Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 113.789 113.77-114.00 | EURUSD 1.10064 1.1004-07 | AUDUSD 0.74392 0.7413-19 | NZDUSD 0.68195 0.6802-19 | USDCAD 1.33141 1.3322-27 | USDCHF 0.99313 0.9926-38 | GBPUSD 1.42317 1.4213-15 |

 

LMAX Ranges 6am London time

Highs    Lows

EURUSD               1.10030 | 1.09839

USDJPY                 113.961 | 113.510

GBPUSD               1.42272 | 1.41972

USDCHF               0.99470 | 0.99286

AUDUSD              0.74243 | 0.74000
USDCAD               1.33502 | 1.33188

NZDUSD               0.68034 | 0.67790

EURCHF                1.09314 | 1.09133

EURGBP               0.77417 | 0.77273

EURJPY                 125.260 | 124.824

For today

• EUR: Opening a little lower on the official opening the market has remained in the 1.0990 area for the whole session with very light volumes, Topside offers likely into the 1.1040-60 areas however, a push through the already tested area could see the stronger 1.1100 levels open with the market needing stronger movement to push through the 1.1150 areas, downside bids light through to the 1.0900 levels with strength likely to continue through the 1.0880 into 1.0860, the bid lightens a little until the 1.0820 areas and stronger bids are likely to continue through to the 1.0800 areas.
• GBP: Cable opened slightly off the closing levels and then drifted through the pre-Tokyo session to test to the 1.4210 areas, the move into the Tokyo session saw the range confined to the 1.4220 levels drifting to the 1.4200 areas before regaining the 1.4210 levels and holding that level into the grey hours. Topside offers into the 1.4250 levels however, the market is not likely to find that much trouble on a push through the level with Fridays attempt lacking impetus on its final test higher, a push through the level though is likely to find the 1.4300 more of a challenge with the level likely to be key to a move back to the 1.4400-1.4600 ranges from the beginning of last month. Downside bids light through the 1.4150 areas and then possibly stronger bids into the 1.4050 areas with the bids increasing into 1.4000 however, with little data the market is likely to move, if it does, on the subject of Brexit.
• JPY: USDJPY was possibly the most active of the majors with the opening in line with Fridays close and trading quietly to the Tokyo opening, from there though the market drifted down to the 113.50 levels before finding some limited support and trading back to range in the 113.60-80 areas through to the grey hours, Topside offers through the 114.00 areas and particularly into the 114.20 areas, the market to the topside has patches or resistance from then on with the 114.80 areas likely to be stronger in nature with the level protecting the previous ranges above the 117 level. Downside bids well traversed with the 113.20-112.80 levels likely to be limited, and a push through the level likely to quickly find the market testing to the 112.00 however, a limited news day and possibly quiet overall.
• AUD: The Oz saw a large drop on the opening after plenty of commentary over the weekend in China, opening around the 0.7115 areas and then holding around the 0.7410 areas through the session with only one minor dip to test the 74 cent levels into the Tokyo session. Topside offers into the 0.7440-60 area is not likely to open the market to any major movement however, if the market can find some impetus the topside could open through the 75 cent level with possibly stronger offers into the 76 cent levels, downside bids into the 73 cent level are likely to be limited but present and slowing any move through onto the 72 cent level with stronger bids likely between those two levels, however, limited data and news.

Overnight News

JPY:

Kuroda: FX Rate Would Move Gradually If Reflecting Fundamentals

Kuroda: Decline in Interest Rates Exactly What BOJ Intended

Some Japan Govt. Depts. Studying Impact of Tax Hike Delay: Reuters

Abe Adviser Hamada: BOJ Board Nominee Sakurai Has Good Intuition

Japanese Public Approves Okinawa Base Issue Settlement: Mainichi

’Abenomics’ Disapproval Rating Rises 3 Ppts to 47%: Yomiuri Poll

Fitch Says Japan Tax Hike Delay May Hurt Credit Rating: Reuters

CNY:

China Premier Calls for ‘New Momentum’ to Boost Growth: Xinhua

China Won’t See Zero Or Negative Interest Rates: PBOC’s Yi

Opening of China’s Interbank Bond Mkt Credit Positive: Moody’s

Moody’s: China Increase in Leverage Risks Raising Liabilities

China to Continue to Allow Local Debt Swap This Year: Lou

China Govts Revenue to Fall After VAT Reform: Finance Minister

KRW:

North Korea Warns Against U.S.-S. Korea Military Exercises

CHF:

Maechler Says Banks Tell SNB Negative Rates Are Working: Temps

GBP:

British Chamber of Commerce Says John Longworth to Step Down

AUD:

Australia’s Feb. Construction Index Falls 0.2 Pt M/M to 46.1

Australia Feb. ANZ Job Ads Fall 1.2% vs 0.9% Rise in Jan.

NZD:

RBNZ Names Steve Gordon as Head of Currency, Property, Security

Today’s data

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

JPY         Leading Index Jan (P) A 101.4 | C 101.6 | P 102.1 | R 101.8

07:00     EUR        German Factory Orders M/M Jan C -0.40% | P -0.70%

08:00     CHF        Foreign Currency Reserves Feb P 575B

09:30     EUR        Eurozone Sentix Investor Confidence Mar C 8.5 | P 6

15:00     USD       Labour Market Conditions Index Change Feb P 0.4

Weekend News

CNY:

China NPC Report Highlights: GDP Target 6.5%-7%, M2 set at 13%
China Eases Fiscal Stance to Meet Slower 2016 Growth Target
Yuan Exchange Rate Is Currently Stable: China’s Forex Head
China Forex Reserves Level to Stay ‘Reasonable’: PBOC’s Yi
PBOC’s Yi Reveals Some Non-Dollar Reserves in Transparency Bid
IMF to Identify Yuan in FX Reserve Database Starting Oct. 1
China ‘Absolutely’ Won’t Have Hard Landing, NDRC’s Xu Says
China Has Ample Policy Tools to Arrest Economic Slowdown: Xinhua
China Is Exploring Interest-Rate Corridor Mechanism: PBOC’s Yi
China Supply-Side Reform to Make Policies More Effective: Zhou
China’s Forex Reserves Fully Diversified: PBOC Deputy Governor
PBOC Considers National Leverage Ratio in Money Policy Decisions
China Won’t See Wave of Layoffs, NDRC Chairman Says
Chinese Minister Confident of Healthy Property Development
USD:

Lagarde: USD May Share Global FX Reserve Prominence in Future
Trump Stays in Front as Cruz Raises Pressure With Split Decision
GBP:

UK Business Lobby Chief Future at Risk over Brexit Speech: Times

UK Business Lobby Chief resigns over his backing of Brexit and likely to muddy the waters
Osborne May Speed Increase to 40% Income Tax Threshold: S. Times
Ex-Member of BOE’s MPC Says Rates to Stay Low Through 2021: BBC
EUR/GBP:

EU Membership Makes U.K. Less Safe, Gove Tells S. Times
EUR:

Schaeuble Warns Cabinet Members on Budget Requests, Welt Reports
EU Commission Will Ask Italy to Reduce Debt, La Repubblica Says
Tsipras: Greece Can’t Bear Refugee Crisis Burden for All Europe
NOK:

Norway AAA Rating Affirmed by Moody’s; Keeps Stable Outlook
RUB:

Russia May Be Cut by Moody’s on Oil Price Decline
PLN:

Poland May Shuffle Government in ‘Summer,’ Fakt Says

Harry Hindsight

• EUR: Limited movement through the Asian session with the market holding around the 1.0950 levels through to the London opening, even into the London session the market only drifted to the 1.0930 levels before Eurozone retail PMI results reversed the loss and the Euro managed to move above the 1.0970 levels, moving through the session the market eventually tested to the 1.0990 levels before heading into the NYK session slipping a little lower into the numbers, headline number NFP saw a decent number and the Euro quickly hit the 1.0900 areas before the market absorbed the next numbers including the average hourly earnings which dipped to -0.10% and again seeing little inflationary pressure from the 4.90% unemployment level, and finally a weaker trade balance, the result was the Euro snapping back to above the 1.1000 levels with sellers quickly moving in however, once the correction was finished with the Euro again moved quickly to the topside touching through the 1.1040 levels before eventually slipping back to trade around the 1.1000 levels to the close.
• GBP: From the opening around the 1.4170 levels the market slowly drifted lower through the Asian session holding into the grey hours around the 1.4160 levels, the move into the London session saw stronger movement with the market dropping into the 1.4130 levels but failing to test much beyond the 1.4160 levels into the NYK release, initial movement was towards the 1.4100 areas before snapping back to test towards the 1.4200 levels, movement in the Euro with the EURGBP pushing to the highs around the 0.7775 areas, Cable again moved higher pushing easily through the 1.4200 levels and eventually testing the 1.4250 areas before slipping back to finish the day just off those highs into the close.
• JPY: USDJPY saw market selling into the Tokyo session with USDJPY moving off the 113.70 areas and dropping back in a couple of waves to the 113.20 levels before starting a recovery as the early sellers removed themselves from the market and the NFP later in the day, the recovery was a steady affair and the market moved into the London session again pushing towards the 114.00 levels, London were sellers and the market dipped back in early trading towards the opening levels and held in those areas to the NFP release, headline numbers sent the USDJPY into the topside offers and the 114.20 levels before quickly dropping back to the 113.10 levels as the market absorbed the other numbers and then snapping back as the USDJPY adjusted to the previous levels around the 113.90 levels into the London close, the market again tested the topside, slowly this time however, with the same result and the market has drifted to the 113.80 levels to the close.
• AUD: The Oz took its time moving trading through the early part of Asia around the 0.7350 levels before pushing to the 0.7370 areas and then trading through to the London session holding the 0.7360-70 areas, London were quiet buyers and the market managed to push towards the 0.7390 levels before the NFP numbers, the Oz’s reaction to the releases was muted initially however, as the USD fell back the Oz put in a quick move off the numbers and traded through the 0.7400 level and eventually ran into the stronger offers into the 0.7440 areas, the market held in the areas from then to the close.

Friday’s premiership results

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

AUD       Retail Sales M/M Jan A 0.30% | C 0.40% | P 0.00%

JPY         Labour Cash Earnings Y/Y Jan A 0.40% | C 0.20% | P 0.10%

EUR        Eurozone Retail PMI Feb A 50.1 | P 48.9

USD       Change in Nonfarm Payrolls Feb A 242K | C 198K | P 151K | R 172K

USD       Unemployment Rate Feb A 4.90% | C 4.90% | P 4.90%

USD       Average Hourly Earnings M/M Feb A -0.10% | C 0.20% | P 0.50%

USD       Trade Balance Jan A -45.7B | C -43.5B | P -43.4B | R -44.7B

CAD       Labour Productivity Q/Q Q4 A 0.10% | C 0.20% | P 0.10% | R 0.40%

CAD       Trade Balance (CAD) Jan A -0.66B | C -1.0B | P -0.6B

CAD       Ivey PMI Feb A 53.4 | C 59 | P 66

Stay lucky

Andy

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