Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 114.091 | EURUSD 1.11274 | AUDUSD 0.7185 | NZDUSD 0.66298 | USDCAD 1.3671 | USDCHF 0.99244 | GBPUSD 1.42935 |

LMAX Highs and Lows 6am

                                High | Low

EURUSD               1.11460 | 1.11181

USDJPY                 114.327 | 113.816

GBPUSD               1.43119 | 1.42723

AUDUSD              0.71822 | 0.71342

USDCHF               0.99313 | 0.99135

USDCAD               1.36906 | 1.36541

NZDUSD               0.66678 | 0.66148

EURGBP               0.77967 | 0.77805

EURJPY                 127.162 | 126.79

EURCHF                1.10510 | 1.10415

 

For Today

• EUR: A reasonably quiet session with the market opening around the 1.1125 areas and slipping to the 1.1120 level in early trading before the market started to see better buyers moving in to take the market to the 1.1140 levels and then nothing with the market holding into the grey hours around that level, Topside offers light through the 1.1150 levels with possible weak stops however, better offers are likely to appear on a move through the level and a test into the 1.1180 levels and through to the 1.1220 areas, with possibly better stops on a move through the 1.1230-50 area, limited offers into the 1.1300 levels and a break through the 1.1360 opens up a larger move to the topside, downside bids light into the 1.1120 areas but improving as the market pushes to the 1.1100 however, a push through the level is likely to confirm technical weakness and the downside opening for a quick test to the 1.1000 levels with sentimental bids only.
• GBP: Cable opened around the 1.4290 levels and after a brief flirtation with the 1.4270’s moved steadily through the session to test into the 1.4310 levels late in the day before holding the 1.4300 into the grey hours, all about the Euro today with the ECB monetary policy meeting likely to provide any movement and of course the Brexit chatter, which is possibly becoming a little one sided with European lining up to put their oar in and possibly alienating Joe Public in the UK, nothing like cutting your nose of too spite your face but that one swings both ways, light bids into the 1.4250 levels are likely to see stronger bids appearing as the market approaches the 1.4200 and those bids likely to continue on a move through to test the lows of the year. Topside offers light through the 1.4350 levels however, the possibility of weak stops through the level and the market then opening for a further test to the 1.4450 level and then congestion through the level into 1.4500 and stronger levels.
• JPY: Late Sydney buying continued through to the Tokyo opening with the market moving from the 114.10 levels to test the 114.30 areas before Tokyo moved in and sold the market back through the 114.00 levels testing the 113.80 areas and holding those levels through the session trading around the 114.00 into the grey hours. Topside offers light into the 114.50 levels however, its likely that offers continue in patches to the 114.80 areas and then stronger offers kick in, a push through the 115.10-20 areas is likely to see weak stops and the market opening for a test to the 115.80 areas with possibly only weak offers and the 117.00 level becoming vulnerable. Downside bids light into the 113.20 levels and possibly continuing into the 112.80 before opening to another test to the 112.00.
• AUD: A drop in employment was enough to turn the market having seen the Oz rise over the past 24hrs to test the resistance into the 0.7180 levels and the market dropped quickly to the 0.7135 level before running out of sellers and a steady rise back to the 0.7170 levels, having recaptured the bulk of its losses the market struggled through the remainder of the session and moved into the grey hours holding the 0.7160 level. Topside offers seem to be more resistant than expected and now seems to be key in any further gains, a push through the 0.7220 level will likely see offers possibly every 20 pips of course that is if it can get through the 0.7240-60 areas. Downside bids light into and through the 71 cent level with possibly slightly stronger bid into the 0.7050 areas before finding very strong bids likely to start appear on a move through the 70 cent levels with 0.6950 likely to be stronger.

Overnight News

AUD:

Australian Jan. Employment Fell 7,900 M/M; Est. 13,000 Gain

RBA Says Oil Price Fall Driven by Strong Supply Not Weak Demand

JPY:

Japanese Sell Most Foreign Debt in Eight Months Last Week

Abe Rules Out Japan Stimulus, for Now, Nikkei Reports

JPY: Kuroda: Market Moves from Start of Year May Have Been Excessive

Kuroda Says BOJ Will Check Risks and Add to Stimulus If Needed

BOJ’s Ishida: Prolonged Market Moves Could Impact Real Economy

BOJ Held About 54% of ETF Market at End-Sept.: BOJ’s Amamiya

Japan Post Bank Mulls Cutting Deposit Rates to 0.001%: Nikkei

Japan Jan. Exports Fall 12.9% Y/y; Est. -10.9%

Japan Panel to Recommend Allowing Boards to Fire CEOs: NHK

CNY:

China Jan. Consumer Prices +1.8% Y/y; Est. +1.9%

China CPI Affected by Cold Weather, Lunar New Year: NBS

China State Researcher Sees 6.7% Growth in 2016: Eco Info Daily

China State Researcher Says Not a Problem if Deficit >3% of GDP

USD:

Bullard: U.S. Not Remotely Close to Needing Negative Rates, QE

NZD:

New Zealand Producer Output Prices Fall on Milk, Fuel

N.Z. Consumer Confidence Retreats on Global Pressures: ANZ

Today’s data

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

NZD       PPI Inputs Q/Q Q4 A -1.20% | P 1.60%

NZD       PPI Outputs Q/Q Q4 A -0.80% | P 1.30%

JPY         Trade Balance (JPY) Jan A 0.12T | C 0.06T | P 0.04T

AUD       Employment Change Jan A -7.9K | C 12.9K | P -1.0K | R -0.8K

AUD       Unemployment Rate Jan A 6.00% | C 5.80% | P 5.80%

CNY        CPI Y/Y Jan A 1.80% | C 1.90% | P 1.60%

CNY        PPI Y/Y Jan A -5.30% | C -5.40% | P -5.90%

07:00     CHF        Trade Balance (CHF) Jan C 2.67B | P 2.54B

09:00     EUR        Eurozone Current Account (EUR) Dec C 22.3B | P 26.4B

12:30     EUR        ECB Monetary Policy Meeting Accounts

13:30     CAD       Wholesale Sales M/M Dec C 0.10% | P 1.80%

13:30     USD       Philly Fed Survey Feb C -2 | P -3.5

13:30     USD       Initial Jobless Claims (FEB 13) C 275K | P 269K

15:00     USD       Leading Indicators Jan C -0.20% | P -0.20%

15:30     USD       Crude Oil Inventories P -0.8M

Harry Hindsight              

• EUR: Opening around the 1.1140 levels the market held steady into the Tokyo opening then dropped as quick USD buyers appeared in the market, however, once this initial selling was done with the market moved back off the 1.1120 level to the opening area, With Rosengren talking down further hikes the USD took a back step and the Euro steadily rose through the session to test the offers into the 1.1170 areas however, with Lunch upon the market it was unable to push any further until the grey hours and a steady push to the 1.1180 levels before moving into the London session and uncertainties on Brexit, European Bonds began to weigh on the market and as slow drift back towards the lows with the market dipping to the 1.1125 levels and then struggling through to NYK unable to push through the level or for that matter above the 1.1150 level again, the move into NYK saw better PPI numbers in the US and the Euro finally tested towards the 1.1100 levels however, again the market was resilient and the market held the levels and all that happened was a slight expansion of the range with the topside 1.1150 proving difficult to push beyond through the session, the market eventually went out just above the lows holding the 1.1120 areas. Taking one set of data and ignoring the others with good employment numbers hitting while average wages continued to show little movement as you would expect with low unemployment however, the market did eventually settle on a direction and Cable rallied to the 1.4340 levels for the first time.
• GBP: A fairly choppy day overall but contained for the most part with the 1.4240-1.4340 range being played. Moving through the Asian session there was barely a blip on the charts with the market holding around the 1.4300 levels for the most part and really struggling to move beyond a 15 pip range, however, the move into London saw strong selling by early Europeans in front of the employment numbers with the market dropping for the first time through the 1.4250 level on the day, the release of the data saw mixed reactions with sellers of the weekly earnings numbers against the buyers of employment rates, the buyers won the brief fight and Cable tested the hits for the first time drifting back the 1.4300 levels, and playing around the area into the NYK session, stronger PPI numbers in the US saw the market dip to the 1.4240 before quickly recovering and triggering weak stops and another test to the topsides 1.4340 level, the market spent the afternoon without London trading steadily back to the opening levels and through the 1.4300 to finish the day almost unchanged on the day. Early buying in the Euro initially saw the GBP unable to keep pace and the EURGBP cross pushing towards the 0.7845 levels before the release of the employment figures in London and quick selling to the 0.7760 areas during that period, before eventually testing back to the 0.7790 levels and the opening areas.
• JPY: Opening around the 114.10 levels the market saw early buying into the Tokyo session with the USDJPY pushing to the 114.40 levels before returning as the Rosengren comments started to impact the market, the move through the 114.00 saw the market continuing to push to the 113.70 levels and then holding into the grey hours, early London followed through with the move and the market eventually tested to the 113.40 levels and holding the level for a period, stronger UK numbers saw the market moving back steadily to the 114.00 with GBPJPY a main factor in the move, which given the current markets uncertainties about Brexit was surprising however, with the recovery to above the 114.00 levels the market moved into the NYK session looking to test further and eventually pushed through the previous highs but could only push to the 114.50 levels before running out of steam and drifting to the opening areas again, the evening saw light profit taking and steady selling of the USD on the back of a bland FOMC report however, USDJPY although testing to the 113.80 still managed to close around the opening levels of the day.
• AUD: The Ozzie languished through the Asian session with tight ranges holding around the 71 cent levels, with an early push to the 0.7120 level limited before dipping back below the 71 cent levels, the move into the London session saw Crude oil push towards the $32 area and the Oz reacted with the first move pushing to the 0.7140 levels before drifting a little lower into the NYK session, however the Crude oil was not finished and with discussions between Saudi/Russia reaching an agreement to freeze supply the markets move into the NYK session saw the market again moving higher and $33 trading and the Oz following the move to test to the 0.7180 levels and the topside resistance, from there it was a dull session with the market struggling around the levels to the close even with the Crude making a final move towards the $33.50 levels.

Yesterday’s premiership results

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

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

GBP       Jobless Claims Change Jan A -14.8K | C -2.9K | P -4.3K | R -15.2K

GBP       Claimant Count Rate Jan A 2.20% | P 2.30%

GBP       Average Weekly Earnings 3M/Y Dec A 1.90% | C 1.90% | P 2.00% | R 2.10%

GBP       ILO Unemployment Rate 3M Dec A 5.10% | C 5.00% | P 5.10%

CHF        ZEW (Expectations) Feb A -5.9 | P -3

USD       Housing Starts Jan A 1.10M | C 1.16M | R 1.15M

USD       Building Permits Jan A 1.20M | C 1.21M | P 1.20M

USD       PPI M/M Jan A 0.10% | C -0.20% | P -0.20%

USD       PPI Y/Y Jan A -0.20% | C -0.60% | P -1.00%

USD       PPI Core M/M Jan A 0.40% | C 0.10% | P 0.10%

USD       PPI Core Y/Y Jan A 0.60% | C 0.40% | P 0.30%

CAD       International Securities Transactions (CAD) Dec A -1.41B | C -6.05B | P 2.58B

USD       Industrial Production Jan A 0.90% | C 0.40% | P -0.40% | R -0.70%

USD       Capacity Utilization Jan A 77.10% | C 76.70% | P 76.50% | R 76.40%

Good Luck,

Andy

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