Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 113.279 | EURUSD 1.07478 | AUDUSD 0.75731 | NZDUSD 0.72525 | USDCAD 1.30694 | USDCHF 0.99934 | GBPUSD 1.26343 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.07654 | 1.07441

USDJPY                 113.460 | 113.054

GBPUSD               1.26634 | 1.26263

USDCHF               0.99921 | 0.99788

AUDUSD              0.75855 | 0.75647

USDCAD               1.30782 | 1.30545

NZDUSD               0.73107 | 0.72815

EURCHF                1.07428 | 1.07382

EURGBP               0.85177 | 0.84953

EURJPY                 122.010 | 121.674

For Today

• EUR: The move into the Tokyo session saw the market moving off the opening 1.0750 levels to test through to the 1.0765 areas before drifting back a little in quiet trading, the Topside offers remain through the 1.0770 levels with a push through the 1.0810-15 areas likely to open up to stops and a possible spike higher into the 1.0860 areas and possibly stronger offers appearing on a run towards the 1.0900, from there the market is likely to find plenty of congestion and on any attempt towards the 1.1000 levels. Downside bids weak to the 1.0700 areas with only limited bids likely into the area, a push through the 1.0680 areas will possibly see weak stops and then congestive bids around the 1.0650 areas through to the stronger 1.0600 areas.
• GBP: Opening around the 1.2640 areas the market moved quietly through to test above the 1.2660 before running out of steam for the move into the grey hours, Topside offers into the 1.2700 levels with weak stops likely through the level and the market opening to a stronger push on a break through the 1.2770 areas and the bottom of the Jun-Sep range and larger gains opening for the future. Downside bids light into the 1.2600 levels and only a slight possibility of stops with stronger bids likely to be in the 1.2550 areas and very likely little until 1.2500 where stronger bids appear.
• JPY: From the opening the market has remained in a fairly tight range with the USDJPY testing above the 113.40 areas and unable to push too far and then on the move through into the Tokyo session dipped back to hold the 113.10 before settling in to trade around the opening 11.30 areas into the grey hours. Offers are building into the 114.00 areas with congestive offers through the level and likely stronger offers through the 114.50 levels, limited stops possible through the sentimental levels however, until the market pushes through the 115.00 levels the market is likely to continue struggle, with differing opinions in the market, Trump wanting a weaker USD while the market looks for a stronger USD as a consequence of Trumps central mantra of US business comes first likely to strengthen the USD over time. Downside bids through the 113.00 areas likely to continue to the 112.50 areas and stronger bids showing, a push through that level will likely see stronger stops appearing and a quick test of the 112.00 areas with a push through the levels likely to open up a large move into the 110.50 areas.
• AUD: A quiet session for the Oz trading into the Tokyo session testing the 0.7585 level in a weak push before slipping back and trading back to the 0.7570 areas and holding the opening levels through the session with a minor dip to the 0.7565 areas. Topside offers remain strong in a run to the 76 cent levels possible stops appearing on a push through the 0.7620 areas and the market seeing only weak offers on a move through the 0.7650 areas with only slightly stronger offers into the 0.7700. Downside bids likely to be reasonably strong on a move through to the 75 cent levels with weak stops on a move through the level mixed in with congestive bids, the congestion is likely to run through to the 0.7450 areas with possibly stronger stops through 0.7440 and the market opening through to the 74 cent level.

Overnight News

JPY/USD:

Abe: Bilateral Trade Talks With U.S. ‘Not Absolutely Impossible’

USD/JPY:

Abe Adviser Says Yen May Weaken Past 120 versus Dollar This Year

JPY:

Japanese Sold Net 539 Billion Yen Overseas Debt Last Week

Suga Welcomes Dow’s Surge to Record; Hopes It Will Spur Growth

CNY:

China Said to Require Banks to Curb New Loans in 1Q

China State-Owned Cos. 2016 Profit Rises 1.7% Y/y to 2.32t Yuan

China Dec. Industrial Companies’ Profit Rises 2.3% Y/y

KRW/USD/CNY:

South Korea to Reduce Trade Reliance on U.S., China, Yoo Says

KRW/USD:

1. Korea to Increase Imports of U.S. Energy, High-Tech Machinery

MXN:

Pena Nieto: Mexico to Decide Next Steps after Washington Talks

SGD:

Singapore December Factory Output +21.3% Y/y; Est. +10.4%

Singapore 4Q Private Home Prices Fall 0.5% Q/Q: URA

NZD:

RBNZ 4Q Sectoral Factor Model Inflation Index Rises 1.5% Y/Y

Today’s data

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

NZD       CPI Q/Q Q4 A 0.40% | C 0.30% | P 0.30%

NZD       CPI Y/Y Q4 A 1.30% | C 1.20% | P 0.40%

JPY         Corporate Service Price Y/Y Dec A 0.40% | C 0.40% | P 0.30%

07:00     CHF        Trade Balance (CHF) Dec C 2.81B | P 3.64B

07:00     EUR        German GfK Consumer Confidence Feb C 10 | P 9.9

09:30     GBP       BBA Mortgage Approvals Dec C 41000 | P 40659

09:30     GBP       GDP Q/Q Q4 (A) C 0.50% | P 0.60%

09:30     GBP       GDP Y/Y Q4 (A) C 2.10% | P 2.20%

09:30     GBP       Index of Services 3M/3M Nov C 0.90% | P 1.00%

11:00     GBP       CBI Retailing Reported Sales Jan C 27 | P 35

13:30     USD       Advance Goods Trade Balance Dec C -64.5B | P -66.6B

13:30     USD       Wholesale Inventories Dec (P) C 0.10% | P 1.00%

13:30     USD       Initial Jobless Claims (JAN 21) C 245K | P 234K

15:00     USD       New Home Sales Dec C 585K | P 592K

15:00     USD       Leading Indicators Dec C 0.50% | P 0.00%

15:30     USD       Natural Gas Storage P -243B

Harry Hindsight

• EUR: The market opened around the 1.0730 levels and traded in a tight range through the Asian session around that level, the market dipped into the grey hours and pushed into the London session testing the 1.0710 areas and from the official opening left the lows to be not see again, the market moved steadily higher through the first hour to trade to the 1.0750 areas before drifting a little through towards the NYK session with a quick spike to the 1.0770 level before dropping back quickly on the move into the new session, as stated earlier the market never made new lows however the market did base off the 1.0720 levels through the session and struggled around the 1.0750 levels from those lows for a quiet finish to the session.
• GBP: Mixed fortunes for the Cable through the Asian session with the market moving off the 1.2520 levels to push slowly through to the 1.2540 areas, the market then drifted lower again and tested into the grey hours holding the opening levels, the grey hours saw the market testing the 1.2500 levels through to the official opening before starting a steady climb higher, news that PM Theresa May promised the White Bill for Thursday surprised opposition ministers and given that its full steam ahead for the moment the market saw Cable quickly rally to the 1.2600 areas before trading quietly for the move into the NYK session, with the close of London the Cable managed a slow push through the 1.2600 rising through to the 1.2640 for a quiet close.
• JPY: A choppy day for USDJPY but having rallied into the close the previous day the opening saw the market testing briefly to the 114.00 levels before falling back on the Tokyo opening to trade around the 113.50 levels the move through the London session was even more limited with the range between the 113.50-113.80 suddenly seeing the USD drop back towards the 113.00 level and recovering into the NYK opening to test towards the highs again and a return to the choppy movement through to late in the session, talk of rate rises every quarter by a top forecaster saw the market dropping to the 113.20 areas before closing just off the level for the day.
• AUD: The Oz opened quietly with the market moving to close to the 76 cent level the release of softer inflationary data put paid to any topside test as the market dropped quickly back to the 0.7550 level and continuing steadily lower to trade around the 0.7535 areas, the move into the grey hours, the market moved to the lows in early London testing through the 0.7520 level before recovering to the 0.7570 areas from those lows into the NYK session, the market ranged through the session eventually settling down to a quiet finish puhsing towards the opening 0.7580 areas.

Yesterday’s premiership results

AUD       Westpac Leading Index M/M Dec A 0.40% | P 0.20% | R 0.30%

JPY         Trade Balance (JPY) Dec A 0.36T | C 0.22T | P 0.54T | R 0.47T

AUD       CPI Q/Q Q4 A 0.50% | C 0.70% | P 0.70%

AUD       CPI Y/Y Q4 A 1.50% | C 1.60% | P 1.30%

AUD       CPI RBA Trimmed Mean Q/Q Q4 A 0.40% | C 0.50% | P 0.40%

AUD       CPI RBA Trimmed Mean Y/Y Q4 A 1.60% | C 1.60% | P 1.70%

AUD       CPI RBA Weighted Median Q/Q Q4 A 0.40% | C 0.50% | P 0.30% | R 0.40%

AUD       CPI RBA Weighted Median Y/Y Q4 A 1.50% | C 1.40% | P 1.30%

CHF        UBS Consumption Indicator Dec A 1.5 | P 1.43 | R 1.45

EUR        German IFO – Business Climate Jan A 109.8 | C 111.3 | P 111

EUR        German IFO – Expectations Jan A 103.2 | C 105.8 | P 105.6

EUR        German IFO – Current Assessment Jan A 116.9 | C 116.9 | P 116.6

CHF        ZEW Survey (Expectations) Jan A 18.5 | P 12.9

GBP       CBI Trends Total Orders Jan A 5 | C 2 | P 0

USD       House Price Index M/M Nov A 0.50% | C 0.30% | P 0.40% | R 0.30%

USD       Crude Oil Inventories A 2.84M | C 2.5M | P 2.3M

Good Luck,

Andy

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