Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 113.479 | EURUSD 1.0868 | AUDUSD 0.72955 | NZDUSD 0.66359 | USDCAD 1.34159 | USDCHF 0.99667 | GBPUSD 1.40797 |

LMAX Highs and Lows 6am

                                High | Low

EURUSD               1.08754 | 1.08535

USDJPY                 114.243 | 113.408

GBPUSD               1.40927 | 1.40713

AUDUSD              0.73220 | 0.72883

USDCHF               0.99820 | 0.99585

USDCAD               1.34349 | 1.34088

NZDUSD               0.66975 | 0.66563

EURGBP               0.77252 | 0.77093

EURJPY                 124.007 | 123.191

EURCHF                1.08368 | 1.08285

 

For Today

• EUR: Opening around the 1.0870 levels the market held the levels through into the Tokyo session and saw a little weakness once the CNY numbers were released drifting from the highs just above the 1.0875 levels and slipped steadily lower through the next couple of hours to trade into the mid 1.0850’s as the market moved towards the grey hours, Topside offers into the 1.0880-1.0900 areas and likely to see weak stops on a move through the level and then further offers likely into the 1.0940-60 levels these are likely to be light at best and the market has the potential to push to the 1.1000 levels with possibly stronger offers through the level and into the 1.1050 areas. Downside bids into the 1.0820 levels and likely to continue through to the 1.0780 areas before any sign of weakness, a push through the level is likely to open a test of the 1.0720-00 areas however, any push through the level will opening the 1.0600-40 areas for further tests.
• GBP: Cable has traded quietly around the 1.4080 levels with only one brief move towards the 1.4100 levels failing on the move through the 1.4090 areas before returning to the 1.4080 areas with slight drifts into the 1.4070 areas but always returning to the opening levels and holding into the grey hours, Topside offers into the 1.4100 areas with limited offers likely to continue through to the 1.4150 areas before the market opens to the topside with possibly weak stops through the 1.4150 areas and the potential for a squeeze through to the 1.4250-1.4300 levels. Downside bids into the 1.4000 are likely to be light at best however, through the level the market is likely to find better support than it previously did as the market readjusts from the EU referendum in the UK and starts to concentrate on economics, a push through the 1.4000 will likely find support increasing on a push to the 1.3950 and through the levels and only a solid push through the 1.3900 areas will open the market for further weakness.
• JPY: USDJPY opened around the 113.50 levels and the move into the Tokyo session started to push steadily higher pushing gradually through to test the 114.20 levels with only a brief period holding around the 113.80 areas , the market drifted from the 114.25 area settling back to the 114.10 areas for the move into the grey hours, Topside offers through the 114.50 areas and likely to increase above the 114.80 areas however, a solid push through the 115.00 levels is likely to see light stops and the market opening quickly to the 117.00 levels as it recovers the losses from early Feb, offers from there into the 118.00 levels are likely to contain the market, Downside bids light through the 113.50 areas and increasing into the 113.20 levels with bids likely to be building in the area, a push through those levels again will likely see the market test to the 112.00 levels again with the levels already well traversed.
• AUD: A mixed day for the Oz with better trade balance numbers than were expected however, this was balanced somewhat by the weaker PMI numbers in China and although the Oz moved off the opening 0.7285 areas and climbed steadily to test the 0.7320 levels it was unable to make any further headway during the Asian session slipping back to the 73 cent level for a second run higher and then slipping into the grey hours quietly. While the Oz maybe trading on its yearly highs the topside has seen several attempts to this 0.7400 areas during the last 3 months of 2015 and the market is likely to again see those offers appearing on any attempt through the 0.7340-60 areas, downside has limited bids and still remains weak especially if the RBA start to chatter, however, a push to the 71 cent level will likely see some profit taking and the descent slowing into better bids through the levels and into the 70 cent handle.

Overnight News

JPY:

Japanese Bought Net 933.8 Billion Yen Overseas Debt Last Week

Kuroda: BOJ Will Examine Risks, Won’t Hesitate to Act If Needed

Nakaso: Negative Rates Will Accelerate Process to Beat Deflation

Kuroda’s Deputy Urges Abe Government to Accelerate Reforms

Abe Says Sales Tax Hike to Go Ahead, But Notes Consumption Hit

Japan’s Asakawa Says G-20 Didn’t Discuss Yen at All: Jiji (Yday)

Nikkei Japan Feb. Services PMI 51.2 vs 52.4 in Jan.

Japan LDP Panel to Study Immigrant Labour Feasibility: Reuters

JPY/KRW:

Abe Plans to Invite S.Korea’s Park to G-7 Summit: Nippon TV

KRW:

North Korea Fires Short-Range Missiles toward Eastern Waters

CNY:

Caixin China Feb. Services PMI 51.2 vs 52.4 in Jan.

AUD:

Australia Jan. Trade Deficit A$2.937b; Est. A$3.2b Deficit

Australia Feb. Services Index Rises 3.4 Pts M/M to 51.8

NZD:

N.Z. Construction Rose 8.1% in 2015, Slowest in Four Years

SGD:

Nikkei Singapore Feb. Whole Economy PMI 51.6 vs 52.5 in Jan.

RUB:

Russia Sees Oil averaging $35/barrel in 2016: Vedomosti

Today’s data

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

0:30        AUD       Trade Balance (AUD) Jan A -2.94B | C -3.22B | P -3.54B | R -3.52B

1:45        CNY        Caixin PMI Services Feb A 51.2 | C 52.6 | P 52.4

08:45     EUR        Italy Services PMI Feb C 52.7 | P 53.6

08:50     EUR        France Services PMI Feb (F) C 49.8 | P 49.8

08:55     EUR        Germany Services PMI Feb (F) C 55.1 | P 55.1

09:00     EUR        Eurozone Services PMI Feb (F) C 53 | P 53

09:30     GBP       Services PMI Feb C 55.1 | P 55.6

10:00     EUR        Eurozone Retail Sales M/M Jan C 0.10% | P 0.30%

12:30     USD       Challenger Job Cuts Y/Y Feb P 41.60%

13:30     USD       Non-Farm Productivity Q4 (F) C -3.30% | P -3.00%

13:30     USD       Unit Labour Costs Q4 (F) C 4.80% | P 4.50%

13:30     USD       Initial Jobless Claims (FEB 27) C 271K | P 272K

15:00     USD       ISM Non-Manufacturing Composite Feb C 54 | P 53.5

15:00     USD       Factory Orders Jan C 0.80% | P -2.90%

Harry Hindsight              

• EUR: Another day of limited movement for the Euro with the topside offers into the 1.0900 levels keeping a lid on the move into the Tokyo session as the market moved off the opening 1.0865 levels to test for the first time through the 1.0880 level however, the opening of Tokyo saw the highs and the rest of the session was a steady slide lower to test to the 1.0850 levels, and then into the grey hours, early Europeans were the sellers and early London the buyers and the market moved back to test the 1.0880 levels again, the market again struggled at the level and slipped back for a final run at the level only to see Eurozone PPI numbers weaker than expected and the market drift steadily lower through into the NYK session to attempt the downside 1.0820 areas, London closed and the rally back to the previous levels was already pushing well on its way and the market again pushed towards the highs before holding in the area to the close.
• GBP: Cable opened around the 1.3950 areas and remained fairly static through the session until closer to the grey hours where it started to steadily rise and push at the 1.3980 areas, as with the Euro there was a limited dip before the early London players started to buy taking the market through the 1.3980 levels, strong EURGBP buying moved into the market at the opening in London and the cross pushed away from its lows around the 0.7770 areas to test above 0.7800 and into the 0.7810 levels however, the weak PPI numbers turned the cross and from those highs the EURGBP dropped through the session into NYK in a tight channel trading below the 0.7700 levels before moving off the lows on limited profit taking, Cable was the main beneficiary of the movement and the market in Cable traded steadily through the 1.4000 levels and continued to rise pushing towards the 1.4100 levels into the late session and after the London close however, it was late in the session the volumes were not particularly great and the market unable to push any higher settled into trade around the 1.4080 to the close.
• JPY: The USDJPY traded through the Asian session in a fairly tight range holding around the 114.00 levels, the move into the grey hours saw the market start to rise and push through into London holding the 114.40 areas and remained in the areas into the NYK session, better ADP numbers saw the market push briefly above the 114.50 levels before slipping back and continuing to drop as the market found little to stop the slide and the market tested back below the 114.00 areas, the break down through 113.80 levels saw weak stops appear in the market and the USDJPY dropped quickly to the 113.30 areas before finding sufficient support to hold the market for a quiet close around the 113.50 areas.
• AUD: Having opened around the 0.7175 levels the market held in the areas through into the Tokyo session slipping just slightly before the release of the GDP numbers and then rising quickly on the better numbers to test quickly above the 72 cent levels and gradually push to the 0.7240 areas into the grey hours, London was less inclined to buy on the news and the market remained in the 0.7220 areas for much of the session and only once the US data was out of the way did the Oz start to rise pushing slowly through the session to test the 73 cent levels before closing just below the level.

Yesterday’s premiership results

JPY         Monetary Base Y/Y Feb A 29.00% | C 27.90% | P 28.90%

AUD       GDP Q/Q Q4 A 0.60% | C 0.50% | P 0.90% | R 1.10%

CHF        GDP Q/Q Q4 A 0.40% | C 0.20% | P 0.00% | R -0.10%

GBP       Construction PMI Feb A 54.2 | C 55.5 | P 55

EUR        Eurozone PPI M/M Jan A -1.00% | C -0.90% | P -0.80%

EUR        Eurozone PPI Y/Y Jan A -2.90% | C -2.90% | P -3.00%

USD       ADP Employment Change Feb A 214K | C 185K | P 205K | R 193K

USD       Crude Oil Inventories A 10.4M | C 2.5M | P 3.5M

Good Luck,

Andy

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