Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 113.225 113.10-35 | EURUSD 1.12562 1.1245-65 | AUDUSD 0.71061 0.7090-0.7110 | NZDUSD 0.66277 0.6620-40 | USDCAD 1.38487 1.3845-60 | USDCHF 0.97705 0.9750-75 | GBPUSD 1.45081 1.4490-1.4505 |

 

LMAX Ranges 6am London time

Highs    Lows

EURUSD               1.12552 | 1.12123

USDJPY                 114.011 | 113.278

GBPUSD               1.45329 | 1.44823

AUDUSD              0.7172 | 0.71035

USDCHF               0.98054 | 0.97783

USDCAD               1.39029 | 1.38024

NZDUSD               0.66639 | 0.66141

EURGBP               0.77569 | 0.7720

EURJPY                 127.841 | 127.27

EURCHF                1.09997 | 1.09759

For today

• EUR: Given that there are holidays in the US and Russia the market has been a little bit more active than you’d expect with movement in the JPY driving the market, with the Euro opening around the 1.1250 areas and trading lower from the opening to the 1.1220 areas before moving into the Tokyo session however, having reached the level the market was unable to move off the level and tested only slightly lower before holding the 1.1220 into the grey hours, Topside offers light through the 1.1280 areas and likely to continue to the 1.1320 areas before weak stops possibly appear on a push towards the 1.1340 levels however, stronger offers are likely from that point on with the strong offers continuing through to the 1.1360 areas however, the US bank holiday is likely to reduce liquidity as the market moves towards what would be the NYK session, downside bids light into the 1.1200 areas and those bids are likely to disappear on a push through the 1.1140 areas and leaving the 1.1100 vulnerable, with little data the day is likely to focus on the Eurozone Trade balance early in London and that will possibly define the day with a push through 1.1100 opening a test lower through the sentimental 1.1000.
• GBP: Cable opened just above the 1.4500 levels and slipped in early trading through the level however, as the Euro slipped lower so did the EURGBP cross and Cable gradually moved to test to the 1.4520 levels into the Tokyo opening and although there was light selling on the opening pushed eventually through those levels a little. Topside offers light through the 1.4550 and a push through the level will see possibly stronger offers on the approach to the 1.4600 levels and continuing through the level with a push through the 1.4650 areas possibly the immediate key levels there. Downside bids light through the 1.4450 areas and into 1.4400, a push to the 1.4350 levels is likely to open the downside beyond and into the range from the end of last month.
• JPY: The USDJPY opened around the 113.30 areas and edged to the 113.70 in early trading with limited weekend news with early numbers out of Japan saw a weaker GDP number and all though the selling of USDJPY into the Tokyo session reappeared and the market tested back to the opening levels, once the selling was completed the market continued its rise again pushing gradually to the 114.00 levels and struggling into the grey hours against the level. A push through the light offers from 114.00-20 opens the topside a little with better offers and congestion through the 114.50 areas continuing into the 115.00 areas, a push through here has the possibility of opening the topside for a larger move and a return towards the 117.00 areas. Downside bids light down into the 113.00 areas with the possibility of weak stops below the 113.50 areas before those limited bids, congestion through the 112.80 areas and possibly growing stronger towards the 112.20.
• AUD: With the Japanese GDP weaker than expected the Carry trade was the trade of choice with the AUDJPY buying starting almost from the opening and the Oz steadily rising through the session from the 0.7105 areas to push through 0.7130 and into light stops and a move to the 0.7150 during mid-session, the move towards the grey hours saw the market continuing to test higher however, it faced more resistance this time and struggled in light trading into the grey hours. Topside offers increase into the 0.7200 areas with those offers likely from the 0.7180 areas onwards, even through 72 cent the market is likely to see continuing offers however, a push through the 0.7240 areas will likely see the 73 cent opening, Downside bids light through 71 cent and increasing on a push to the 0.7060 levels however, as with other moves lower the strong bids remain below the 0.6980 areas and particular beyond 0.6950.

Overnight News

GBP/EUR/USD:

Brexit puts focus of European security as US urges unity

Brexit pollsters straddle the fence after miserable election forecasts

British public expect Cameron to get poor EU deal – poll

JPY:

JPY weakens from its highs on calmer sentiment, eyes on China

Japanese economy shrinks more than expected, and adds to fears of global slowdown

CNY:

China’s exports drop in January as challenges flow into New Year

China exports CNY YoY fall -6.60% from a positive 2.30% in Dec

China Imports CNY YoY fall -14.40% against a fall of 4.00% in Dec

Today’s data

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

CNY        Trade Balance (USD) Jan A $63.3B | C $60.90b | P $60.09b

JPY         GDP Q/Q Q4 (P) A -0.40% | C -0.30% | P 0.30%

JPY         GDP Deflator Y/Y Q4 (P) A 1.50% | C 1.60% | P 1.80%

GBP       Rightmove House Prices M/M Feb A 2.90% | P 0.50%

JPY         Industrial Production M/M Dec (F) A -1.70% | C -1.30% | P -1.40%

JPY         Tertiary Industry Index M/M Dec A -0.60% | C -0.10% | P -0.80%

10:00     EUR        Eurozone Trade Balance (EUR) Dec C 22.4B | P 22.7B

Weekend News

EUR:

Spaniards see new elections as inevitable poll

French PM rejects permanent quota system for refugees

Coalition Government support fell by 5% – poll

ECB Board Member Peter Praet, Extended market volatility could delay rise in inflation

EUR/GBP:

EU will lurch in wrong direction if UK leaves : UK Foreign secretary Hammond

BoE and ECB hold talks over bond market shutdown after investors are spooked by share price rout

NZD:

Christchurch rocked by 5.7 Magnitude quake

RUB:

Russia warns of new Cold War as east Ukraine violence surges

AUD:

Australian PM Turnbull in second revamp of ministry ahead of elections

CNY:

Chinese start to lose confidence in their currency – NYT

Harry Hindsight

• EUR: Early weakness in the USD saw the Euro make the highs into the opening of Tokyo with the market pushing briefly above the 1.1330 levels before dipping back through the opening 1.1325 areas and continuing through the session into the grey hours to test below 1.1300, light buying into the grey hours saw the markets again reach the opening levels before the official London opening with little change in the German numbers but showing weakness in Italy and the selling saw the market quickly to the 1.1270, a slight gain in the build up to the Eurozone release and although the numbers disappointed it was limited in reaction with the market only starting to slide as the market moved towards the NYK session tipping through the 1.1270 lows a little, the move into the NYK session saw better retail sales numbers and the Euro again dropped quickly this time to the 1.1230 levels and then struggled through the session with a weaker University of Michigan number hitting the market weaker and allowing the Euro to briefly rally however the push towards the 1.1200 area was the markets target into the London close and only once the level was tested and London gone for the day did the Euro rally a little and ground a slow rise to the 1.1255 area for the close.
• GBP: The move through the Asian session was quiet with Cable drifting from the opening 1.4475 areas to test into the grey hours around the 1.4460 and apart from brief early attempts to 1.4480 that defined the range for Asia, the move into the grey hours saw strong Cable buying with the market testing the 1.4530 levels before dipping back to the opening levels into the London opening, EURGBP selling from the 0.7820 levels saw the market drop back into the London session trading to the 0.7750 level once the numbers were released, and while the construction numbers failed to live up to expectations they were suitably better than the previous month and boosted the Cable to trade its highs to the 1.4570 level before the market started to reverse into the NYK session as the USD started to strengthen especially after the Retail sales numbers with the market testing through the 1.4450 levels, the close in London helped the market slowly to recover the 1.4500 levels into the close.
• JPY: Opening around the 112.40 levels there was a brief attempt higher in the Sydney session before the opening in Tokyo, the opening in Tokyo was as the previous day a sudden move lower and the market traded quickly below the 112.00 before bouncing back to the 112.40, the move through Asia saw the first half held for the most part in that range before finally pushing higher on the talk of FinMin and BoJ officials being seen entering the offices of PM Abe, of course as long as the meeting continued the market held above the 112.60 levels however as the market approached the grey hours the meeting over and very little to add to the current situation the market in USDJPY slowly but surely moved back to the lows, the push through the level saw the market spike to the 111.80 areas and while the market attempted to get amongst the stops the quick push to the 111.60 level was of little effect and the market moved quickly back to the 112.20 and a break through the 112.40 levels saw weak stops triggered into the London opening and traded quickly to the 112.80 areas, the market steadied down through to the NYK opening and then a steady rise through the session to test through the 113.20 levels and weak stops saw the market test to the 113.50 areas before slipping a little lower to the close.
• AUD: Another quiet day for the Oz with the range through the Asian session pushing from the opening 71 cent levels to repeatedly test above the 0.7120 levels before pushing back the 71 cent levels, this initially continued into the London session and only as the market moved into the NYK session did the downside open a little with the market testing through the 0.7070 levels a couple of times before steadily climbing back to the 71 cent levels in quiet trading to the close.

Friday’s premiership results

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%

EUR        German CPI M/M Jan (F) A -0.80% | C -0.80% | P -0.80%

EUR        German CPI Y/Y Jan (F) A 0.50% | C 0.50% | P 0.50%

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

EUR        Italian GDP Q/Q Q4 (P) A 0.10% | C 0.30% | P 0.20%

GBP       Construction Output M/M Dec A 1.50% | C 2.10% | P -0.50% | R -1.10%

EUR        Eurozone Industrial Production M/M Dec A -1.00% | C 0.30% | P -0.70% | R -0.50%

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

USD       Import Price Index M/M Jan A -1.10% | C -1.20% | P -1.20%

USD       Advance Retail Sales Jan A 0.20% | C 0.10% | P -0.10% | R 0.20%

USD       Retail Sales Less Autos Jan A 0.10% | C 0.10% | P -0.10% | R 0.10%

USD       Business Inventories Dec A 0.10% | C 0.10% | P -0.20%

USD       U. of Michigan Confidence Feb (P) A 90.7 | C 93 | P 92

Stay lucky

Andy

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