Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 112.424 | EURUSD 1.13232 | AUDUSD 0.71094 | NZDUSD 0.66828 | USDCAD 1.3936 | USDCHF 0.97246 | GBPUSD 1.44764 |

LMAX Highs and Lows 6am

                                High | Low

EURUSD               1.13345 | 1.12925

USDJPY                 113.011 | 111.899

GBPUSD               1.45003 | 1.44602

AUDUSD              0.71289 | 0.70929

USDCHF               0.97478 | 0.97171

USDCAD               1.39387 | 1.38892

NZDUSD               0.67402 | 0.66646

EURGBP               0.78268 | 0.78059

EURJPY                 127.641 | 126.791

EURCHF                1.10153 | 1.10021

 

For Today

• EUR: Euro’s opened around the 1.1325 area and held into the Tokyo session around the 1.1315 areas before a quick move to above 1.1330 before drifting back with EURJPY selling moving into the market, the move through the balance of the session was reasonably quiet with the market steadily drifting with the back ground USDJPY movements having little effect on the Euro, the market managed to drift to the low 1.1290’s into the grey hours. Topside offers into the 1.1380 levels and continuing through to the 1.1410 areas however, a push through the level will likely see the market rising into the 1.1440-50 areas with light offers appearing and then opening the market to a test into the 1.1480-1.1500 levels which again are not likely to be particularly strong and the market is then open to the 1.1600 levels. Downside bids light into the 1.1260-40 areas then slightly better bids likely into the 1.1220-00 areas and a possibility of increasing weak stops through the 1.1180 areas, with possibly on light bids down through the handle. Several important numbers in Europe before the US retail sales numbers.
• GBP: A very quiet session for the Cable with the market moving slowly down from the 1.4480 levels and trading steadily lower to the 1.4460’s before holding around those lows into the grey hours. Downside bids into the 1.4400-1.4390 levels and likely weak stops through the 1.4380 areas and the market quickly testing the 1.4350 levels, with only light congestion in the areas with the 1.4300 possibly stronger bidding area. Topside offers through the 1.4550 areas are likely to be weak and a push through is not likely to see much difference into the 1.4600 areas however, once the market pushes through that level the offers are likely to start increasing beyond 1.4650 and into the 1.4700 areas.
• JPY: Opening on the 112.40 areas the market edged higher to above the 1.1260 levels before drifting to the Tokyo opening, with talk of retail traders under pressure from increasing margin calls the opening saw a quick drop from the opening with the USDJPY trading to the 112.10 areas before stabbing quickly through the 112.00 levels to touch 111.90, with BoJ’s Kuroda seen entering the PM Abe’s office the market became a little more nervous and the market moved back steadily to the 112.50 levels and then ranged between the 112.10-50 areas, before a sudden move higher, as with other moves over the past couple of days there was little substantial news about the moves with speculation within the market for the most part however, the rally saw the market touch briefly above the 113.00 levels before drifting over the next few hours to below 112.50 again holding around the 112.40 levels to the grey hours. Topside offers light through the 113.00 areas and as with yesterday the topside is likely to be a little nervous, with call levels in the market rather than actual offers and so what offers there are could be immaterial, through to the 114.00 areas where the market is possibly a little stronger however, this is pure speculation and as we’ve seen sudden movements are a distinct possibility and for the moment equity markets are likely to govern the safe haven flows. Downside bids into the 111.00 areas as the market saw yesterday, these are possibly weak and a move through should see stronger bids moving into the 110.20 areas and through that level to 109.80, a push through the 109.70 levels will likely see stops appearing and the market opening to the 108. Handle.
• AUD: As with yesterday the moves in Oz have been muted with the market more focused on the JPY, with the market opening around the 0.7110 areas and trading steadily to above the 0.7120 areas however, although the market approached the level three times it was unable to push beyond the 0.7130 levels and always trading back to the 71 cent levels moving only briefly through, Topside offers light into the 0.7140-60 areas and then stronger offers building into the 0.7180-0.7200 area with those offers likely to continue through to the 0.7250 levels before the topside 73 cent level becomes vulnerable, downside bids light through to the 70 cent level and then increasing in size as the market moves down towards the 0.6950-0.6900 areas.

Overnight News

JPY:

Japan FinMin Aso: watching markets closely

Aso: Japan’s Economy fundamentals very strong

Aso: Desirable for currencies to move in stable manner reflecting economic fundamentals

Aso: Sudden FX moves are undesirable

Aso: Recent Yen moves have been very rough

Aso: Will take appropriate measures on Forex if needed

Aso: Want to consider policy coordination looking at markets at G20 meeting in Shanghai

Aso: will continue to closely monitor Forex moves

Aso: No comment on whether Japan Intervened in Forex Markets (NYK Session move)

Aso: G7 has agreed that sudden Forex moves are undesirable

BoJ Kuroda: Desirable for Forex to move in way reflecting fundamentals

Japan’s Ishara: Abrupt movements in FX markets undesirable

BoJ may call emergency meeting on further easing Abe advisor

AUD:

RBA’s Stevens: Unlikely to be raising rates any time soon

Australia investment lending for homes dipped from previous 0.7% to 0.6% in December

EUR:

Eurozone’s Dijsselbloem plays down bank crisis fears

S&P cuts Deutsche Bank’s Tier 1 securities rating to B+ from BB-

EU refines UK offer

USD:

Yellen states no negative interest rates in store for US

IMF:

Grexit fears loom without solid Greek reforms IMF

KRW/USD:

To discuss advanced missile defence systems as early as next week

 
Today’s data

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

AUD       Home Loans Dec A 2.60% | C 2.90% | P 1.80% | R 1.90%

07:00     EUR        German CPI M/M Jan (F) C -0.80% | P -0.80%

07:00     EUR        German CPI Y/Y Jan (F) C 0.50% | P 0.50%

07:00     EUR        German GDP Q/Q Q4 (P) C 0.30% | P 0.30%

09:00     EUR        Italian GDP Q/Q Q4 (P) C 0.30% | P 0.20%

09:30     GBP       Construction Output M/M Dec C 2.10% | P -0.50%

10:00     EUR        Eurozone Industrial Production M/M Dec C 0.30% | P -0.70%

10:00     EUR        Eurozone GDP Q/Q Q4 (A) C 0.30% | P 0.30%

13:30     USD       Import Price Index M/M Jan C -1.20% | P -1.20%

13:30     USD       Advance Retail Sales Jan C 0.10% | P -0.10%

13:30     USD       Retail Sales Less Autos Jan C 0.10% | P -0.10%

15:00     USD       Business Inventories Dec C 0.10% | P -0.20%

15:00     USD       U. of Michigan Confidence Feb (P) C 93 | P 92

Harry Hindsight              

• EUR: A quiet start to the day was quickly wiped out as the Tokyo session started and the USDJPY moved lower again, The Euro having drifted from the opening to hold the 1.1280 level moved to the 1.1320 area before offers held and the market then drifted through the session back through the opening 1.1295 areas and then quietly hold those levels through to the grey hours, East European buying saw the market again test above the 1.1300 levels however, the early buying wilted and the market moved into the London session back on the 1.12808 area, London opening and the market moved quickly towards the 1.1360 levels and then moved through to the NYK session holding above the 1.1320 levels for the most part, for the most part the markets were again dominated by the equity markets with early loses in London defining most of the day. The opening in NYK saw the market become increasingly choppy with the Euro making successive highs through the session and ultimately testing towards the 1.1380 areas into the London close and then the market drifted a little from that point with the market moving to the close holding around the 1.1320 areas.
• GBP: Brexit, EU negotiation’s, economic woes across the globe all end’s up not being on the side of Cable for the day, usually one of the safe haven refuges for the moment it seems to be persona non grata, the market drifted from the opening, from the 1.4525 levels the market initially tested higher and pushed above the 1.4560 levels on strong USDJPY selling into the Tokyo session however, the buying remained limited and once the high was made it drifted through to the grey hours, the early push must have excited the day traders as early buying in the grey hours saw the market pushed through the 1.4540 levels however, those early buyers soon found themselves the wrong way with recent data, news that EU discussions on negotiations seem to be going the wrong way saw the market dropping quickly as the FTSE fell out of bed and dropped 120 pips from the official opening, Cable followed and only really stopped once it ran into the 1.4400 levels, the bounce was respectable to the 1.4460 level however, the move was limited and the move towards the NYK session saw the 1.4400 level tested again and pushed into the 1.4380 levels, so while the equity market remained choppy they maintained there levels generally and the Cable made some inroads on the losses edging steadily to the 1.4480 levels late into the London session and then eventually holding to the close in the area, EURGBP rose as the equity markets had less effect on the Euro than the GBP with the market quickly moving from the 0.7760 levels to the 0.7870 areas in early trading, with the 0.7900 so close it was only a matter of time before the market tested the level coming to a hare’s whisker of touching it before dropping back again and leaving the market to drift to the close.
• JPY: While it was a bank holiday in Japan it didn’t stop exporters moving in to sell USDJPY as the safe haven flows continue to combine with negative interest rates for new deposits, with the market opening around the 113.30 areas and edging higher through the Sydney session to above 113.50 and then dropping quickly through to the 112.50 levels in early Tokyo, the market then attempted a rise to the 113.00 level and flirted with the area for a couple of hours before drifting back towards the 112.50 levels into the start of the grey hours, the move into London saw the quick drop in the equity markets and the USDJPY was traded just as quickly through to the 111.00 level, with the market touching that level twice before giving up the idea and moving back above the 111.50 levels, after the movements over the past few days the topside was possibly a long way from being settled so into the opening in NYK the market saw a spike from the 111.50 areas pushing through the 113.00 in less than a minute, with no official word of the BoJ the market quickly settled back to the 112.20 areas and quietened down, for the rest of the session and given the moves over the previous 12hrs the range of a big figure through to the close was not particularly exceptional, trading above the 112.50 after the spoof and then drifting back to trade to the 111.50 levels into the London close, from there though it was a steady rise back through to the 112.50 areas for the close.
• AUD: Opening around the 71 cent levels the Oz was buffeted by the JPY for the most part with the drop in USDJPY seeing the Oz quickly rise to the 0.7150 levels before slowly giving way to a steady drift lower and a push towards the 0.7080 areas before finding support strong enough to hold the market and a slow rise back to the 71 cent levels into the grey hours, the crash in the equity markets saw the Oz dropping quickly with the market pushing quickly through the 70 cent levels and spiking to the 0.6980 areas before finding some buyers and a steady rise back to 0.7040 for the move into the NYK session, NYK saw USD sellers impacting the market and the Oz was again rising back to the 71 cent levels and traded once there in a narrow 0.7080-0.7100 levels to the close.

Yesterday’s premiership results

NZD       Business NZ Manufacturing Index Jan A 57.9 | P 56.7 | R 57

AUD       Consumer Inflation Expectation Feb A 3.60% | P 3.60%

GBP       RICS House Price Balance Jan A 49% | C 52% | P 50% | R 49%

CHF        CPI M/M Jan A -0.40% | C -0.40% | P -0.40%

CHF        CPI Y/Y Jan A -1.30% | C -1.30% | P -1.30%

USD       Initial Jobless Claims (FEB 6) A 269K | C 287K | P 285K

CAD       New Housing Price Index M/M Dec A 0.10% | C 0.30% | P 0.20%

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.