Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 114.716 | EURUSD 1.06127 | AUDUSD 0.74843 | NZDUSD 0.71359 | USDCAD 1.31442 | USDCHF 1.01086 | GBPUSD 1.2163 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.06228 | 1.06036

USDJPY                 115.191 | 114.541

GBPUSD               1.21747 | 1.21392

USDCHF               1.01194 | 1.01004

AUDUSD              0.75079 | 0.74761

USDCAD               1.31685 | 1.31356

NZDUSD               0.71228 | 0.70881

EURCHF                1.07282 | 1.07232

EURGBP               0.87379 | 0.87200

EURJPY                 122.148 | 121.644

For Today

• EUR: A quiet session for the Euro with the market remaining in the 1.0605-20 areas through to the grey hours with very little movement, Topside offers through the 1.0680 level, weak stops through the 1.0710 areas will quickly see congestive offers into the 1.0750 areas and likely stronger offers in an attempt through the 1.0780-1.0820 areas. Downside bids into the 1.0600 with congestion likely to continue down through the level and into the 1.0550 areas, better bids into the 1.0510-00 areas is likely to see stops on a move through the 1.0490 areas however, this will head into a congestive area for the Euro with probably decent bids from there all the way down through the 1.0400 levels.
• GBP: The market ranged a little more than the Euro with the market drifting lower through the early part of the session to test the 1.2140 levels before heading back to make the highs above the 1.2170 levels and holding quietly then through to the grey hours around the 1.2160 areas, Topside offers light through the 1.2200 with limited offers until through the 1.2250 area where congestion starts to build in a move through to the 1.2300 areas where the market struggled yesterday, however, there is a distinct possibility of stops through the 1.2320 areas with limited offers through the level and open for a strong move, US numbers to watch out for with retail sales expected to be strong, downside bids likely to be reasonable just below the current levels with some congestion through towards the 1.2120 areas, a push through will likely see stronger bids appear into the 1.2050 levels and the current lows for the week, a break through the level will likely see some weakness appear however, as with the previous break through 1.2090 the selling run into some well-constructed bids.
• JPY: Opening around the 114.70 areas the market quickly moved through to the 115.00 on the move into the Tokyo session and then ranged around the level through the session with the market unable to push through the 115.20 areas, Topside weak stops through the current highs and the market then seeing offers on a move to the 115.50 areas and then congestion likely all the way through to the 116.20 levels, a push through the 116.60 areas again opens a test through the 117.00 levels with further offers all the way through. Downside bids light through to the 114.50 levels with better bids likely on a deeper move to 114.00 with a break here likely to see some minor congestion all the way down to 113.20.
• AUD: For the most part a quiet session with the market basing on the 0.7480 levels with a brief move higher on the release of the CNY Trade balance number pushing back through the 75 cent level briefly before dropping back from the 0.7510 level to the base level again. Topside offers into the 0.7520 areas with likely limited offers into the 0.7550 areas to contain the stops on the break, congestion from the 0.7550 areas onwards with possibly strong offers into the 76 cent level, downside bids into the 74 cent levels with possible congestion along the way a break below will possibly catch weak stops with limited bids into the 0.7350 areas.

Overnight News

JPY:

Foreigners Bought Record Japan Short-Term Debt Last Week: MOF

Japanese Bought Net 206.5 Billion Yen Overseas Debt Last Week

Ishihara Says Will Monitor ‘Sudden’ Yen Strengthening: Reuters

Japan households’ inflation expectations hit 4-yr low-BOJ

USD:

Yellen Says Productive Workforce Critical for Economic Health

Yellen: Inflation Has Picked Up, Is Pretty Close to 2% Target

Yellen Says Fed Tries to Ensure the Job Market Is Strong

Yellen Says Wouldn’t Want to See Dodd-Frank Changes Rolled Back

CNY:

China’s Dec. Exports Fall 6.1% Y/y in Dollar; Est. -4%

Pressure on China’s Exports Expected to Ease in 1Q: Customs

PBOC Said to Step Up Yuan Curbs With Banks Told to Balance Flow

China to Strictly Control Debt Risks at State Cos.: Sec. Journal

Yuan Moves Last Week Not Result of PBOC Intervention: Sec. News

USD/CNY:

Tillerson’s Views on South China Sea ‘Disastrous’: China Daily

EUR:

Schaeuble Considers Aid to Greece Possible Without IMF: SZ

EUR/RUB:

Germany Sees Russia Behind Cyberattacks on Govt Computers: Bild

SGD:

Singapore November Retail Sales +1.1% Y/y; Est. +1.7%

Today’s data

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

JPY         Japan Money Stock M2+CD Y/Y Dec A 4.00% | C 4.10% | P 4.00% | R 3.90%

CNY        Trade Balance (USD) Dec A 40.8B | C 47.6B | P 44.6B

CNY        Trade Balance (CNY) Dec A 335B | C 345B | P 298B

13:30     USD       PPI M/M Dec C 0.30% | P 0.40%

13:30     USD       PPI Y/Y Dec C 1.60% | P 1.30%

13:30     USD       PPI Core M/M Dec C 0.10% | P 0.40%

13:30     USD       PPI Core Y/Y Dec C 1.50% | P 1.60%

13:30     USD       Advance Retail Sales Dec C 0.70% | P 0.10%

13:30     USD       Retail Sales Less Autos Dec C 0.50% | P 0.20%

15:00     USD       Business Inventories Nov C 0.50% | P -0.20%

15:00     USD       U. of Michigan Confidence Jan (P) C 98.5 | P 98.2

Harry Hindsight              

• EUR: Having spooked the market with his the Trump equation continued through into the following day, the Euro opened around the 1.0580 levels and initially struggled around the area until the move into the Tokyo session where fresh USD selling began, the market moved steadily through the session pushing above the 1.0610 areas with good volumes moving through but not really running away, the move into the grey hours saw the market start to push as the fresh sellers of USD’s moved in from the Middle East and Eastern Europe and the market moved through into the London session moving up through the light offers around the 1.0640 areas and finally breaching the 1.0660 levels after a couple of hours, the market paused for the move into the NYK session and the pattern was repeated with fresh sellers and the market testing to the 1.0680 level and finally meeting resistance sufficient to curb the steady rise, the end of the day saw the market drifting towards the end of the day dipping back towards the 1.0600 level with the media more inclined to follow the non-wrong doings in Moscow than the lack of economic foresight the market had expected. ECB monetary policy meeting showed greater support for weaker QE going forward, no real surprise there however, the divergence from the ECB will likely grow until Germany in particular force the issue.
• GBP: Cable dipped from the opening and saw the market testing to the 1.2170 levels however, eventually the woes of the USD saw the market back to the opening levels around the 1.2220 area and the move into the grey hours saw the market lifting up in a steady rise through to test beyond the 1.2300 levels peaking just below the 1.2320 level the market held through to the NYK session in the 1.2280-1.2300 range, with a slight dip in the initial jobless claims number the USD started a steady recovery and the addition of a drop in import price index saw the USD rally a little and the Cable forced quickly through to the 1.2200 levels, decent volumes and the market running out of steam with the Trump speech more or less buried by the media the Cable continued to slip back through into the 1.2150 areas into the closing period.
• JPY: From the opening the USDJPY stared a slow decline opening around the 115.40 levels the first hour saw the market pushing the 115.50 levels and then dipping from that point, the move through into Tokyo saw the market testing the 115.00 levels for a couple of hours before breaking and triggering weak stops and then holding the 114.50 levels the move into London saw the market trade down through the 114.00 levels, some light trading below the level saw the market basing for several hours along the 113.80 levels and only deep into the NYK session did the USDJPY start to recover, end of London saw the market pushing quickly back to the 114.60 areas and then holding around that level into the close.
• AUD: Opening around the 0.7445 levels the early sellers into the Tokyo session saw the market testing the 0.7430 areas before the weakness in USD’s saw the Oz climbing steadily higher to push into the 0.7470 areas and into the grey hours, London were steady buyers and the market pushed through the 75 cent levels to test above the 0.7510 areas the market continued to test above the 0.7510 levels and moved into the NYK session pushing towards the 0.7520 area to make the highs however, when the USD started to recover the Oz remained fairly well bid and refused to give up most of its gains finishing the day around the 0.7490 levels.

Yesterday’s premiership results

JPY         Current Account (JPY) Nov A 1.80T | C 1.48T | P 1.93T

JPY         Eco Watchers Survey: Current Dec A 51.4 | C 49.3 | P 48.6

EUR        Eurozone Industrial Production M/M Nov A 1.50% | C 0.50% | P -0.10% | R 0.10%

EUR        ECB Monetary Policy Meeting Accounts

CAD       New Housing Price Index M/M Nov A 0.20% | C 0.30% | P 0.40%

USD       Initial Jobless Claims (JAN 7) A 247K | C 255K | P 235K | R 237K

USD       Import Price Index M/M Dec A 0.40% | C 0.70% | P -0.30%

USD       Natural Gas Storage A -151B | C -150B | P -49B

Good Luck,

Andy

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