cuts Y/Y Jan P -27.60%

13:30     USD       Non-Farm Productivity Q4 (P) C -1.40% | P 2.20%

13:30     USD       Unit Labour Costs Q4 (P) C 3.90% | P 1.80%

13:30     USD       Initial Jobless Claims (JAN 30) C 286K | P 278K

15:00     USD       Factory Orders Dec C -2.00% | P -0.20%

Harry Hindsight              

• EUR: Euro’s traded reasonably quietly through the Asian and London sessions with the market trading around the 1.0920 areas and unable to push through the topside offers into the 1.0940 or below the bids into the 1.0900 areas, European numbers failed to impress however, comments from William Dudley the head of the NYK Federal reserve stating that “financial conditions are considerably tighter than they were at the time of the December meeting. Things have happened in financial markets and in the flow of economic data that may be in the process of altering the outlook for growth and the risk to the outlook for growth going forward” the move saw initially steady moving through the 1.0940 levels triggering weak stops to the 1.0960 levels and stalling for a short period before again starting a quick rise higher through the 1.1000 levels and further stops, the market again paused in the 1.1050 areas before again pushing ahead to test through the 1.1080 levels and the market had truly got the bit between its teeth and pushed into the 1.1140 levels deep into the NYK session before running out of steam, the market dipped a little before holding around the 1.1110 levels to the close.
• GBP: While the market talks about Brexit and the draft agreements between the UK and Europe leaving a lot to be desired the market spent much of the Asian trading just above the 1.4400 levels with only a minor venture through the level into the 1.4390’s the move into the grey hours saw the Cable slowly rise towards the 1.4440 areas before early London came in as light sellers and testing the 1.4380 areas before the official opening, as it was that was the low and Cable then started a tight channelled rise through the day, moving easily through the 1.4500 level and pausing only on the move through 1.4600 in a strong steady move, the market continued through the 1.4600 eventually with light stops triggering for a move to above the 1.4650 however, with time running out and an exhausted market from the buy side to some extent the Cable drifted to a close around those 1.4600 levels.
• JPY: A little bit more movement in the USDJPY than the other majors with the market drifting from the opening 120.00 areas to test into the 119.40 level before moving into the grey hours and a quiet reversal, the move back to the 120.00 level, the move into the London session saw a slow drift after the European numbers and settled back to the 119.40 levels again and broadly held the 119.20-40 levels into the NYK session, and then the market started to drop quickly as the Dudley comments started to impact the fresh market and the market quickly moved through to trigger weak stops through the 118.80 areas and push through the 117.80 a little slower with the market initially holding the level generally before again pushing through from the end of London to test the market below 117.20 areas, the failure to continue saw the market bounce and the USDJPY rising back to the 118.00 levels with a slower end to the session.
• AUD: The moved into the new session testing towards the 70 cent levels and with the release of trade balance numbers the market tested to within a hare’s whisker of that level, the market through the Asian session like the majors was unable to push to far from the 0.7020 levels and traded into the grey hours around that level, early buying then started to move into the market and a tight channelled rise to the 71 cent level was only briefly interrupted around the 0.7080 levels before holding into the early part of NYK as the offers absorbed the buying as the London market came to its close further buying moved into the market and this time the break through pushed the market through to above 0.7120 and into the light offers, NYK option cut seemed to attract attention with suspicions of 72c calls becoming a target and although the market looks to have trade very actively above the 0.7180 areas the market was never quiet able to push to the 72 cent level and eventually drifted a little below 0.7180 areas to the close.

Yesterday’s premiership results

NZD       Unemployment Rate A 5.30% | C 6.10% | P 6.00%

NZD       Employment Change Q/Q A 0.90% | C 0.80% | P -0.40% | R -0.50%

GBP       BRC Shop Price Index Y/Y Jan A -1.80% | P -2.00%

AUD       Trade Balance (AUD) Dec A -3.54B | C -2.45B | P -2.91B | R -2.73B

AUD       Building Approvals M/M Dec A 9.20% | C 4.60% | P -12.70% | R -12.40%

CNY        Caixin PMI Services Jan A 52.4 | C 50.5 | P 50.2

JPY         Consumer Confidence Jan A 42.5 | C 43.8 | P 42.7

EUR        Italy Services PMI Jan A 53.6 | C 54.2 | P 55.3

EUR        France Services PMI Jan (F) A 50.3 | C 50.6 | P 50.6

EUR        Germany Services PMI Jan (F) A 55 | C 55.4 | P 55.4

EUR        Eurozone Services PMI Jan (F) A 53.6 | C 53.6 | P 53.6

GBP       Services PMI Jan A 55.6 | C 55.4 | P 55.5

EUR        Eurozone Retail Sales M/M Dec A 0.30% | C 0.40% | P -0.30%

USD       ADP Employment Change Jan A 205K | C 191K | P 257K | R 267K

USD       ISM Non-Manufacturing Composite Jan A 53.5 | C 55.2 | P 55.3

USD       Crude Oil Inventories A 7.8M | C 3.7M | P 8.4M

Good Luck,

Andy

Any opinions, news, research, analyses, prices or other information contained on this Blog, whether by LMAX, its employees, partners or contributors, does not constitute investment advice nor has it been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the material contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. Whilst information provided on this Blog may help with your investment research you must consider carefully whether you should make (or refrain from making) investment or other decisions based on what you see without doing further research on the investments you are interested in. Participating in this Blog cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you. LMAX has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

LMAX will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the material produced in this Blog was obtained from sources deemed to be reliable, LMAX does not provide any guarantees about the reliability of such sources.

Consequently any person acting on it does so entirely at his or her own risk.

If you currently hold an account with LMAX for the purposes of trading FX and CFD’s, you are encouraged to use a different Username and Password to access the Blog or any other online systems. The Blog is a place to learn, discuss and share information and ideas with Blog followers. It is not a place to slander, use unacceptable language or to promote LMAX or any other FX, Spread Betting and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.