Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 112.106 | EURUSD 1.10193 | AUDUSD 0.72028 | NZDUSD 0.66613 | USDCAD 1.37946 | USDCHF 0.99134 | GBPUSD 1.40214 |

LMAX Highs and Lows 6am

                                High | Low

EURUSD               1.10270 | 1.09998

USDJPY                 112.116 | 111.639

GBPUSD               1.40288 | 1.39640

AUDUSD              0.72108 | 0.71667

USDCHF               0.99103 | 0.99355

USDCAD               1.38158 | 1.37841

NZDUSD               0.66454 | 0.66066

EURGBP               0.78865 | 0.78552

EURJPY                 123.540 | 123.027

EURCHF                1.09420 | 1.09202

 

For Today

• EUR: JPY buying dominated a quiet market with the Euro only playing a marginal roll, opening around the 1.1020 areas the market moved into Tokyo pushing slightly higher before the move in Cable dragged on the Euro with the market dipping to the 1.1000 levels and light bids into the area to turn the market higher as the USDJPY moved to its lows. Topside offers light into the 1.1040-60 areas and a push through will likely see a small push through the 1.1100 areas as weak stops are taken out and the market finds more offers into the level and these are likely to continue through to the 1.1160 areas possibly nothing overtly strong but plenty of them, downside bids remain into the 1.1000 levels and likely to continue to the 1.0980 areas, possibly weakness then into the 1.0950 levels and then the market starts to see stronger bids as a possibility with congestion from earlier in the year around the 1.0950-1.0900 levels before opening up.
• GBP: The market opened above the 1.4020 levels however, the move into the Tokyo session saw strong GBPJPY selling moving into the market as the Brexit worries continue to worry investment money, add to which comments from Kuroda talking about major currencies rising against the USD and it not being just the JPY obviously confused or was lost in translation, however, although the early push found support the market eventually dropped through the 1.4000 level and was unable to move off those lows into the grey hours, Topside offers light through the 1.4000 areas and although there is a possibility of light offers through the 1.4050 areas a move through the level will still see offers lining up to the 1.4100 levels with the only weakness likely through the 1.4150 areas and requiring a strong move at that. Downside bids into the 1.3950 levels with possibly better bids into the 1.3900 areas and then nothing particularly strong until way below the level.
• JPY: A quiet session for the USDJPY with the market opening around the 112.10 areas and then slipping into the opening in Tokyo testing below the 111.80 areas before moving quietly back, strong GBPJPY selling seemed to be the main mover to the lows and the market tested into the 111.60’s before finding its legs into the grey hours, Topside offers likely to be weak through the 112.00 levels and a push against the 112.50 will likely see weak stops appearing and the market pushing into possibly better offers into the 112.80-113.00 levels, Downside bids through to the 111.20 areas are likely to be weak however, from there the market is likely to find stronger support however, a push through the 110.70 areas is likely to see sellers appearing and a push towards the 110 levels.
• AUD: Opening a little lower the market saw some light AUDJPY selling in the market before starting a steady rise as the market moved into Tokyo, Tokyo were early buyers and the market managed to push above the 0.7210 levels in fairly light trading before again drifting back to the 0.7190 levels with wage cost numbers coming in better than expected and reducing the likelihood of interest rate hikes, which by all accounts are not expected anyway, weak stops from early buyers saw the market drop to the 0.7170 levels and the market then spent the rest of the session regaining the 20 pips into the grey hours, Topside offers light to the 0.7220 levels with better offers likely through the 0.7250 areas with stronger offers still into the 73 cent level, downside bids light through to 71 cents and then the downside is likely to see further weakness until it gets closer to the 70 cent levels and the stronger bids beyond.

Overnight News

JPY:

Bank of Japan’s Kuroda Says He Won’t Target FX Rates or Stocks

Deposit Rates Are ‘Extremely Low Already’, Asahi Cites Kuroda

Japan’s Negative Rates Unlikely to Spur Lending, Growth: Moody’s

USD:

Fed’s Fischer Qualifies ‘Gradual,’ Says Hikes Not Predetermined

Fed’s Fischer Says Cheaper Oil Is Sustaining Consumer Spending

Fischer Says Fed Has No Plans at Present to Use Negative Rates

Trump Gets Third Win in Nevada as Rubio, Cruz Battle for Second

KRW:

South Korea Says Thaad Is Issue of Self-Defence: Yonhap

1. Korea Says North Threat Is ‘Unacceptably Provocative’: Yonhap

AUD:

Australian 4Q Wage Index Rose 0.5% QoQ; Median Est. 0.6% Rise

USD/JPY:

Obama Asks Japan’s Abe to Postpone Russia Visit, Yomiuri Says

EUR:

Merkel Cabinet Considers Investment Tax Bill to Close Loopholes

Today’s data

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

23:50     JPY         Corporate Service Price Y/Y Jan A 0.30% | C 0.30% | P 0.40%

0:30        AUD       Wage Cost Index Q/Q Q4 A 0.50% | C 0.60% | P 0.60%

07:00     CHF        UBS Consumption Indicator Jan P 1.62

09:30     GBP       BBA Mortgage Approvals Jan C 45.2K | P 44.0K

11:00     GBP       CBI Reported Sales Feb C 16 | P 16

15:00     USD       New Home Sales Jan C 525K | P 544K

15:30     USD       Crude Oil Inventories P 2.1M

Harry Hindsight              

• EUR: A quiet rise from the opening in Tokyo could not keep the Wolves of Brexit from the doors, opening in the 1.1025 levels the market moved through to the Tokyo session and the market made steady headway to push towards the 1.1050 levels however, the market failed at that point and although it kept in a tight range through to the grey hours, early sellers chased the market back towards the opening and the move into the London session saw selling on the back of an unchanged German GDP number and the market back to the early lows before rejecting the level and moving quickly to push through the 1.1050 levels testing the level a couple of times before the release of weaker IFO numbers saw the market collapse back to the opening levels and weak stops joined strong selling and the market pushing through the 1.1000 levels, several attempts to push lower failed as easily as the topside 1.1050 levels held, the move into the NYK session saw mixed reactions, the release of a weaker Consumer Confidence number in the US saw the USD weaken and the Euro again make its way to above the opening levels before trading tightly above the 1.1000 levels to the close.
• GBP: Cable slipped lower over the course of the day with the market initially moving quietly sideways from the opening and into the Tokyo session holding the 1.4150 levels, Tokyo were steady sellers and the market slipped back to the 1.4120 levels into the grey hours, the market teetered around the 1.4100 levels for several hours with a brief rise back to the opening levels with the release of German IFO numbers with the EURGBP dropping back from its 0.7830 levels and again testing the 0.7770 levels, however, this was short lived with the comments in London in particular beginning to come thick and fast as the various factions clash over various comments made by one side or the other, EURGBP reversed its early losses through the day and into NYK and while the London contained much of the action the move from the close in London saw the EURGBP buyers re-emerge in earnest and the EURGBP break higher to test above the 0.7860 levels, Cable dropped quickly through the 1.4080 levels and triggered weak stops on a move towards the 1.4000 levels, and while the market was unable to break through to the 1.4000 levels the market didn’t bounce and held to the close around the 1.4020 areas.
• JPY: USDJPY dropped quickly on the move into the Tokyo session with Brexit and then doubts about further easing and the USDJPY quickly dropped from the 113.00 levels to test the 112.00 levels in the first two hours in Tokyo, the market held the level for several hours before snapping back as yields dropped ahead of the 40 year debt auction and the market recovered half its losses into the grey hours, London were steady sellers through the session and the market traded around the 112.00 levels through to the NYK session not quiet able to push through the 111.80 areas with any conviction and unable to regain those 112.50 levels holding to the close around the 112.10 levels.
• AUD: The Oz traded quietly during the first half of the day with the market moving steadily higher after steady recovery of the Crude market through the previous session, moving from the opening 0.7230 levels the market traded in the 0.7215-60 areas before running into strong offers and although the market didn’t back away from the levels through the early part of the session the opening in NYK saw the Oil markets again under pressure and Oz falling back in line with that movement dipping back to the 72 cent level and holding the areas to the close.

Yesterday’s premiership results

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

EUR        German IFO – Business Climate Feb A 105.7 | C 106.8 | P 107.3

EUR        German IFO – Current Assessment Feb A 112.9 | C 112.2 | P 112.5

EUR        German IFO – Expectations Feb A 98.8 | C 102 | P 102.4 | R 102.3

USD       S&P/Case-Shiller Composite-20 Y/Y Dec A 5.70% | C 5.60% | P 5.80% | R 5.70%

USD       Consumer Confidence Feb A 92.2 | C 97.5 | P 98.1 | R 97.8

USD       Existing Home Sales Jan A 5.47M | C 5.42M | P 5.46M | R 5.45M

Good Luck,

Andy

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