Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 112.694 | EURUSD 1.08727 | AUDUSD 0.71408 | NZDUSD 0.6596 | USDCAD 1.35412 | USDCHF 0.9984 | GBPUSD 1.39162 |

LMAX Highs and Lows 6am

                                High | Low

EURUSD               1.08901 | 1.08744

USDJPY                 112.758 | 112.000

GBPUSD               1.39440 | 1.39135

AUDUSD              0.71517 | 0.71097

USDCHF               0.99862 | 0.99689

USDCAD               1.35504 | 1.35281

NZDUSD               0.66154 | 0.65908

EURGBP               0.78209 | 0.78040

EURJPY                 122.632 | 122.055

EURCHF                1.08665 | 1.08546

 

For Today

• EUR: A quiet session for the Euro with the market trading quietly around the 1.0880 levels with very little independent movement in the Euros, Topside offers are light through to the 1.0960 levels with the market having already cleared a path through the previous day, stronger offers likely into the 1.0980 areas and although those offers are likely to be the 1.1000 areas the congestion above the area is likely to see those offers continuing to some extent, a push through the 1.1060 level will likely see the 1.1100 become a target and although the offers are likely to increase. Downside bids into the 1.0860 levels and through to the 1.0840 areas are likely with renewed bids likely to reappear on any move through to the 1.0820 areas, a push through 1.0780 areas is likely to see weak stops appearing and the market opening to the 1.0700 areas.
• GBP: A quiet rise through the Asian session from the opening 1.3920 levels to test above the 1.3940 area, limited overall, Topside offers into the 1.3950 areas are likely to be light with better offers possibly appearing into the 1.4000 areas, however, with offers likely to continue to the 1.4050 levels, weak stops are a possibility and while there are likely to be offers through the 1.4100 areas one would suspect the 1.4150 level being a stronger area. Downside bids light into the 1.3900 levels with a move through the level seeing stronger bids into the 1.3850 areas, with stops a very distinct possibility on a move through the level and the market opening for a deeper move to threaten the lows from 2009.
• JPY: USDJPY opened around the 112.70 levels and the move into Sydney saw a quick drop back to the 112.20 levels with before holding the levels and drifting through the early part of the session ranging the 112.20-40 areas, the move into Tokyo saw the market briefly move into the 112.50 levels before slowly drifting to the lows again, with the data out and lower numbers out of China the USD eventually started a slow move higher and pushed through to trade around the 112.60 levels into the grey hours. Topside offers light into the 112.80 areas and those offers are likely to continue through the 113.20 areas with weak stops a possibility on a break through the level and the market opening to a steady rise higher, downside bids into the 112.20 levels are likely to continue through to the 111.80 areas where the market is likely to see weak stops through the level and a possibility of a move to the 111.00 areas.
• AUD: The market drifted from the opening having initially tested the 0.7150 levels what weak longs were in the market quickly closed their positions and the market into the Tokyo session saw the lows set around the 0.7110 levels, the RBA announcement as unchanged and the same commentary broadly speaking saw the market move back to the opening 0.7140 areas. Topside offers likely into the 72 cent levels with those offers likely to continue through to the 0.7240 areas before any type of weakness appears, downside bids limited through to the 0.7000 areas and then the bids start to strengthen with 0.6950 levels likely to be particularly strong.

Overnight News

CNY/USD:

Lew Says China Assured No Need or Plans to Devalue Currency

CNY:

PBOC’s Chen Says Strong Dollar May Cause Emerging Market Crises

China Feb. Manufacturing PMI 49.0; Est. 49.4

China Feb. Manufacturing PMI Fall Affected by Holiday, NBS Says

Caixin China Feb. Manufacturing PMI 48; Est. 48.4

PBOC Suspends Open-Market Operation Because of Ample Liquidity

China FX Reserves of About $2t “Reasonable’: Eco. Info Daily

China Said to Aim to Lay Off 5m-6m State Workers: Reuters

AUD:

RBA’s Stevens Keeps Benchmark Interest Rate at 2% (Full Text)

Australia 4Q Net Exports Neutral for GDP, Est. 0.3 Pt Rise

Australian Govt. Bonds’ Foreign Ownership Declines in 4Q

Australia ANZ Weekly Consumer Confidence Falls 2.6% to 111.3

Australia Feb. Manufacturing Index Rises 2.0 Pts M/M to 53.5

JPY:

Suga Says Abe Mulls Economics Panel Ahead of G7 Summit in May

Japan 4Q Capital Spending Rose 8.5% Y/y; Est. +8.7%

Japan Jan. Unemployment Rate at 3.2%; Est. 3.3%

Nikkei Japan Feb. Manufacturing PMI 50.1 vs 52.3 in Jan.

USD:

Fed’s Dudley Says ‘Somewhat Less Confident’ on Inflation Outlook

NZD:

New Zealand Terms of Trade Fall Led by Dairy Price Decline

Today’s data

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

NZD       Terms of Trade Index Q/Q Q4 A -2.00% | P -3.70% | R -3.80%

JPY         Jobless Rate Jan A 3.20% | C 3.30% | P 3.30%

JPY         Household Spending Y/Y Jan A -3.10% | C -2.50% | P -4.40%

AUD       Current Account Balance (AUD) Q4 A -21.1B | C -19.8B | P -18.1B | R -18.8B

AUD       Building Approvals M/M Jan A -7.50% | C -2.90% | P 9.20% | R 8.60%

CNY        Manufacturing PMI Feb A 49 | C 49.4 | P 49.4

CNY        Non-manufacturing PMI Feb A 52.7 | P 53.5

CNY        Caixin PMI Manufacturing Feb A 48 | C 48.4 | P 48.4

AUD       RBA Rate Decision A 2.00% | C 2.00% | P 2.00%

08:15     CHF        Retail Sales (Real) Y/Y Jan C -1.20% | P -1.60%

08:30     CHF        PMI Manufacturing Feb C 49.6 | P 50

08:45     EUR        Italy Manufacturing PMI Feb C 52.2 | P 53.2

08:55     EUR        German Unemployment Change Feb C -10K | P -20k

08:55     EUR        German Unemployment Rate Feb C 6.20% | P 6.20%

08:55     EUR        Germany Manufacturing PMI Feb (F) C 50.2 | P 50.2

09:00     EUR        Eurozone Manufacturing PMI Feb (F) C 51 | P 51

09:30     GBP       PMI Manufacturing Feb C 52.3 | P 52.9

10:00     EUR        Eurozone Unemployment Rate Jan C 10.40% | P 10.40%

13:30     CAD       GDP M/M Dec C 0.10% | P 0.30%

15:00     USD       ISM Manufacturing Feb C 48.5 | P 48.2

15:00     USD       ISM Prices Paid Feb C 35.5 | P 33.5

15:00     USD       Construction Spending M/M Jan C 0.50% | P 0.10%

Harry Hindsight              

• EUR: A weak opening saw the market contained in a tight range through the Asian session with the market finding strength only into the grey hours with the market holding the 1.0920-40 areas until that point then a steady rise to the 1.0960 levels through the grey hours to make the high for the day however, the better German retail sales only had a limited effect on the Euro and the move into the London session saw steady Euro selling and the market pushed to the 1.0900 levels before finding tentative bids lasting only briefly and the market continuing its move to the 1.0880 levels, the move into NYK had little movement as the market clung to the 1.0880 level deep into the NYK session before pushing gradually through to the 1.0860 level at which point the selling subsided and the market pushed gradually back above the 1.0880 levels and moved around the level to the close.
• GBP: With the UK Government busy with in house arguments over the In or Out referendum campaign Cable struggled in a narrow range with the downside open to the possibility of a substantial levels not seen since the Lehman and beyond that the mid 1980’s lows. So with those levels in mind the market found sufficient support to hold roughly any threat to the downside and traded around the 1.3860 levels for long periods of time through the day, the move into the grey hours had seen the Asian session test into the 1.3840 levels with little conviction and unable to push above the 1.3880 levels at its widest point, Early London saw a push through the 1.3900 levels which was more to do with the weakness in the Euro than strength in Cable and EURGBP selling moving in however, while the Euro weakened and GBP continued to gain against it the rally for Cable ended and the market drifted back from its highs and the market tested the 1.3840 levels into the NYK opening, NYK were sellers of the EURGBP and this helped the Cable back to the 1.3900 level and weak stops through the level saw Cable trade to the 1.3940 levels before ranging quietly above the 1.3900 levels to the close.
• JPY: The USDJPY opened testing the 114.00 levels however, the limited buying soon finished and the market traded quickly back to the 113.80 levels and eventually touched through 113.60 into the Tokyo opening, the limited buying on the opening then saw a steady but constant background of selling through the Asian session and pushed into the grey hours testing below the 113.00 levels holding the 112.80-113.00 through the bulk of the London session with the NYK session pushing from the opening through to the 113.20 levels before slipping back to the 112.80 levels on weaker US numbers, the market then slowly drifted to the end of the day testing the lows of the day to finish on those lows.
• AUD: The Oz traded quietly throughout the day with the market slowly rising higher through the day, with the early range through Asia around the 0.7110-30, the move to the grey hours saw the range step up to trade around the 0.7130 levels and the move into London saw weaker CPI numbers giving rise to EURAUD selling and a spike in the Oz to set the high just short of the 0.7170 levels before drifting back to trade the 0.7130-50 areas through the session and into the close in quiet trading before the following days RBA announcement.

Yesterday’s premiership results

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%

EUR        German Retail Sales M/M Jan A 0.70% | C 0.30% | P -0.20%

CHF        KOF Leading Indicator Feb A 102.4 | C 99.1 | P 100.3

GBP       Mortgage Approvals Jan A 75K | C 74K | P 70.8k

GBP       M4 Money Supply M/M Jan A 0.00% | C 0.30% | P -0.20%

EUR        Eurozone CPI Estimate Y/Y Feb A -0.20% | C 0.00% | P 0.30%

EUR        Eurozone CPI – Core Y/Y Feb (A) A 0.70% | C 0.90% | P 1.00%

CAD       Current Account (CAD) Q4 A -15.38B | C -16.8B | P -$16.21B | R -15.31B

CAD       Industrial Product Price M/M Jan A 0.50% | C 0.10% | P -0.20%

CAD       Raw Materials Price Index M/M Jan A -0.40% | C -3.30% | P -5.00%

USD       Chicago PMI Feb A 47.6 | C 53.8 | P 55.6

USD       Pending Home Sales M/M Jan A -2.50% | C 0.90% | P 0.10%

Good Luck,

Andy

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