Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 113,979 113.89-90 | EURUSD 1.09313 1.0922-39 | AUDUSD 0.71268 0.7119-35 | NZDUSD 0.66286 0.6621-59 | USDCAD 1.35155 1.3506-25 | USDCHF 0.99671 0.9960-70 | GBPUSD 1.38715 1.3867-80 |

 

LMAX Ranges 6am London time

Highs    Lows

EURUSD               1.09433 | 1.09035

USDJPY                 114.004 | 112.895

GBPUSD               1.38782 | 1.38418

USDCHF               0.99825 | 0.99600

AUDUSD              0.71470 | 0.71083
USDCAD               1.35571 | 1.35230

NZDUSD               0.66015 | 0.65694

EURCHF                1.09024 | 1.08882

EURGBP               0.78911 | 0.78729

EURJPY                 124.474 | 123.530

For today

• EUR: Much of the market was broadly in line with expectations, with the back drop of commentary from the G20 in the world of fantasy and as you’d expect from anything beginning with G and followed by number talked much about the problems faced with very little actually achieved that’s probably besides the bar bill, opening just below the 1.0920 levels the market saw quick trading to the downside before holding a tight range through the session with the market unable to push to far through the 1.0935 level but never seriously threatening the 1.0900 levels and once into the Tokyo session narrowing to a 1.0920-35 range for the most part to the grey hours. Downside bids into the 1.0900 areas are likely to continue the level and into the 1.0970 areas and while the market on a push through this level is likely to be a little mixed a steady move through the 1.0840 will exposed the 1.0780 level and possibly stronger stops appearing however, the market will need to push through the bids to get there. Topside offers light into the 1.1000-1.1020 levels and a push through the 1.1030 area has the possibility of triggering weak stops and a limited move into the 1.1050 levels and once through the level after only a short period of weakness the offers again start to appear around the 1.1080-1.1120 areas to slow the market movement.
• GBP: Cable drifted with very little meaningful discussion over the weekend on the subject of the EU referendum in the UK, with corrections to opinions coming rather than further recriminations from either side of the divide, opening a little lower the market drifted along the 1.3860 level for the move into the Tokyo session with GBPJPY selling entering from the opening and taking the Cable into the 1.3840’s before rising quickly back to the 1.3860 level, the move towards the grey hours saw general selling of the USD however, this was more a continuation of USDJPY and the Cable made meagre gains to push towards the 1.3880 level. Topside offers likely to be light through the 1.3900 levels and the market could see a small squeeze into the 1.3950 areas with weak stops likely to be present and then the market is likely to see some stronger offers moving into the market as the market pushes through to the 1.4000 levels however, these stronger offers are not likely to be that strong either and the market has the possibility of squeezing higher. Downside bids into the 1.3850 levels are likely to be the key level to further downside movement with a move through the levels likely to see the market targeting lows not seen since the mid 1980’s
• JPY: Opening just below the 114.00 levels the market dropped as weakness in the NZD saw carry trade selling moving into the market with the USDJPY dipping to the 113.70 levels before the early Tokyo sellers moved in, the move towards the Tokyo session saw the market trade to the 113.50’s before rising into the opening to push above the 113.80 levels again however, this was as high as it went and the selling continued through the session with the only respite coming as the market moved into the lunch period and trading around the 113.40, the move towards the grey hours again saw the market dropping lower and although there were bids into the 113.00 level the market crumbled and tested through the level and to the 112,90 areas. Topside offers light through the 113.40 areas with the market again likely to see offers if the market approaches the 114.00 levels, a push here though is likely to see weak stops on a move through the level and the market opens to the 114.60-115.00 levels with possibly only limited offers in the way of a larger movement. Downside bids are light into the 112.60 areas and likely to continue all the way down to strong bids as the market approaches the 112.00 levels with the likelihood of stronger bids down through the level and into the 111.80 areas before the market opens a little for a fresh test of the 111.00 areas.
• AUD: After the selloff in NYK last Friday the Oz has found itself in familiar territory and has managed to remain above the 71 cent levels through the early part of the session before breaking through the 0.7130 levels and steadily rising towards the 0.7150 areas. Topside offers into the highs however, there is a possibility of weakness from there into the 72 cent levels where the market is likely to start to see stronger offers through to the 0.7230-50 areas in particular, downside bids light through the 71 cent level and opens up the possibility of fresh tests into the low 70 cent levels however through that level the market is likely to see stronger bids moving in and growing the closer the market gets to the 0.6950 levels,

Overnight News

USD/CNY:

Lew: China, U.S. Have Mutual Interest in Each Other’s Prosperity

CNY:

China’s Premier Li Says to Intensify Fiscal Policies: Reuters

JPY:

Japan’s Suga: Not Considering Extra FY2016 Budget at This Point

BOJ Will Lower Rates ‘If Necessary,’ Kuroda Tells Caixin (Yday)

Japan Jan. Industrial Production Rises 3.7% M/m; Est. +3.2%

EUR/GBP:

Varoufakis Says Brexit Would Bring EU’s ‘Effective Dismantling’

Ex-BOE Governor King Says Euro Doomed to Fail, Telegraph Reports

GBP:

U.K. Consumer Spending to Stay Strong in 2016, Item Club Says

NZD:

Key Says RBNZ to Decide Whether Firms Need Interest Rate Relief

NZ Treasury Says GDP Growth May Be Faster Than December Outlook

New Zealand January Home-Building Approvals Fall 8.2% M/M

New Zealand Business Confidence Falls on Global Unease: ANZ

N.Z. Jan Household Lending Gains Most in More Than Seven Years

AUD:

Australia Jan. Credit to Business, Consumers Rose 0.5% M/M

Australia Feb. Melbourne Inst. Inflation Gauge Fell 0.2% M/M

Australia 4Q Inventories Fall 0.4% Q/Q; Est. 0.1% Rise

Today’s data

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

NZD       Building Permits M/M Jan A -8.20% | P 2.30%

JPY         Industrial Production M/M Jan (P) A 3.70% | C 3.20% | P -1.70%

JPY         Retail Trade Y/Y Jan A -0.10% | C 0.20% | P -1.10%

AUD       MI Inflation Gauge M/M Feb A -0.20% | P 0.40%

NZD       NBNZ Business Confidence Feb A 7.1 | P 23

AUD       Company Operating Profit Q/Q Q4 A -2.80% | C -1.70% | P 1.30% | R 1.40%

AUD       Private Sector Credit M/M Jan A 0.50% | C 0.50% | P 0.50%

JPY         Housing Starts Y/Y Jan A 0.20% | C -0.20% | P -1.30%

7:00        EUR        German Retail Sales M/M Jan C 0.30% | P -0.20%

8:00        CHF        KOF Leading Indicator Feb C 99.1 | P 100.3

9:30        GBP       Mortgage Approvals Jan C 74K | P 70.8k

9:30        GBP       M4 Money Supply M/M Jan C 0.30% | P -0.20%

10:00     EUR        Eurozone CPI Estimate Y/Y Feb C 0.00% | P 0.30%

10:00     EUR        Eurozone CPI – Core Y/Y Feb (A) C 0.90% | P 1.00%

13:30     CAD       Current Account (CAD) Q4 C -16.8B | P -$16.21b

13:30     CAD       Industrial Product Price M/M Jan P -0.20%

13:30     CAD       Raw Materials Price Index M/M Jan P -5.00%

14:45     USD       Chicago PMI Feb C 53.8 | P 55.6

15:00     USD       Pending Home Sales M/M Jan C 0.90% | P 0.10%

Weekend News

G20:

G-20 Reaffirms No-Devaluation Pledge, to Consult Closely on FX
G-20 Seeks Infrastructure Push to Help Boost Global Economy
Japan, Not China, Emerges as Currency Worry at G-20 Meeting
G20/EUR:

G-20 Strengthens Words on Competitive Devaluations: Dijsselbloem
CNY:

Dodging Critics and Soothing Fears, China Meets Its G-20 Goals
Monetary Policy Needs ‘Appropriate’ Looseness: China’s Lou
USD/CNY:

U.S.’s Lew Says China Committed Not to Devalue to Boost Exports
IMF/CNY:

IMF’s Lagarde Says China Said It Doesn’t Intend to Devalue Yuan
JPY:

Japan’s Kuroda Says No G-2O Opposition to BOJ Negative Rates
Japanese Cos. Seen Spending 5t Yen on Share Buybacks: Nikkei
Mitsubishi UFJ Union Won’t Seek Base Pay Rise, Kyodo Reports
JPY/G20:

Japan’s Aso Asked G-20 Sub-Group to Examine Capital Flow Controls
USD/KRW:

U.S.’s Lew Stresses Need for FX Flexibility with Korea’s Yoo
KRW/CNY:

1. Korea, China Discuss Extending Bilateral Currency Swap: Maeil
   CHF:

SNB’s Jordan: Change of Exemption Threshold Possible Policy Tool
SNB’s Jordan Says G-20 Agreed Central Banks to Avoid FX Wars
EUR/GBP:

EU Exit Vote Would be ‘Gamble of the Century,’ Cameron Writes
Belgian PM Says U.K. Won’t Get 2nd Chance if it Leaves EU: WSJ
GBP:

U.K.’s Exit from EU Would Be Final, Boris Johnson Tells Times
British Chancellor Says Exit Would Shock Global Economy: BBC
Osborne Readies Ground for More Spending Cuts in U.K. Budget
USD/EUR:

U.S.’s Lew Agrees on Debt Relief for Greece ‘In Timely Manner’
EUR:

Irish PM Kenny Pleads for Time as Grand Coalition Pressure Grows
Greece Faces Difficulty Paying March Debt: IMF to Spiegel
German Minimum Wage to Rise to About EU8.80/Hour in 2017: FAZ
German Unemployment to Rise Short-Term, Nahles Tells Passauer
EUR: German Budget Surplus to Be Used Entirely for Refugees: Focus
USD:

Christie Endorsing Trump Brings N.J.-Style Politics National
Clinton Wins South Carolina Primary to Set Up Super Tuesday
AUD:

Australia’s Howard Urges Action on Tax Reforms, Australian Says

Harry Hindsight

• EUR: The Euro opened quietly around the 1.1020 areas and as soon as Tokyo opened the market popped higher and then moved steadily to above the 1.1060 levels however, having made the level it then struggled through the Asian session to make any significant gains and held in the 1.1060-70 areas for much of the session and into the London opening, Brexit, Greece and other areas in the EU again figured strongly on the opening in London and the market moved quickly through to test the lows through the 1.1010 levels, the move to the NYK session was a quiet period with the market committing itself to a similar range play to Asia albeit 50 pips lower and the market ranged in the 1.1010-30 levels before again dropping quickly having ignored the Eurozone confidence numbers, quickly moving through the 1.1000 level as a strong US GDP reading impacted the market and the Euro dipped to the 1.0960 areas before finding light bids and slowing the decent however, it only slowed the movement and the market again started falling back and the market quickly hit the 1.0910 levels before finding support in a similar vein to the previous move to the 1.1010 areas and with the London session coming to a close the movement in the market dried and became range bound to the close to finish just off those lows.
• GBP: Limited buying eventually took the market back above the 1.4000 in Asia however, having opened around the 1.3960 levels the market struggled to make those levels over several hours and once above the level found it very difficult to make any further headway and the move into the grey hours saw the gains quickly disappear and the market returning to the opening levels into the London opening, from there the market slowly edged higher through early morning with the market eventually testing through the previous highs and into the 1.4040 levels before running out of steam and drifting back through the 1.4000 and triggering weak stops to test back to the 1.3940 levels before a weak bounce saw the market back to the opening levels into the NYK opening, as with the Euro there was a steady stream of selling with the EURGBP doing very little as the USD rose across the board through the early part of the NYK session, then with Cable holding around the 1.3860 levels and this continued to the close with very little movement in the market.
• JPY: Initial gains into the Tokyo opening were quickly reversed once Tokyo opened officially and the market dipped back away from the 113.20 areas to quickly push at the 112.70 areas before holding the 112.80 level deep into the Asian session the move towards the grey hours saw further selling to set the low just below the 112.60 areas with weak stops triggered and the market then struggling through to the London opening rising to recover the lost ground and those opening levels, the move into the NYK session saw better than expected US GDP numbers and the USD immediately started to rise strongly and the USDJPY was not exception with the market pushing quickly through the 113.00 areas and then the 113.50 level and targeting the 114.00 however, the level was too strong for the late buyers and the market settled in around the 113.90 areas to the close.
• AUD: Early trading into the Tokyo session saw the Oz testing above the 0.7250 levels however, the push was short lived and the market drifted lower through the Asian session and into early London, with the market trading around the 0.7220 levels in London the slipping further as the market moved towards the NYK session only to rest on the 72 cent level until the US numbers started to be released, A strengthening USD saw the Oil market move off its highs above the $35 level and quickly drop to the $34 areas and slip slowly lower and this dragged on the Oz and the market was quickly back towards the 71 cent level with the market closing barely holding the 0.7120 areas.

Friday’s premiership results

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

NZD       Trade Balance (NZD) Jan A 8M | C -250M | P -53M | R -38M

JPY         National CPI Core Y/Y Jan A 0.00% | C -0.20% | P 0.10%

JPY         Tokyo CPI Ex-Fresh Food Y/Y Feb A -0.10% | C 0.00% | P -0.10%

GBP       GfK Consumer Sentiment Feb A 0 | C 3 | P 4

EUR        Eurozone Business Climate Indicator Feb A 0.07 | C 0.28 | P 0.29

EUR        Eurozone Economic Confidence Feb A 103.8 | C 104.4 | P 105 | R 106.7

EUR        Eurozone Industrial Confidence Feb A -4.4 | C -3.5 | P -3.2 | R -3.1

EUR        Eurozone Services Confidence Feb A 10.6 | C 11.4 | P 11.6 | R 11.5

EUR        Eurozone Consumer Confidence Feb (F) A -8.8 | C -6.7 | P -8.8

EUR        German CPI M/M Feb (P) A 0.40% | C 0.50% | P -0.80%

EUR        German CPI Y/Y Feb (P) A 0.00% | C 0.20% | P 0.50%

USD       Goods Trade Balance Jan A -62.0B | C -61.1B | P -61.5B

USD       GDP (Annualized) Q4 (S) A 1.00% | C 0.30% | P 0.70%

USD       GDP Price Index Q4 (S) A 1.00% | C 0.80% | P 0.80%

USD       Personal Income Jan A 0.50% | C 0.40% | P 0.30%

USD       Personal Spending Jan A 0.50% | C 0.20% | P 0.00%

USD       PCE Core M/M Jan A 0.30% | C 0.10% | P 0.00%

USD       PCE Core Y/Y Jan A 1.70% | C 1.20% | P 1.40%

USD       U. of Michigan Sentiment Feb (F) A 91.7 | C 91.1 | P 90.7

Stay lucky

Andy

Any opinions, news, research, analyses, prices or other information contained on this Blog, whether by LMAX, its employees, partners or contributors, does not constitute investment advice nor has it been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the material contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. Whilst information provided on this Blog may help with your investment research you must consider carefully whether you should make (or refrain from making) investment or other decisions based on what you see without doing further research on the investments you are interested in. Participating in this Blog cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you. LMAX has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

LMAX will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the material produced in this Blog was obtained from sources deemed to be reliable, LMAX does not provide any guarantees about the reliability of such sources.

Consequently any person acting on it does so entirely at his or her own risk.

If you currently hold an account with LMAX for the purposes of trading FX and CFD’s, you are encouraged to use a different Username and Password to access the Blog or any other online systems. The Blog is a place to learn, discuss and share information and ideas with Blog followers. It is not a place to slander, use unacceptable language or to promote LMAX or any other FX, Spread Betting and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.