Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 112.569 | EURUSD 1.12243 | AUDUSD 0.75521 | NZDUSD 0.65937 | USDCAD 1.30977 | USDCHF 0.97687 | GBPUSD 1.4261 |

LMAX Highs and Lows 6am

                                High | Low

EURUSD                1.12292 | 1.12049

USDJPY                 112.958 | 111.938

GBPUSD               1.42909 | 1.42291

AUDUSD               0.76196 | 0.75345

USDCHF                0.97919 | 0.97711

USDCAD               1.31328 | 1.30703

NZDUSD               0.67826 | 0.67170

EURGBP                0.78856 | 0.78508

EURJPY                 126.601 | 125.601

EURCHF                1.09910 | 1.09630

 

For Today

• EUR: Although the volume wouldn’t suggest it the market has moved quietly through the session for the Euro with the market opening around the 1.1220 levels and dipping towards the 1.1210 levels then continuing to range around those two levels for the day with the market moving into the grey hours little changed from the opening, Topside offers are likely to be limited through the 1.1240-60 areas and is then likely to meet further resistance and possibly stronger into the 1.1280-1.1300 levels however, once through the market could see quick weak stops appearing on a push through the 1.1320 levels and the market opening for a larger move and opening the 1.1400-1.1500 levels for a test. Downside is likely to be a little weaker for the moment with unfocused bids likely to dominate any support however a strong push through the 1.1200 levels opening up a move back to the 1.1100-20 areas with the 1.1070 levels possibly seeing weak stops.
• GBP: Cable opened quietly around the 1.4260 levels and moved sideways into the Tokyo session holding the 1.4240 levels before seeing cross movement sending it to test into the 1.4290 areas with light profit taking in GBPJPY and EURGBP selling back to the 0.7850 before dropping away from its highs, again the market turned quiet and traded quietly for a good proportion of the session holding the opening levels however, the closer the market moved to the grey hours the weak the GBP performed and the market slowly drifted to the 1.4240 levels. Topside offers likely through the 1.4300 levels and continuing with those offers likely to continue weakly into the 1.4350 areas, stronger offers again appear around the 1.4400 levels, downside bids weak through to the 1.4150 from the current levels and once the market pushes through this level the market starts to see bids moving back into the market with the 1.4100 and then strong bids appearing in the market, however, the strong movement in the Cable yesterday could be quickly reversed on any bad news.
• JPY: From the opening the market made only a token effort to retrace some of its losses and failed to push through the 113.00 level into the early Tokyo session and then drifted around the 112.70 areas for several hours, before starting a steady fall back to the 112.00 levels talk of the moves and future moves been more a flee to safety as the markets see more disorder, the market eventually saw strong enough bids to slow the movement and while it tested slightly through the level has started to rally a little into the grey hours. Topside offers through the 112.80 levels and into the 113.00 areas possibly weaker offers through the level and into the 113.20 areas before the market opens again to the highs from yesterday. Downside bids into the 111.80-90 areas will likely quickly disappear and the market will possibly see stops appearing for a move lower to test the 111.00 areas and the lows for the year.
• AUD: With the markets rally on the FOMC the Oz was left with little to do but test the 76 cent level, initially seeing early sellers the market dipped into the 0.7430 levels however, with the JPY weakening and Crude moving quickly through the $40 level to test towards $41 the Oz moved quickly into the Tokyo session and straight through the level to push to the 0.7620 areas before finding sufficient resistance to pin the market in a tight range and the remaining session trading around the 0.7600 areas. Technically the topside open for a move into the 77-79 cent levels the possibility is that the RBA is not likely to be overly pleased about that and the “we have the ability to cut” is running a little thin, a push through to the 0.7660 level will open the market for the move into the 77 cent levels then congestion could cause some slowing, downside bids light htorugh the 75 cent levels and the a move through the level could see weak stops appearing and the market retracing yesterday’s gains with very little of significance until the 73 cent levels.

Overnight News

JPY:

Japanese Bought Net 897.3 Billion Yen Overseas Debt Last Week

Global Funds Sell Most Japanese Stocks Since at Least 2005

Japan Feb. Exports Fall 4% Y/y; Est. -3%

Japan’s Exports to China Rose 5.1% Y/y in Feb. in Value

Aso Reiterates Sales-Tax Should Be Increased as Planned in 2017

Japan’s Abe Says Nation No Longer in Deflation

AUD:

Australian Feb. Employment Rises 300 M/M; Est. 13,500 Gain

Debelle Says RBA Would Welcome Slightly Lower Exchange Rate

CNY:

China’s Trade to Be More Difficult in 2016 Than Year Ago: Shen

China to Relax Foreign Investors’ Entry to Finance Sector: Shen

China Feb. FDI Rises 1.8% Y/y in Yuan Terms

NZD:

New Zealand GDP Expands on Services, Retail, Construction

Today’s data

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

NZD       GDP Q/Q Q4 A 0.90% | C 0.70% | P 0.90%

JPY         Trade Balance (JPY) Feb A 0.17T | C 0.24T | P 0.12T | R 0.07T

AUD       Employment Change Feb A 0.3K | C 12.3K | P -7.9k | R -7.4K

AUD       Unemployment Rate Feb A 5.80% | C 6.00% | P 6.00%

06:45     CHF        SECO March 2016 Economic Forecasts

08:15     CHF        Producer & Import Prices M/M Feb C 0.20% | P -0.40%

08:15     CHF        Producer & Import Prices Y/Y Feb P -5.30%

08:30     CHF        SNB 3-Month Libor Upper Target Range C -0.25% | P -0.25%

08:30     CHF        SNB Sight Deposit Interest Rate C -0.75% | P -0.75%

08:30     CHF        SNB 3-Month Libor Lower Target Range C -1.25% | P -1.25%

10:00     EUR        Eurozone Trade Balance (EUR) Jan C 20.2B | P 21.0B

10:00     EUR        Eurozone CPI M/M Feb P -1.40%

10:00     EUR        Eurozone CPI Y/Y Feb (F) C -0.20% | P -0.20%

10:00     EUR        Eurozone CPI – Core Y/Y Feb (F) C 0.70% | P 0.70%

12:00     GBP        BoE Rate Decision C 0.50% | P 0.50%

12:00     GBP        BoE Asset Purchase Target C 375B | P 375B

12:00     GBP        MPC Official Bank Rate Votes C 0–0—9 | P 0–0–9

12:00     GBP        MPC Asset Purchase Facility Votes C 0–0—9 | P 0–0–9

12:30     CAD       Wholesale Sales M/M Jan P 2.00%

12:30     USD        Current Account Balance Q4 C -115B | P -124B

12:30     USD        Philly Fed Survey Mar C -0.5 | P -2.8

12:30     USD        Initial Jobless Claims (MAR 12) C 267K | P 259K

14:00     USD        Leading Indicators Feb C 0.20% | P -0.20%

Harry Hindsight               

• EUR: Opening just above the 1.1100 levels the market trade quietly through the Asian session eventually pushing through the 1.1100 levels after several hours but unable to push too far and the market had to move into the grey hours before pushing to the 1.1080’s into the London opening, the market continued to drift through the day with the move into the NYK very little different and holding the 1.1080-1.1100 levels, eventually the NYK session reacted to the indifferent US CPI saw the market dip again to the 1.1060 levels and then held at this level through to the FOMC, no change on the rates was expected however, the market reacted quickly to the headline with the Euro heading quickly back through the 1.1100 and only slowed it’s ascent above the 1.1160 levels and although it slowed it continued to push through the 1.1200 levels spiking to the 1.1240 level before running into sufficient offers to hold the market and the close around the 1.1220 areas.
• GBP: The move through the Asian session saw the Cable continue under pressure, with the opening 1.4150 areas and moving into the Tokyo slipping slowly to the 1.4130 areas and dipping from the grey hours to hold along the 1.4100 areas, as with the Euro the Cable dipped lower into the NYK session and the Cable moved to the 1.4060 levels as the last of the weak longs pulled out before the FOMC, recovering to the 1.4100 level the release saw the headline release move the Cable back to the 1.4200 levels in a quick move and then slowly edge higher over the next hour to the 1.4280 levels and negating the recent moves lower holding to the close only just short of those highs. While there was plenty of data from the UK the employment numbers were again on the good side but overshadowed by the FOMC and the actual budget report had little impact overall.
• JPY: USDJPY opened around the 113.15 areas dipping into the Tokyo session as the weak longs cut positions for the day and the market tested towards the 113.00 levels before starting a steady climb higher through to the 113.50 levels in the first couple of hours before holding steady through to the London opening, London saw another leg higher and the market moved firmly above the 113.50 level and traded for the most part above the 113.60 levels pushing to the 113.80 levels as the market approached the FOMC numbers, while the market didn’t expect a change the fact that there was little indication has shifted the market away from the chance of the implied 4 hikes for the year and reduced that to expectations of only two, USDJPY dropped back quickly trading through the 113.00 levels before slowing with the next hour seeing the market pushing through to the 112.30’s before finding some support reappearing with light profit taking and the market holding to a close around the 112.50’s.
• AUD: A very quiet session for the Oz with the market moving around the 0.7460 levels dipping to the 0.7440 levels but finding little movement or independent interest, the move into the London did little to inspire and although the market pushed steadily above the 0.7470 levels to make the highs so far, slipping a little into the NYK session to set the lows just below the 0.7420 levels the market continued to struggle through to the FOMC release and quickly rose to the 0.7520 levels continuing to rise to the close around the 0.7560 levels.

Yesterday’s premiership results

NZD       Current Account Balance (NZD) Q4 A -2.61B | C -2.90B | P -4.75B | R -4.74B

AUD       Westpac Leading Index M/M Feb A -0.20% | P -0.04% | R 0.10%

GBP        Jobless Claims Change Feb A -18.0K | C -9.0K | P -14.8k

GBP        Claimant Count Rate Feb A 2.10% | C 2.20% | P 2.10%

GBP        ILO Unemployment Rate (3M) Jan A 5.10% | C 5.10% | P 5.10%

GBP        Average Weekly Earnings 3M/Y Jan A 2.10% | C 2.00% | P 1.90%

GBP        Annual Budget Release

CAD       Manufacturing Shipments M/M Jan A 2.30% | C 0.50% | P 1.20%

USD        Housing Starts Feb A 1.18M | C 1.15M | P 1.10M

USD        Building Permits Feb A 1.17M | C 1.20M | P 1.20M

USD        CPI M/M Feb A -0.20% | C -0.20% | P 0.00%

USD        CPI Y/Y Feb A 1.00% | C 0.90% | P 1.40%

USD        CPI Core M/M Feb A 0.30% | C 0.20% | P 0.30%

USD        CPI Core Y/Y Feb A 2.30% | C 2.20% | P 2.20%

CAD       International Securities Transactions (CAD) Jan A 13.51B | P -1.41B

USD        Industrial Production Feb A -0.50% | C -0.30% | P 0.90%

USD        Capacity Utilization Feb A 76.70% | C 76.80% | P 77.10%

USD        Crude Oil Inventories A 1.3M | C 2.9M | P 3.9M

USD        FOMC Rate Decision A 0.50% | C 0.50% | P 0.50%

USD        FOMC Press Conference

Good Luck,

Andy

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