Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 117.554 | EURUSD 1.04547 | AUDUSD 0.71854 | NZDUSD 0.69414 | USDCAD 1.34400 | USDCHF 1.02384 | GBPUSD 1.22781 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.04905 | 1.04536

USDJPY                 117.565 | 117.201

GBPUSD               1.23075 | 1.2270

USDCHF               1.02487 | 1.02135

AUDUSD              0.72358 | 0.71876

USDCAD               1.34510 | 1.34045

NZDUSD               0.69749 | 0.69227

EURCHF                1.07194 | 1.06937

EURGBP               0.85290 | 0.85157

EURJPY                 123.081 | 122.645

For Today

• EUR: After a quiet day yesterday with the market testing down to the 1.0450 areas the market pushed into the new session lifting from the 1.0460 levels to steadily rise through the Tokyo session to the 1.0490 levels before holding just below the levels through into the grey hours. Topside offers light through the 1.0500 levels and likely to continue in the same vein to the until the 1.0580 areas where the offers are likely to thicken, and the question being having seen the risk off into the end of the year will those same players now renew their positions and sell into the USD strength?, a move through the level will likely see weak stops mixed in with congestive offers and the market struggling through the mid 1.06 areas. Downside bids light through to the 1.0400 levels where the bids are likely to reappear and those bids are likely to continue through to the 1.0350 areas with stronger bids likely, a push through the 1.0340 areas could see stops appearing and the 1.0300 levels quickly vulnerable and limited bids through the level.
• GBP: Eventually the market moved off the 1.2280 areas to push into the closed Tokyo session rising to the 1.2300 levels and holding in a tight range around the level through to the grey hours, Topside offers light through the 1.2350 level with better offers likely through the 1.2390 areas with possible weak stops on a move through the level and likely to be very little through to the 1.2490-1.2500 areas where stronger offers are likely to appear, downside bids around the 1.2250 levels are likely to be weak however, a push through will see stronger supportive bids moving in and strengthening further on a push towards the 1.2200 level, a push through the level will likely see weak stops appearing and a possibility of some panic selling.
• JPY: USDJPY late push higher in NYK was not replicated on the move into the Asian session and the opening saw the market a little lower and then testing to the 117.20 levels, before ranging through the closed Tokyo session between the 117.30-50 levels running into the grey hours just off the low end of that range. Offers through the 117.80 levels are likely to be a little packed again and congestive offers running from the 118.00 levels through the mid 118 handle. Downside bids light through the 117.00 levels with limited bids through the 116 handle into the figure showing possibly the stronger bids with possible weak stops on a move through the 115.80 levels.
• AUD: From the opening we saw the local market moving in to buy the Oz from the closing levels and the move into the Tokyo session saw the market moving back to the 72 cent level, a better PMI number in China saw the Oz start a strong rally considering the limited market and pushing through quickly to the 0.7215 and then steadily continuing to top around the 0.7235 levels and moving into the grey hours just below that high. Topside offers likely to run from the 0.7240 levels with weak stops through the 0.7260 areas and the market then quickly running to the 73 cent levels, light offers around the sentimental level and the market then seeing further offers around the 0.7350 areas and light profit taking. Downside bids through the 72 cent level and increasing in size on a move towards the 0.7150 areas with particularly strong support even through the 0.7140 levels where there could be some weak stops the market is likely to remain well bid into the 71 cent levels.

Overnight News

USD:

Trump picks Lighthizer to serve as trade representative

CNY:

Better PMI figures from manufacturing 51.9 vs. Nov 50.9

China’s factories services cap year of gains as prices rise

China’s economy could grow 6.5% in 2017; devaluation could stabilise yuan: think tank

Today’s data

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

CNY        Caixin PMI Manufacturing Dec A 51.9 | C 50.9 | P 50.9

08:30     CHF        SVME PMI Dec C 56 | P 56.6

08:55     EUR        German Unemployment Change Dec C -5K | P -5K

08:55     EUR        German Unemployment Rate Dec C 6.00% | P 6.00%

09:30     GBP       Manufacturing PMI Dec C 53.3 | P 53.4

13:00     EUR        German CPI M/M Dec (P) C 0.60% | P 0.10%

13:00     EUR        German CPI Y/Y Dec (P) C 1.40% | P 0.80%

15:00     USD       ISM Manufacturing Dec C 53.7 | P 53.2

15:00     USD       ISM Prices Paid Dec C 55.5 | P 54.5

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

Harry Hindsight              

• EUR: Opening around the 1.0525 level the market struggled through a limited session with much of the market absent and still enjoying time away the move through to the London session saw the market holding around the 1.0520 levels dipping in the grey hours to the 1.0510 areas before moving into the official opening and the market testing those lows again, no change on the PMI numbers in Europe gave the market the impetus to sell Euro’s in limited volumes and the market pushed through quickly to the 1.0480 areas holding for a period and slowly drifting through the NYK session drifting steadily lower to test into the congestive bids through 1.0460-50 areas.
• GBP: Limited action through the Asian session with the Cable moving just above the 1.2350 levels and holding the 1.2340 levels through to the London session, with little independent news the Cable was pulled lower with the Euro in early London dropping back to the 1.2300 levels and then drifting into the NYK session pushing firmly through to the 1.2280 levels to trade quietly through to the close in NYK holding that level and unable to push back through the figure level.
• JPY: Very patchy through the Asian session with prices infrequent and trading even worse, the market testing through the 116.80 levels before slowing pushing through to the grey hours testing 116.90 the move into the grey hours saw some stronger buying moving into the market and the USDJPY rose into the London opening and the market tested through to the 117.40 levels quickly, the rest of the London session saw the market holding around the level and very little action with the market unable to push through the 117.50 levels.
• AUD: Quiet through the Asian session with barely a market to trade on the move towards the grey hours saw some pricing appearing in the market and having opened around the 0.7215 level was very little different into the London session, the movement in the Euro saw the market buying USD’s across the board and the Oz dropped quickly through the 72 cent level and triggered weak stops to test to the 0.7170 levels with bids every through pips on the move lower the market was unable to make any further losses and started a slow recovery through the day to the 0.7185 areas into the close.

Yesterday’s premiership results

EUR        Italy Manufacturing PMI Dec A 53.2 | C 52.3 | P 52.2

EUR        France Manufacturing PMI Dec (F) A 53.5 | C 53.5 | P 53.5

EUR        Germany Manufacturing PMI Dec (F) A 55.6 | C 55.5 | P 55.5

EUR        Eurozone Manufacturing PMI Dec (F) A 54.9 | C 54.9 | P 54.9

Good Luck,

Andy

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