Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 112.567 112.53-86 | EURUSD 1.1130 1.1112-36 | AUDUSD 0.71484 0.7149-55 | NZDUSD 0.66313 0.6620-56 | USDCAD 1.37714 1.3763-85 | USDCHF 0.98951 0.9889-96 | GBPUSD 1.44038 1.4290-1.4306 |

 

LMAX Ranges 6am London time

Highs    Lows

For today

• EUR: A quiet range overall with the market opening a little lower than Fridays close with the deal done on Friday the market had the weekend to settle down and read the details, with the weekend to read the Euro started the day around the 1.1120 areas holding the 1.1125 level to the topside and then drifting into the Tokyo session to the 1.1105 and then maintain an ever decreasing range to the grey hours. Topside offers weak into the 1.1140 levels and through to the 1.1160 areas, a push through and the market is likely to see stronger offer into the 1.1180-1.1200 areas with lighter offer through to the 1.1220, likely stops on a move through the level and the market open only to the 1.1250 areas, weak and limited with stronger offers into the 1.1300 levels. Downside bids through to below the 1.1070 areas with what stops likely to have been cleared,
• GBP: Pre markets saw the market quickly trade lower and into the 1.4260 areas before the official opening, the official opening saw the market opening around the 1.4290 levels and although the market moved above 1.4300 from the opening it again tested back to the 1.4260 levels as the market absorbed the weekend news that London Mayor Johnson is to back the leave Europe campaign and as a one of the leading contenders to take over from Cameron this effected the markets, once the early selling had finished though the market remained steady trading around the 1.4280 areas for the most part. Topside offer light through to the 1.4400 levels with a move through the 1.4320-30 areas possibly seeing weak stops and the possibility of a small squeeze higher and then running into the offers around the 1.4400 areas and congestion from that point on. Downside bids light from current levels with better bids into the 1.4250 areas and 1.4200 level continuing through there with patchy but increasing support to the market.
• JPY: Weakness in GBP was sufficient to get the USD moving higher into the Tokyo session however, the opening in Sydney was weak with the market opening around the 11260 areas and testing the 112.50 levels before the Tokyo opening and a gradual push to the 113.00 level and a quiet ranging market to the grey hours. Topside offers through the 113.00 levels with the possibility of weak stops through the 113.20 levels and the market opening for a test into the 114.00 levels, downside bids into the 112.50 are light with stronger bids into the 112.00 areas and through onto the 111. Handle however; the bids into the 111.20 areas are likely to be a little stronger.
• AUD: The Oz dipped as the market adjusted to the Cables early selling and pushed to the 0.7140 before moving into the Tokyo session and steadily rising to the 0.7170 level peaking around the 0.7180 level before quietly moving into the grey hours. Topside offers through the 0.7200 areas and while a push here may see some weak stops the market is likely to be offered through to the 0.7260 areas before opening for a further test of the vulnerable 73 cent level. Downside bids light through to the 71 cent levels with those bids likely to improve the lower to the 70 area the market.

Overnight News

JPY:

Aso Says Stock Prices Are the Clearest Indicator of Abenomics

JPY: Nikkei Japan Feb. Flash Manufacturing PMI 50.2 vs 52.3 in Jan.

GBP:

Moody’s May Revise U.K. Rating to Negative If Vote for ‘Brexit’

G20:

Tamaki: G-20 Succeeds If It Communicates Well With Markets

CNY: China Needs RRR Cut in Medium-Term: Eco. Info. Daily Commentary

China New Regulator Head Expected to Bring Transparency: Reorient

AUD:

Australia’s BBSW Benchmark Threatened by Lack of Trades: Debelle

IDR/JPY:

Indonesia to Upsize Samurai Bond Sale on Negative Rates: Kontan

Today’s data

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

JPY         PMI Manufacturing Feb (P) A 50.2 | C 52 | P 52.3

08:00     EUR        France Manufacturing PMI Feb (P) C 49.9 | P 50

08:00     EUR        France Services PMI Feb (P) C 50.4 | P 50.3

08:15     CHF        Producer & Import Prices M/M Jan C -0.20% | P -0.40%

08:15     CHF        Producer & Import Prices Y/Y Jan P -5.50%

08:30     EUR        Germany Manufacturing PMI Feb (P) C 52.1 | P 52.3

08:30     EUR        Germany Services PMI Feb (P) C 54.8 | P 55

09:00     EUR        Eurozone Manufacturing PMI Feb (P) C 52.1 | P 52.3

09:00     EUR        Eurozone Services PMI Feb (P) C 53.4 | P 53.6

11:00     GBP       CBI Trends Total Orders Feb C -12 | P -15

Weekend News

JPY:

Abe Says He’s Not Planning to Call Snap Poll or Delay Tax Hike
Japan Law Board Says Banks Can’t Set Neg. Saving Rates: Nikkei
Ex-BOJ’s Hayakawa:Will be Side-Effects if Rates Go More Negative
CNY:

China Lenders’ Foreign-Exchange Holdings Omitted From PBOC Data
China Removes Xiao as CSRC Head After Stock Market Meltdown
KRW:

North Korea Fired Several Rounds of Artillery Shells Near Border
EUR/GBP:

Cameron Calls June 23 EU Referendum as Cabinet Fractures
Merkel Says Cameron’s Been Given a Deal He Can Sell to Voters
U.K. EU Ref. Poll Shows 48% Want to Stay, 33% Leave: Survation
Osborne: ‘We’ve Achieved Substantial Change’ in EU Relationship
USD:

Trump Wins South Carolina Primary as Bush Drops Out of Race
Clinton Pulls Out Nevada Victory After Late Sanders Surge

GBP:

Johnson says Cameron did fantastically well

Johnson says this is not fundamental reform of EU relationship

Johnson: I would like to see a new relationship

Johnson: I want a better deal for the people of this country

Johnson says didn’t want to go against David Cameron

Johnson: I will be advocating vote leave in EU referendum

Johnson: Cameron has to stay whatever happens

Harry Hindsight

• EUR: A quiet opening saw the market move into the Tokyo session around the 1.1105 levels and then start to move higher, trading to the 1.1125 areas and holding the levels in a tight range through to the grey hours, early sellers in Europe sold the market back towards the opening levels and into the London session testing to the 1.1140 level after the unimpressive German PPI numbers, UK retail sales saw strong selling in the EURGBP and the Euro dropped quickly back to the 1.1100 areas triggering weak stops and a move through to the 1.1080 areas and the waiting bids, the market recovered into the NYK session and through the opening until the release of the US inflationary numbers with those better numbers again seeing the downside tested this time through to some weak stops however, the move was short lived and even a weaker Eurozone confidence number was unable to deflect the sense of accomplishment as the agreement between the EU and UK was announced, with Cable quickly leading the way higher and the Euro moving steadily back towards the highs through the later part of NYK and finishing the session just below those highs.
• GBP: Concerns through the day about the negotiations saw the market holding the 1.4320 levels through Asia before moving into the London session slipping a little lower after the retail sales numbers, the market then trade slowly lower through the session and into the NYK morning testing the lows around the 1.4260 levels as the negative comments weighed on the markets. The news on that a deal had been reached was sufficient to send the Cable quickly higher to the 1.4340 levels and continue steadily higher through to a close testing through the 1.4400 levels.
• JPY: USDJPY made its highs during the Sydney hours pushing towards the 113.40 levels before quickly giving ground as the market moved into the Tokyo session and the USD weakened for the most part, the move through the Tokyo session saw the market test repeatedly below the 112.80 levels and then hold through the London session unable to push back above the 113.20 levels and holding the downside 112.80 areas through into mid NYK before the release of the EU/UK news and the USD slipped back taking the USDJPY down to the 112.30’s before slowly pushing to the 112.60 levels into the close
• AUD: Yen safe haven flows, concerns about the negotiations in EU/UK left the Oz with position closing through the session with early selling into the Tokyo session, the opening around the 0.7160 level was the high and made on the opening and then the move into Tokyo saw the market drop quickly back to 71 cent with the market basing off that level through to the NYK session, fresh selling saw the market drop quickly and push to the 0.7070 levels before finding sufficient bids to hold the market and the recovery saw the market moving back to those opening levels and finishing only just short of the levels.

Friday’s premiership results

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

JPY         All Industry Activity Index M/M Dec A 0.90% | C -0.30% | P -1.00% | R -1.10%

EUR        German PPI M/M Jan A -0.70% | C -0.30% | P -0.50%

EUR        German PPI Y/Y Jan A -2.40% | C -2.00% | P -2.30%

GBP       Retail Sales M/M Jan A 2.30% | C 0.80% | P -1.00% | R -1.40%

GBP       Public Sector Net Borrowing (GBP) Jan A -11.8B | C -13.8B | P 6.9B

USD       CPI M/M Jan A 0.00% | C -0.10% | P -0.10%

USD       CPI Y/Y Jan A 1.40% | C 1.20% | P 0.70%

USD       CPI Core M/M Jan A 0.30% | C 0.20% | P 0.10%

USD       CPI Core Y/Y Jan A 2.20% | C 2.10% | P 2.10%

CAD       Retail Sales M/M Dec A -2.20% | C -0.70% | P 1.70%

CAD       Retail Sales Less Autos M/M Dec A -1.60% | C -0.50% | P 1.10%

CAD       CPI M/M Jan A 0.20% | C 0.00% | P -0.50%

CAD       CPI Y/Y Jan A 2.00% | C 1.70% | P 1.60%

CAD       BoC CPI Core M/M Jan A 0.30% | C 0.20% | P -0.40%

CAD       BoC CPI Core Y/Y Jan A 2.00% | C 1.90% | P 1.90%

EUR        Eurozone Consumer Confidence Feb (A) A -8.8 | C -7 | P -6.3

Stay lucky

Andy

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