Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 114.072 | EURUSD 1.1144 | AUDUSD 0.71115 | NZDUSD 0.65677 | USDCAD 1.38636 | USDCHF 0.98861 | GBPUSD 1.43059 |

LMAX Highs and Lows 6am

                                High | Low

EURUSD               1.11761 | 1.11193

USDJPY                 114.396 | 113.589

GBPUSD               1.43078 | 1.42882

AUDUSD              0.71206 | 0.70848

USDCHF               0.98983 | 0.98617

USDCAD               1.38795 | 1.38468

NZDUSD               0.65825 | 0.65531

EURGBP               0.78150 | 0.77798

EURJPY                 127.281 | 126.862

EURCHF                1.10174 | 1.10063

 

For Today

• EUR: Opening around the 1.1140 levels the market held the levels moving into to the Tokyo session before dropping quickly back as Tokyo opened and the USD buyers initially moved in however, like any quick move from the opening, once the initial selling had taken the market to the 1.1120 levels the market bounced back to the opening levels and then steadily traded higher through the course of the session to test briefly above the 1.1170 levels, Topside offers through the 1.1170 levels and likely through to the 1.1210-20 areas before weakness appears with weak stops on a move towards the 1.1250 areas and likely patchy resistance until the market closes on the 1.1300 levels where offers again strengthen. Downside bids through the 1.1120 areas and likely to continue through the 1.1100 levels with a push through the 1.1080 likely to see stops appearing and the market opening for a test through the 1.1000 and likely to be weak until the 1.0960 levels.
• GBP: Cable opened just above the 1.4300 levels and spent the day moving in a tight range around that level and for the most part hardly deviated from the 1.4300 level, Offers light into the 1.4400 and possibly seeing light stops on a push through the level from there the light offers reappear into the 1.4450 levels with better offers not really seen until the market approaches the 1.4500 levels and possibly continuing through to the 1.4550 areas. Downside bids in the current areas and really technically weak on a break through the level to the 1.4200 levels where possibly better bids start to appear a move through that level exposes the years lows however, likely to be strong bidding into the 1.4150 areas.
• JPY: Buying of USDJPY from the opening with the market opening around the 114.10 areas and pushing to the 114.20 areas before Tokyo entered the market, the market pushed eventually to the 114.40 levels in early trading however, the market then started to drift as comments from Rosengren deflected the market and talk of no more rises in interest rates by the Fed was sufficient to stymie the markets early gains and the USDJPY drifted steadily to the 113.60 areas before holding in the 113.70-80 areas to the grey hours. Topside offers are weak through the 114.00 levels however, once the market passes the 114.20 areas these offers become lighter until the 114.40-60 area and then 114.80-115.20 with strength of offers around the 114.80-115.00 levels in particular, Downside bids into the 113.20 areas are likely to slow the market however, the bids are not likely to be that strong and a move through the 112.80 level will likely see the market testing to the 112.00 levels quickly again with the likelihood of better bids making an appearance.
• AUD: The Oz for the most part was dominated by the USD with slightly weaker interest on the back of rising tensions in the S.China sea however, the range was tight and although the market settled down to trading below the 71 cent level it was contained in the 0.7090-0.7120 from the start and the market remains quiet with FOMC later in the day, Bids into the 0.7060-40 levels are likely to be weak having been traversed repeatedly with better bids likely to be towards the 0.7000 level and then increasing on a move through the level with particular attention towards the 0.6950 areas and very strong bids, topside offers likely through the 0.7170 area and continuing into the 72 cent level however, given the amount of chances we’ve had at the level weak stops are likely to follow quickly on a break through the 72 cent level however, there is a possibility of strong offers reappearing again into the 0.7240-60 areas before further limited weakness.

Overnight News

JPY:

BoJ may add to stimulus in March meeting Abe adviser says

KRW:

US flies F-22 fighters over S.Korea after North’s rocket launch

CNY:

China approves US$8.3B of fixed-asset investment projects in Jan

China ramps up rhetoric, plans new steps to boost economy

USD:

No US inflation progress, not Fed rate hikes Rosengren

Rosengren, says Fed may have to wait for economic data to improve

US Crude rebounds on investor optimism over oil producers deal

CNY/TWD:

Taiwan President Tsai says tensions higher in S.China sea, self-control needed

China sends missiles to S.China sea island

SAR/RUB:

Saudi Arabia and Russia agree oil output freeze, more action may follow

Today’s data

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

23:30     AUD       Westpac Leading Index M/M Jan A 0.00% | P -0.30%

23:50     JPY         Machine Orders M/M Dec A 4.20% | C 4.60% | P -14.40%

09:30     GBP       Jobless Claims Change Jan C -2.9K | P -4.3k

09:30     GBP       Claimant Count Rate Jan P 2.30%

09:30     GBP       Average Weekly Earnings 3M/Y Dec C 1.90% | P 2.00%

09:30     GBP       ILO Unemployment Rate 3M Dec C 5.00% | P 5.10%

10:00     CHF        ZEW (Expectations) Feb P -3

13:30     USD       Housing Starts Jan C 1.16M | P 1.15M

13:30     USD       Building Permits Jan C 1.21M | P 1.20M

13:30     USD       PPI M/M Jan C -0.20% | P -0.20%

13:30     USD       PPI Y/Y Jan P -1.00%

13:30     USD       PPI Core M/M Jan C 0.10% | P 0.10%

13:30     USD       PPI Core Y/Y Jan P 0.30%

13:30     CAD       International Securities Transactions (CAD) Dec P 2.58B

14:15     USD       Industrial Production Jan C 0.40% | P -0.40%

14:15     USD       Capacity Utilization Jan C 76.70% | P 76.50%

19:00     USD       FOMC Meeting Minutes

Harry Hindsight              

• EUR: Early gains from the Sydney opening 1.1155 were quickly wiped out into the Tokyo open with the Euro initially pushing towards the 1.1180 levels and then backing away from the level with a lack of momentum to push through those offers and returning to the 1.1155 into the grey hours, early London saw buying into the topside offers and the market made steady headway early on before the data started to hit with initially the UK inflationary data coming in mixed, quickly followed by the European ZEW numbers which while largely ignored saw the Euro trading back towards the opening levels again in slow trading, the opening in NYK saw the market testing the 1.1180 levels again however, a stronger USD with the back drop of weaker numbers saw the Euro quickly drop back, talk of an agreement at the OPEC meeting to freeze output was enough initially for the stronger USD however, that does rely on all parties sticking to the plan and the oversupply is frozen in place, so no real change to the situation, Euros then traded around the 1.1130-50 levels to the close with the market really centred on the 1.1145 level for much of the evening session with little volatility.
• GBP: Through the Asian session the Cable traded quietly with the market initially pushing from an opening below the 1.4440 level to test the 1.4460 area into the Tokyo session however, after a couple of hours of Tokyo the market settled back and started to drift and moved into the grey hours testing the 1.4400 areas, early London were buyers on expected better inflationary news and while the headline CPI number came in around the expected level and a little better than the previous month the rest of the data was still a little bearish, Cable had seen buyers moving in as the EURGBP longs decided to cut out before the numbers and EURGBP again pushed to the 0.7700 level before the releases, Cable dropped from the release having pushed above the 1.4500 and although the selling was light from the numbers the market increased as the rumours on the current UK/EU negotiations started to filter through and unsurprisingly there were different countries wanting different amendments to the changes tabled by the UK and this eventually weighed on the GBP in general with the EURGBP again heading to above the 0.7800 levels and Cable falling back to the 1.4300 levels and barely a pulse from that point on as it traded in a narrow band for a large part of the session through to the close.
• JPY: Opening around the 114.60 levels early Sydney sold into the Tokyo session moving the market to the 114.30 levels before Tokyo were quick buyers of both USDJPY and AUDJPY taking the market through to test above the 114.70 levels and setting the market for a later challenge of the 114.80-90 areas however, by the time the market moved to those levels, Lunch was upon the market and it slowly drifted from there into the London session, the London opening saw the market back around the opening levels and the push into the 114.30 areas had seen the weak longs positioning there stops below that level and the market quickly dipped through the 114.00 areas into early trading, this continued through into mid-session with the market again probing beyond the 113.70 level but never quiet getting any reaction, the market then tested to the 113.60 levels late into the London session with NYK less active than normal on the pair and the market traded quietly until rallying a little into the close just through the 114.00 areas.
• AUD: Early gains after the RBA minutes saw the Oz and AUDJPY Carry rising through early Tokyo opening around the 0.7140 levels and again testing through the 0.7170 levels, the market struggled with the level for several hours before drifting back to the 0.7150 levels and moving through to the early London buyers willing to test the topside for a period, even into the full session in London the market was unable to push through the offers and the market held the 0.7180 areas before drift again back to the 0.7150 level for the opening in NYK, USD buyers saw the Oz quickly losing its shine and the commodity currencies in general dropped quickly with the Oz pushing back to the 71 cent level and attempting to push lower through the level only to find bids willing to buy into the weakness and leaving the day some 20 pips lower on the day.

Yesterday’s premiership results

NZD       Retail Sales Ex Inflation Q/Q Q4 A 1.20% | C 1.40% | P 1.60% | R 1.50%

NZD       RBNZ 2-Year Inflation Expectation Q1 A 1.60% | P 1.90%

GBP       CPI M/M Jan A -0.80% | C -0.70% | P 0.10%

GBP       CPI Y/Y Jan A 0.30% | C 0.30% | P 0.20%

GBP       Core CPI Y/Y Jan A 1.20% | C 1.30% | P 1.40%

GBP       RPI M/M Jan A -0.70% | C -0.60% | P 0.30%

GBP       RPI Y/Y Jan A 1.30% | C 1.40% | P 1.20%

GBP       PPI Input M/M Jan A -0.70% | C -1.20% | P -0.80% | R -0.30%

GBP       PPI Input Y/Y Jan A -7.60% | C -8.80% | P -10.80% | R -10.40%

GBP       PPI Output M/M Jan A -0.10% | C -0.20% | P -0.20% | R -0.30%

GBP       PPI Output Y/Y Jan A -1.00% | C -0.90% | P -1.20% | R -1.40%

GBP       PPI Output Core M/M Jan A 0.10% | C 0.10% | P 0.20%

GBP       PPI Output Core Y/Y Jan A 0.00% | C 0.00% | P 0.10%

EUR        German ZEW (Economic Sentiment) Feb A 1 | C 0.1 | P 10.2

EUR        German ZEW (Current Situation) Feb A 52.3 | C 55.5 | P 59.7

EUR        Eurozone ZEW (Economic Sentiment) Feb A 13.6 | C 10.3 | P 22.7

CAD       Manufacturing Shipments M/M Dec A 1.20% | C 0.90% | P 1.00%

USD       Empire State Manufacturing Feb A -16.64 | C -10 | P -19.37

USD       NAHB Housing Market Index Feb A 58 | C 60 | P 60

USD       Net Long-term TIC Flows Dec A -$29.4B | P $31.4B

Good Luck,

Andy

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