Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 114.858 | EURUSD 1.06637 | AUDUSD 0.75615 | NZDUSD 0.71638 | USDCAD 1.33182 | USDCHF 1.00628 | GBPUSD 1.23413 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.06939 | 1.06521

USDJPY                 115.135 | 114.534

GBPUSD               1.23721 | 1.23295

USDCHF               1.00695 | 1.00367

AUDUSD              0.75884 | 0.75539

USDCAD               1.33306 | 1.32853

NZDUSD               0.72247 | 0.71785

EURCHF                1.07331 | 1.07219

EURGBP               0.86488 | 0.8635

EURJPY                 122.678 | 122.373

For Today

• EUR: A quiet session from the opening pushing into the Tokyo session holding the lows around 1.0655 and then pushing higher with some light USD weakness, the release of the Chinese GDP figure saw limited reaction for the USD but the Euro saw more gains and pushed steadily above the 1.0690 levels before running into limited offers and the market drifting a little on the move into the grey hours, Topside offers through the 1.0700 levels with a push through the 1.0720 areas likely to see stops appearing and the market quickly moving into the 1.0750 areas and limited offers, stronger levels are likely to appear in an attempt of the 1.0800 areas with only German CPI for the day of note. Downside bids light down through the 1.0660-40 areas with stronger bids on a move into the 1.0580-1.0600 areas possible weak stops on a move through the level and then bids reappearing around the 1.0550 areas before stronger bids into the 1.0500 areas appear.
• GBP: Cable took its time moving higher holding the 1.2330 levels through into the Tokyo session before lifting quickly higher to test the 1.2370 areas and ranging through to the grey hours between that level and the 1.2350 area, the move into the grey hours saw the market testing the low of the range in a quiet session for the Cable, Downside bids likely to be patchy with some weak bids into the 1.2300 areas, a test through the level will see bids into the 1.2250 areas and possible weak stops appearing on the move, 1.2200 a little stronger with better bids likely to be down in the 1.2150 levels. Topside offers limited through the 1.2400 areas with light stops possibly on a push through and the Topside then opening to another test through to the 1.2500 levels.
• JPY: Early push through the 115.00 levels saw the market testing through the 115.10 levels into early Tokyo, commentary from Abe’s advisor Hamada, this saw the USD coming under pressure as he spoke on the strong USD comments of Pres. Elect Trump, dropping quickly back from the highs to a modest 114.80 area the market drifted then through to the session holding the 114.55 areas and gradually pushed back to the 114.80 in a quieter end to the session, light bids into the 114.50 areas with stronger bids likely to appear on a move through to the 114.00 areas likely to be weak stops on a dip through the 113.80 areas and the market seeing limited congestion through to the 113.40 areas. Topside offers into the 115.50 areas and the market then struggling a little with congestion into the 116.00 with sentimental levels likely to see offers continuing to appear.
• AUD: A similar pattern to the other 3 with the market holding steady through to the Tokyo session and then moving through to test towards the 0.7590 areas and ranging through to the grey hours between the 0.7570-90 levels in quiet trading, Oz remains range bound for the moment with the topside offers appearing into the 76 cents and stronger offers moving through each sentimental level, 0.7650 through to the 77 cent level likely to be as difficult as the move through the 75 cent has been. Downside bids through to the 74 cent level are likely to be congestive in origin and only a solid push through the level will open the downside to further weakness.

Overnight News

JPY:

Japan PM Abe adviser Hamada: some danger Trump could base decisions on “wrong economics”

If he doesn’t heed good advice

Hamada: Japan need not cooperate with Trump on economic policies just to please him

Hamada: Japan does not need to stick to fiscal 2020 target for primary budget surplus

Hamada: Govt. should postpone further sales tax increase if Japan’s economy stays in deflation

Hamada: Japan should intervene in FX market if USD plunges 7-8 Yen per day

Japan’s Abe Vows to Press Ahead on ‘Virtuous Economic Cycle’

Japan Fin Minister Aso Says Economy Entering ’Virtuous Cycle’

BOJ’s Kuroda Says Protectionism Expanding Not a Concern: Kyodo

Nakaso: BOJ to Keep Watching If Banks Taking Excessive Risks

Japan’s Medium-Term Bonds Draw Record Foreign Buy in 2016: JSDA

USD:

Yellen: Gradual Pace Prudent, Waiting too Long to Hike Has Risks

Yellen Defends Dual Mandate, Says Americans Care about Both

Yellen: Uncertainty ‘Prevalent’; Policy May Turn Out Different

Yellen Slams Congress Attempt to Impose Policy Rule on Fed

JPY/USD:

Japan’s Aso: Want Stable Communication with US on Currencies

Abe Reiterates Vow to Bolster U.S. Ties as Trump Takes Office

CNY:

China’s Economy Grows 6.8% in 4Q Y/y; Est. 6.7%

China 2016 Property Development Investment Rises 6.9% Y/y

China Said to Plan to Ease Trading Curbs on Stock-Index Futures

KRW:

U.S. Officials Say N. Korea May Be Preparing Missile Test: Rtrs

AUD:

Australia’s Nov. Private New Home Sales Rise 6.1% M/m

NZD:

New Zealand Affirmed by S&P, Outlook Stable

MYR/CNY:

Najib Says China Investment in Malaysia Vital for Development

Today’s data

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

CNY        GDP Y/Y Q4 A 6.80% | C 6.70% | P 6.70%

CNY        Industrial Production Y/Y Dec A 6.00% | C 6.10% | P 6.20%

CNY        Retail Sales Y/Y Dec A 10.90% | C 10.70% | P 10.80%

CNY        Fixed Assets Ex Rural YTD Y/Y Dec A 8.10% | C 8.30% | P 8.30%

07:00     EUR        German PPI M/M Dec C 0.40% | P 0.30%

07:00     EUR        German PPI Y/Y Dec C 1.00% | P 0.10%

09:30     GBP       Retail Sales M/M Dec C -0.10% | P 0.20%

13:30     CAD       Retail Sales M/M Nov P 1.10%

13:30     CAD       Retail Sales Less Autos M/M Nov P 1.40%

Harry Hindsight

• EUR: A range bound day overall with the early part of the day seeing a steady rise through the Asian session and into early London, opening around the 1.0630 areas Asia was particularly quiet movement wise pushing too the 1.0645 areas before holding steady into the grey hours, early London took the market through the 1.0660 areas triggering some light stops on a move to the 1.0670 levels before holding quietly around the 1.0660 level into the NYK session, with the market testing lightly above the 1.0670 level, the release of the initial claims number in the US saw the USD rally sharply and the Euro dipped quickly back to the 1.0610 area and then slipped a little through the 1.0590 area basing on that level for a couple of hours before starting a slow and steady recovery through to the 1.0670 level and a quiet range to the close. ECB rate decision was as expected with a short than usual news conference, which is not overly surprising for the ECB as they have done nothing different from last month, there was limited dovish comments possibly for the benefit of Buba the German central bank for whom QE is beginning to tell however, there was only limited talk of tapering.
• GBP: Cable ranged quietly into the early Tokyo session opening around the 1.2260 areas and then moving steadily through to the 1.2290 areas before drifting around the 1.2280 and into the grey hours, a dip towards the London opening saw the market back to the starting levels before a quick reversal and a push above the 1.2300 levels trading steadily through to the 1.2340 areas before ranging quietly into the NYK session, Initial claims saw the market test back slightly through the 1.2300 levels however, the market was limited to the downside and eventually pushing up to the 1.2340 areas and hold quietly into the close. Limited Brexit chatter with some banks and companies looking to move operations to Europe while others remain fixed with both hoping that the time period to Brexit will cool hotheads on both sides.
• JPY: Opening around the 114.60 levels the move through the Asian session saw limited movement with the market trading deep into the London session moving around the level the market was unable to push through the 114.40 levels on the downside throughout the day but the limited attempts to the 115.00 levels until the release of the US data and the market quickly tested through to push into the 115.50 areas and technical offers holding the market through into the London close, the move to the close saw the market drifting back to finish only a little above the opening levels with decent volumes through the day.
• AUD: The Oz found little comfort in the numbers with Employment actually increasing but not immediately obvious to the market, moving off the lows after the release the market pushed from below the 75 cent level and edged up into the grey hours to hold just above the 0.7520 levels, grey hours buying saw the market testing the 0.7540 areas before pushing into the London session and climbing through the 0.7550 areas and triggering some minor stops and running into interference around the 0.7570 areas, the market then held through into the NYK session with little impact from the numbers with the market drifting a little in the late session and then holding the 0.7560 areas to the close.

Yesterday’s premiership results

NZD       Business NZ Manufacturing Index Dec A 54.5 | P 54.4 | R 54.5

NZD       Building Permits M/M Nov A -9.20% | P 2.60% | R 2.00%

AUD       Consumer Inflation Expectation Jan A 4.30% | P 3.40%

GBP       RICS House Price Balance Dec A 24% | C 30% | P 30% | R 29%

AUD       Employment Change Dec A 13.5K | C 10K | P 39.1K

AUD       Unemployment Rate Dec A 5.80% | C 5.70% | P 5.70%

CHF        Producer & Import Prices M/M Dec A 0.20% | C 0.20% | P 0.10%

CHF        Producer & Import Prices Y/Y Dec A 0.00% | C 0.10% | P -0.60%

EUR        Eurozone Current Account (EUR) Nov A 36.1B | C 29.3B | P 28.4B | R 28.3B

EUR        ECB Rate Decision A 0.00% | C 0.00% | P 0.00%

CAD       International Securities Transactions (CAD) Nov A 7.24B | C 10.23B | P 15.75B | R 15.77B

CAD       Manufacturing Shipments M/M Nov A 1.50% | C 1.00% | P -0.80% | R -0.60%

USD       Initial Jobless Claims (JAN 14) A 234K | C 251K | P 247K | R 249K

USD       Housing Starts Dec A 1.23M | C 1.19M | P 1.09M

USD       Building Permits Dec A 1.21M | C 1.22M | P 1.20M

USD       Philly Fed Manufacturing Index Jan A 23.6 | C 16 | P 21.5

USD       Natural Gas Storage A -243B | C -235B | P -151B

USD       Crude Oil Inventories A 2.3M | C 0.1M | P 4.1M

Good Luck,

Andy

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