Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 117.748 | EURUSD 1.04048 | AUDUSD 0.72203 | NZDUSD 0.69388 | USDCAD 1.34282 | USDCHF 1.02749 | GBPUSD 1.22375 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.04237 | 1.0390

USDJPY                 118.188 | 117.536

GBPUSD               1.22480 | 1.22208

USDCHF               1.02911 | 1.02587

AUDUSD              0.72414 | 0.72155

USDCAD               1.34573 | 1.34187

NZDUSD               0.69249 | 0.68897

EURCHF                1.06965 | 1.06893

EURGBP               0.85104 | 0.84951

EURJPY                 122.932 | 122.447

For Today

• EUR: Early buyers set the highs around the 1.0420 levels before the Tokyo session and the opening there saw the market drop back through the 1.0400 levels to test the 1.0390 holding there for a period before trading back to the 1.0400 levels and ranging in the 1.0400-10 area to the grey hours. Topside offers light through the 1.0440-60 areas with the market thickening as the market pushes to the 1.0480-1.0500 areas, a push through the 1.0520 areas will likely see some weak stops however, there is some limited congestion above although the market pushed through to the 1.0650 areas on limited volume before the weekend and would suggest further strong offers above the 1.0640 area still remain. Downside bids light through the 1.0400 area and increasing towards the 1.0340 however, the market has been there in the past 24hrs and the market is a little thinner on the bid side than it was with 1.0300 sentimental level more than anything providing the support however, a push through the level will see token bids on a move to the 1.0220 levels and possibly the firmest bids before the parity level.
• GBP: Cable like the Euro did very little with the market holding for the most part around the opening 1.2240 areas with the market dipping in the Tokyo session to the 1.2220 areas before returning, most of the day was devoid of any direct movement and cross trading dominated throughout on improving volumes. Topside offers light through to the 1.2300 levels where limited offers open up to congestive offers around the 1.2350 areas with stops likely behind the level and the market opening again to the 1.2400-1.2500 areas, downside bids are likely to be strong into the 1.2200 levels with limited bids through to the lows from October, the departure of the UK’s Ambassador in the EU while making the front pages is possibly of less import than they make out with Sir Ivan Rogers finding the negotiations possibly against his own convictions on the subject and leaving him with an ethical dilemma he has resolved.
• JPY: Limited buying of the USDJPY saw the market moving into the Tokyo session lifting off the lows around the 117.55 areas and pushing steadily through the 118.00 levels and testing towards the 118.20 levels with congestive offers and strong profit taking still above the 118.50 levels likely, a push through the 118.60-118.70 levels will likely be problematic however, a strong grind through the level will possibly see the offers extending through the 119.00 levels with some weak stops mixed in, and the market opening the 2015 ranges and further congestion. Downside bids are vulnerable to a quick sell off if the offers are present in size with stops on a move through the 117.00 levels opening the market to a deeper move if the momentum appears in the market however, bids around the 116.50 areas could be strong enough to hold the market with the FOMC minutes of import.
• AUD: The Oz remains caught for the moment with the market reacting yesterday on the CNY numbers however, over the course of the day this has balanced out with weaker commodity prices in the market and so struggled to break the highs from yesterday having pushed to the 0.7240 levels through the session from the weak opening around 0.7220. Topside offers through to the 0.7260 areas will likely see weak stops appearing, light offers through the 73 cent levels will see the market running into only minor interference around the 0.7350 areas ant eh market free to move back to the 75 cent level in time. Downside bids below the 72 cent level are likely to remain strong on any pushes through 0.7150 areas however, that has been the strong level for the past couple of weeks and one would suspect the market would need to do a lot of work to the levels from the beginning of last year.

Overnight News

AUD/CNY:

AUD inches higher on new China capital rules

GBP/EUR:

UK ambassador to EU Sir Ivan quits FT

EUR/CNY:

EU regulators delay ChemChina/Syngenta merger decision to April 12

CNY:

China state banks move in to support Yuan for second day

Today’s data

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

08:45     EUR        Italy Services PMI Dec C 52.6 | P 53.3

08:50     EUR        France Services PMI Dec (F) C 52.6 | P 52.6

08:55     EUR        Germany Services PMI Dec (F) C 53.8 | P 53.8

09:00     EUR        Eurozone Services PMI Dec (F) C 53.1 | P 53.1

09:30     GBP       Construction PMI Dec C 52.6 | P 52.8

09:30     GBP       Mortgage Approvals Nov C 68.7K | P 67.5K

09:30     GBP       M4 Money Supply M/M Nov C 1.40% | P 1.10%

10:00     EUR        Eurozone CPI Estimate Y/Y Dec C 1.00% | P 0.60%

10:00     EUR        Eurozone CPI – Core Y/Y Dec (A) C 0.80% | P 0.80%

19:00     USD       FOMC Minutes

Harry Hindsight              

• EUR: A steady rise through the Asian session on limited volume saw the Euro move off the 1.0455 areas to test the 1.0490 levels on the lead into the grey hours, the move towards London saw the gains quickly lost before the release of the European numbers, a brief pause into London session before seeing another drop and trigger of weak stops on the move through the 1.0440 levels the numbers out of Germany were sufficient to bolster the market for a brief period however, the USD was King for the day and the Euro steadily drop back to the 1.0380 levels before holding for the move into the NYK session, better manufacturing numbers in the US saw another test lower with the market dropping from the 1.0400 level to test the support into 1.0340 before working its way back through the 1.0400 levels and then ranging to the close above the figure before quietly closing only just above the 1.0400 level.
• GBP: The Cable followed the Euro in early trading with the market slowly rising from the opening 1.2280 areas moving steadily into the Tokyo session the market then started pushing through the 1.2300 levels meeting limited offers into the 1.2310 areas and holding into the grey hours, the London opening saw the market drop back with the pull of the Euro, EURGBP dropped below the 0.8500 levels again and struggled through to the NYK session eventually pushing to the 0.8450 areas before holding and the market in the cross recovering through the NYK session, early support for the Cable after a very strong Manufacturing number was wasted as the Cable dropped through the 1.2250 levels and weak stops saw the market dipping to the 1.2200 levels before recovering quickly to the 1.2250 levels however, with the bids cleared the market struggled to maintain the 1.2250 level and slipped back through to range in the 1.2230-40 area to the close.
• JPY: Having opening around the 117.50 levels the early market tested to the 117.20 and with Tokyo closed for the day the market struggled through the Asian session with diminishing range into the grey hours, ranging in the 117.30-40, grey hour buying saw the market rising steadily through the 117.50 levels and continuing through to the 117.80 areas, the market moved into the London opening pushing steadily against the resistance into the 118.00 areas eventually grinding through those offers and the congestion above to the 118.30 areas before moving into the NYK session, the release of the ISM numbers in the US saw the market jump a little and push to the 118.60 quickly before slipping back through to the 118.40 levels and dropping quickly as the profit takers moved in triggering weak stops on the move back through the 118.00 levels and quickly dropping to the opening levels again, with the range for the day fairly respectful the move to the close was a little choppy with the market testing to the 117.20 levels and ranging back to the 117.70 levels but unable to push through either side with any conviction.
• AUD: A quiet rise through early Sydney saw the market moving off the opening 0.7185 areas to push to the 72 cent levels and hold there for a short period before breaking higher and pushing through to the 0.7235 levels in a reasonably steady move, the move into the London session saw the market quickly drop back towards the 72 cent levels and range through to the NYK session around the 0.7200-20 areas, ISM numbers in the US saw the market test back to the 72 cent levels however, the resultant weakness in the JPY saw the AUDJPY cross becoming attractive and the Oz benefitted from the move pushing again to the highs and testing the 0.7240 levels before slipping back a little for the close.

Yesterday’s premiership results

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

CHF        SVME PMI Dec A 56 | C 56 | P 56.6

EUR        German Unemployment Change Dec A -17K | C -5K | P -5k

EUR        German Unemployment Rate Dec A 6.00% | C 6.00% | P 6.00%

GBP       Manufacturing PMI Dec A 56.1 | C 53.3 | P 53.4 | R 53.6

EUR        German CPI M/M Dec (P) A 0.70% | C 0.60% | P 0.10%

EUR        German CPI Y/Y Dec (P) A 1.70% | C 1.40% | P 0.80%

USD       ISM Manufacturing Dec A 54.7 | C 53.7 | P 53.2

USD       ISM Prices Paid Dec A 65.5 | C 55.5 | P 54.5

USD       Construction Spending M/M Nov A 0.90% | C 0.50% | P 0.50% | R 0.60%

Good Luck,

Andy

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