Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 115.357 | EURUSD 1.0607 | AUDUSD 0.73396 | NZDUSD 0.70271 | USDCAD 1.3224 | USDCHF 1.00978 | GBPUSD 1.24182 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.06133 | 1.05756

USDJPY                 116.132 | 115.066

GBPUSD               1.24313 | 1.23739

USDCHF               1.01211 | 1.00976

AUDUSD              0.73527 | 0.73142

USDCAD               1.32634 | 1.32232

NZDUSD               0.70438 | 0.70044

EURCHF                1.07124 | 1.07042

EURGBP               0.85494 | 0.8534

EURJPY                 122.840 | 122.139

For Today

• EUR: Holding above the 1.0600 levels through to the Tokyo session the market then started a steady drift lower as the market adjust before the NFP later in the day, the market then traded around the 1.0580 areas through to the grey hours having tested the 1.0610 in early trading. Topside offers into the 1.0640-60 areas likely to slow the move higher however, a push through the level will see a possibly lightly defended 1.0680-1.0700 levels with likely stronger offers into the 1.0720 areas and stops through the level. Downside bids into the 1.0550 levels are likely to be light and building with only limited support into the 1.0500 areas, stronger bids appear around the 1.0450 with congestion down through to the 1.0400 areas and possibly beyond.
• GBP: Cable moved to the 1.2430 levels before moving into the Tokyo session and drifting steadily through the session to push back through the 1.2400 levels and test the 1.2380 areas before holding steady on a move into the grey hours. Topside offers into the 1.2450 levels are likely to be weak with the 1.2500 levels posing a stronger test, weak stops through the level before some light congestion into the 1.2550 level gives way to an opening to above 1.2600. Downside bids likely to be light into the 1.2350 areas with those light bids likely to continue through the 1.2300 areas and opening a fresh test through 1.2250 and stronger bids.
• JPY: Having opened around the 115.40 areas the market dipped in the pre Tokyo session to test towards the 115.00 areas before early Tokyo started to recover with regional currencies affected by the CNY fix and the upcoming NFP, the market pushed through to the 116.10 areas before running out of steam, the market drifted back to the 115.80 levels and spent a few hours trading around the 115.80 levels before moving towards the grey hours testing the 116.00 level again. Topside offers likely to be light until the market approaches the 116.80 levels then the offers are likely to start building light at first through the 117.00 areas however, it will likely increase as the market moves through the sentimentally values and into the 118.00 areas, a solid break through the 118.70-80 areas will likely see weak stops appearing and the topside vulnerable to a larger move. Downside bids light through to the 115.00 areas close to this weeks lows, a solid push through sees several supportive levels through the 114-113 handles however, given the rise from the beginning of Nov these bids are likely to be limited to some extent and stops could outweigh the levels.
• AUD: Considering the data one would have expected more movement however, the Oz for the moment is limited with the initial reaction only taking the market to just above the 0.7350 level before dropping back through the opening level and gradually slipping back to the 0.7320 areas for the move into London. Topside offers into the 0.7360 areas are likely to be limited however, a push through the level will likely leave a weak 74 cent area before opening the topside up to a larger move. Downside bids light through the 73 cent level with weak stops possibly below 0.7280 with congestive bids through the 0.7250 areas increasing in size on any move through the 72 cent areas.

Overnight News

AUD:

Australia trade surplus breaks long down trend as exports boom

Exports jumped 8.4% A$2.3B to top A$30B for the first time

CNY/USD:

China said to mull scrutiny of US firms if Trump starts feud

CNY:

China studying tax cuts to reduce burden on firms

China sets biggest one day Yuan rate increase since 2005 with post fix bid 6.8390 vs. pre 6.7900

JPY:

Real wages fall in Nov, a worrying sign for private consumption

GBP:

UK retail sales edge lower in Dec

USD:

Fed’s Williams sees three hike outlook “very reasonable” for 2017

Today’s data

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

00:00     JPY         Labour Cash Earnings Y/Y Nov A 0.20% | C 0.20% | P 0.10%

00:30     AUD       Trade Balance (AUD) Nov A 1.24B | C -0.55B | P -1.54B | R -1.12B

07:00     EUR        German Factory Orders M/M Nov C -2.50% | P 4.90%

07:00     EUR        German Retail Sales M/M Nov C -0.90% | P 2.40%

08:00     CHF        Foreign Currency Reserves Dec C 649B | P 648B

10:00     EUR        Eurozone Business Climate Indicator Dec C 0.47 | P 0.42

10:00     EUR        Eurozone Economic Confidence Dec C 106.8 | P 106.5

10:00     EUR        Eurozone Industrial Confidence Dec C -0.4 | P -1.1

10:00     EUR        Eurozone Services Confidence Dec C 12 | P 12.1

10:00     EUR        Eurozone Consumer Confidence Dec (F) C -5.3 | P -5.1

10:00     EUR        Eurozone Retail Sales M/M Nov C -0.40% | P 1.10%

13:30     CAD       Trade Balance (CAD) Nov C -1.6B | P -1.1B

13:30     CAD       Net Change in Employment Dec C -5.0K | P 10.7K

13:30     CAD       Unemployment Rate Dec C 6.90% | P 6.80%

13:30     USD       Trade Balance Nov C -42.2B | P -42.6B

13:30     USD       Change in Non-farm Payrolls Dec C 178K | P 178K

13:30     USD       Unemployment Rate Dec C 4.70% | P 4.60%

13:30     USD       Average Hourly Earnings M/M Dec C 0.30% | P -0.10%

15:00     USD       Factory Orders Nov C -2.30% | P 2.70%

Harry Hindsight              

• EUR: A new year starts in earnest with RM/Funds and a full array selling the USD through the session, starting with the opening in Tokyo, after a dull start around the 1.0490 levels the move into the Tokyo session saw the market rise quickly to touch the 1.0540 levels holding in the area for a couple of hours before dipping back to the 1.0520 and a quiet range until the Middle East and Eastern Europe moved into the market and the market moved quickly to above the 1.0560 and then struggled into the London session, quick selling from the opening saw the market pushing back lower triggering some weak stops and then pushing slowly towards the opening levels, the move into the NYK session saw the market lifting off the lows as the USD sellers reappeared and even with some US employment numbers the flows continued with the same types seen selling USD’s and the suggestion of a reinstatement of positions prior to the end of the year, the break back above the 1.0550 levels saw a few weak stops appearing and the market pushing through the high 1.0570 areas and straight to the 1.0610 levels before finding offers, the market then held through the rest of the session holding around the 1.0600 areas to the close.
• GBP: Cable followed the Euro for the most part however, its moves early in the day were limited with the early gains in Asia pushing to the 1.2350 areas before returning to the opening 1.2320 level, the move through to closer to the grey hours saw the same movement as the Euro with the Cable pushing through to the 1.2360 areas into the grey hours before London started a steady move lower and this saw the market testing the 1.2280 areas, the release of the services PMI showing a healthy gain saw the market move quickly back to the opening levels and then struggling around the 1.2300 levels through into the NYK session again testing the lows before the steady USD selling moved into the session and Cable climbed steadily back through the highs triggering some limited stops and pushing through the 1.2400 areas before meeting resistance on a teste above the 1.2420 level, the market then ranged around the area for the rest of the day to finish just off its highs.
• JPY: Opening around the 117.20 levels the early part of the session moved to the 117.40 areas before the Tokyo session began, from there the market dropped quickly to the 116.60 levels into the near term bids and slowly ground through the bids, the move into the grey hours saw the market pushing through the 116.20 levels, early Europeans pushed the market quickly through the 116.00 levels testing to towards the 115.50 levels before a limited reprieve for the move into the NYK session bouncing back to the 116.60 areas, the move into the NYK session saw the market again testing lower with the market pushing to the 116.00 level and holding for a couple of hours before the last vestiges of the London market pushed it through 115.80 again and weak stops triggered for a move to the 115.20 levels and holding that low to the close.
• AUD: Having opened a touch lower the Oz moved off the 0.7270’s level pushing quickly higher into the Tokyo session trading through the 73 cent albeit only just, having tested the level the market dipped back to the opening areas in mid-session however, the Oz lead the rally against the USD through the remainder of the Asian session with the second push higher saw weak stops triggered to the 0.7320 levels and then pressing to the 0.7340 areas before the London opening, London were sellers however the dip back found plenty willing to buy into the weakness, the market tested to the 0.7290 levels and ran into the NYK session holding those levels, USD sellers moved into the market and the Oz saw an extended period of buying and pushed through to the 0.7350 levels before slowing and holding through to the close.

Yesterday’s premiership results

JPY         Monetary Base Y/Y Dec A 23.10% | C 22.30% | P 21.50%

CNY        Caixin PMI Services Dec A 53.4 | C 53.3 | P 53.1

CHF        CPI M/M Dec A -0.10% | C -0.10% | P -0.20%

CHF        CPI Y/Y Dec A 0.00% | C 0.00% | P -0.30%

EUR        Eurozone Retail PMI Dec A 50.4 | P 48.6

GBP       Services PMI Dec A 56.2 | C 54.7 | P 55.2

EUR        Eurozone PPI M/M Nov A 0.30% | C 0.20% | P 0.80%

EUR        Eurozone PPI Y/Y Nov A 0.10% | C -0.10% | P -0.40%

EUR        ECB Monetary Policy Meeting Accounts

USD       Challenger Job Cuts Y/Y Dec A 42.40% | P -13.00%

USD       ADP Employment Change Dec A 153K | C 175K | P 216K | R 215K

USD       Initial Jobless Claims (DEC 31) A 235K | C 260K | P 265K | R 263K

CAD       Industrial Product Price M/M Nov A 0.30% | C 0.20% | P 0.70%

CAD       Raw Materials Price Index M/M Nov A -2.00% | C -1.60% | P 3.30%

USD       ISM Non-Manufacturing Composite Dec A 57.2 | C 56.7 | P 57.2

USD       Natural Gas Storage A -49B | C -97B | P -237B

USD       Crude Oil Inventories A -7.1M | C   -1.8M | P 0.6M

Good Luck,

Andy

Any opinions, news, research, analyses, prices or other information contained on this Blog, whether by LMAX, its employees, partners or contributors, does not constitute investment advice nor has it been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the material contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. Whilst information provided on this Blog may help with your investment research you must consider carefully whether you should make (or refrain from making) investment or other decisions based on what you see without doing further research on the investments you are interested in. Participating in this Blog cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you. LMAX has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

LMAX will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the material produced in this Blog was obtained from sources deemed to be reliable, LMAX does not provide any guarantees about the reliability of such sources.

Consequently any person acting on it does so entirely at his or her own risk.

If you currently hold an account with LMAX for the purposes of trading FX and CFD’s, you are encouraged to use a different Username and Password to access the Blog or any other online systems. The Blog is a place to learn, discuss and share information and ideas with Blog followers. It is not a place to slander, use unacceptable language or to promote LMAX or any other FX, Spread Betting and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.