Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 112.803 | EURUSD 1.07976 | AUDUSD 0.75849 | NZDUSD 0.73245 | USDCAD 1.30311 | USDCHF 0.9895 | GBPUSD 1.25785 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.08049 | 1.07874

USDJPY                 113.277 | 112.657

GBPUSD               1.25915 | 1.25666

USDCHF               0.99089 | 0.98902

AUDUSD              0.75825 | 0.75522

USDCAD               1.30920 | 1.30301

NZDUSD               0.73127 | 0.72595

EURCHF                1.06898 | 1.06813

EURGBP               0.85867 | 0.85802

EURJPY                 122.220 | 121.633

For Today

• EUR: A quiet session with the market opening just below the 1.0800 level and then slowly pushing through the level and hold to the Tokyo session, the market then drifted through the opening and has held along the 1.0790 level in a tight range as you’d expect for an FOMC day. Topside offers into the 1.0810 level is likely to see stops appearing on a move through the level if there is some momentum and opening the market to test too the 1.0860 areas and a limited technical line protecting the 1.0900 areas, some interesting figures for the day could see the market moving however, it is likely to be FOMC that could do the damage but is expected to be no change. Downside bids into the 1.0720 areas with weak congestion around with weak stops through the 1.0680 areas and stronger bids likely on a push through the 1.0660 levels mostly congestive until 1.0620-00 areas with bids there likely protecting the Dec ranges.
• GBP: The market pushed through to the 1.2590 areas from the opening before slipping down to run around the 1.2570 areas through to the grey hours, Topside offers through the 1.2600 area and likely to push through to the 1.2630 and possibly weak stops through the level however, sentimental 1.2650 may be the trigger point for a test to the 1.2700 areas. Downside bids light through to the 1.2500 areas with a move through to the 1.2480 area likely to see weak stops appearing and the market open to a move like yesterday to the 1.2420-00 areas, with better bids likely through towards the 1.2350 areas.
• JPY: A quiet rise through the Asian session as the dust settles, well until a new day begins in the US, the market touched into the 112.60’s before the Tokyo opening and then started a steady climb through the 113.00 levels basing along the line deep into the Tokyo day before attempting a push through the 113.20 areas and holding into the grey hours around that level. Topside offers likely to be weak along the current highs with a little congestion on a move through the 113.50 levels, 114.00 areas are likely to hold better offers and possibly stops on a move through the level to test to the 114.50 areas and more congestion thereafter. Downside bids into the 112.50 levels are likely to be forming again however, for the moment they are light and the 112.00 area is the stronger level with a push through the 111.80 areas likely to see weak stops and stronger stops appearing to open the market for a deeper move with 110.50 areas likely to start seeing some bids moving in. Talk through the session of the BoJ pondering rate hike timing.
• AUD: Oz sees the normal day, opening around the 0.7585 areas the market then moved through into the Tokyo session drifting steadily lower to test through towards the 0.7550 area before finding some light bids and the market holding around the 0.7565-70 levels into the grey hours, Topside offers has no change with the 76 cent level holding the market in place, a push through the level will see weak stops triggered and the market possibly open for a little way but congestive offers are likely to appear with those offers likely to continue through to 77 cents with possibly stronger offers into the level, downside bids light through to the 75 cent areas however, a move through to the 0.7480 areas could see limited stops appearing with some congestion through the 0.7450 areas likely to underpin the market for the time being.

Overnight News

CNY:

China Jan. Manufacturing PMI at 51.3; Est. 51.2

USD/CNY:

Yuan’s Recent Move Has Surprised Trump, Terry Branstad Says

USD:

Trump Nominates Gorsuch to Fill Scalia’s Supreme Court Seat

JPY/USD:

Suga Says Trump Comments on Yen Devaluation ’Totally Inaccurate’

Aso Said to Brief Trump on FX, BOJ Policy on Feb. 10: Reuters

PM Abe adviser sees Trump’s argument destructive to Japan, world economy

JPY:

Japan’s Monetary Policy Aimed at Deflation, Not FX, Asakawa Says

Nikkei Japan Jan. Manufacturing PMI 52.7 vs 52.4 in Dec.

NZD:

New Zealand Jobless Rate Unexpectedly Rose in Fourth Quarter

New Zealand Prime Minister Sets Sept 23 as General Election Day

Statistics NZ Corrects 3Q Terms of Trade Index After Error

CAD:

Poloz Says Uncertainty Requires More Judgment in Policy Making

GBP:

U.K. Jan. BRC Shop Price Index -1.7% Y/y vs Dec. -1.4% Y/y

New U.K. Trade Deals Can’t Soften Blow From Brexit, Niesr Says

AUD:

Australia Jan. Manufacturing Index Falls 4.2 Pts M/m to 51.2

Today’s data

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

NZD       Employment Change Q/Q Q4 A 0.80% | C 0.80% | P 1.40% | R 1.30%

NZD       Unemployment Rate Q4 A 5.20% | C 4.80% | P 4.90%

GBP       BRC Shop Price Index Y/Y Jan A -1.70% | C -1.00% | P -1.40%

CNY        Manufacturing PMI Jan A 51.3 | C 51.2 | P 51.4

CNY        Non-manufacturing PMI Jan A 54.6 | P 54.5

07:00     GBP       Nationwide House Prices M/M Jan C 0.00% | P 0.80%

08:30     CHF        SVME PMI Jan C 55.9 | P 56

08:45     EUR        Italy Manufacturing PMI Jan C 53.3 | P 53.2

08:50     EUR        France Manufacturing PMI Jan (F) C 53.4 | P 53.4

08:55     EUR        Germany Manufacturing PMI Jan (F) C 56.5 | P 56.5

09:00     EUR        Eurozone Manufacturing PMI Jan (F) C 55.1 | P 55.1

09:30     GBP       PMI Manufacturing Jan C 55.9 | P 56.1

13:15     USD       ADP Employment Change Jan C 167K | P 153K

15:00     USD       ISM Manufacturing Jan C 55 | P 54.7

15:00     USD       ISM Prices Paid Jan C 66 | P 65.5

15:00     USD       Construction Spending M/M Dec C 0.30% | P 0.90%

15:30     USD       Crude Oil Inventories P 2.8M

19:00     USD       FOMC Rate Decision C 0.75% | P 0.75%

Harry Hindsight

• EUR: Euro’s moved through the first half of the day struggling with the market opening around the 1.0700 levels and then ranging tightly through to the grey hours, the market opening in London saw the market rise quickly to the 1.0720 areas to set the early highs before drifting back towards the lows of 1.0690, the Eurozone GDP saw a better than expected figure with inflationary numbers building eventually saw the market lifting away from the 1.07 00 areas and testing to the 1.0760 areas with light offers succumbing to the move eventually and then testing steadily through to the 1.0800 areas, with the markets in flap over what was stated before the election and now being put in place, whether we like it or not the Trump rally was really over before it began if he wants to push ahead with a weaker USD and any other policy he stated he would enforce, this undermined the USD through the NYK session but the market was unable to push beyond the 1.0810 areas cleanly and ranged around the 1.0800 levels to the close.
• GBP: Moving through the Asian session the market held around the 1.2520 levels having opened around the 1.2490 areas, the move into the grey hours saw the market drifting back through the session and into the grey hours testing back through the lows for the move into London, a mixture of European numbers saw the EURGBP rallying as solid buying moved in with a report from NEISR that even with the trade relations with other nations not compensating for the balances from Europe, this of course is a double edged sword and is worst case scenario however, given that Donald Tusk has said that the US is a threat to Europe one should work from the worst case scenario for Brexit as they seem to be in the mood for cutting their own noses off. However, moving on the market dropped to below the 1.2420 areas before finding some base and then slowly rising through into the NYK session with a weaker USD allowing Cable to rise towards the 1.2600 areas and hold around the 1.2580 level through to the close.
• JPY: Opening around the 113.80 areas the market dipped steadily through to the 113.30 levels with light bids holding the downside through to the grey hours, the market started to recover on the move into the London session testing through to the 113.90 areas and holding those levels into NYK and the highs for the day were made, the ramifications of comments about the US correcting or taking punitive measures against those perceived by Washington to be interfering with currency rates whether verbally or physically encompassed both Japan, China in Asia and then the EU itself as the QE continues, the impact on the USD on the run to NYK saw the market dropping back to the lows and then suddenly dropping as the market received the US numbers taking it quickly through the 113.20 areas triggering weak stops and falling quickly through to the 112.10 areas before a little bounce and then a steady climb through to the end of London to push back above 113.00, the end of the session saw the market moving around steadily but initially deep into the 112 handle again before tightening around the 112.80 areas for the close.
• AUD: The Oz remains stuck in the 0.7500-0.7600 range and has not really had any good news to test either level for a couple of weeks now, the market opened around the 0.7550 level and rose quietly through the Asian session to test the 0.7570 areas again before drifting off into the grey hours just above those opening levels, the move into the London session saw the Oz testing lower with cross movement initially hurting the Oz with EURAUD in particular pushing the Oz through the 0.7545 level to set the low however, the movement into the NYK session saw the Oz testing higher as the USD weakness manifested through the market and although the market initially holding the 0.7580 areas before a second run took the market too the 0.7605 level, the market as before failed the level and dipped back to the 0.7580 areas with weak stops on the move through the level a while later saw the market back to the opening levels before rising slowly to the close around the 0.7585 areas.

Yesterday’s premiership results

JPY         BOJ Monetary Policy Statement

JPY         Jobless Rate Dec A 3.10% | C 3.10% | P 3.10%

JPY         Household Spending Y/Y Dec A -0.30% | C -0.90% | P -1.50%

JPY         Industrial Production M/M Dec (P) A 0.50% | C 0.30% | P 1.50%

GBP       GfK Consumer Confidence Jan A -5 | C -8 | P -7

AUD       NAB Business Confidence Dec A 6 | P 5 | R 6

JPY         Housing Starts Y/Y Dec A 3.90% | C 8.40% | P 6.70%

EUR        French GDP Q/Q Q4 (A) A 0.40% | C 0.40% | P 0.20%

EUR        German Retail Sales M/M Dec A -0.90% | C 0.60% | P -1.80% | R -1.70%

EUR        German Unemployment Change Jan A -26K | C -5K | P -17K

EUR        German Unemployment Rate Jan A 5.90% | C 6.00% | P 6.00%

GBP       Mortgage Approvals Dec A 68K | C 69K | P 68K | R 67K

GBP       M4 Money Supply M/M Dec A -0.50% | C 0.30% | P 0.40%

EUR        Eurozone Unemployment Rate Dec A 9.60% | C 9.80% | P 9.80%

EUR        Eurozone GDP Q/Q Q4 (A) A 0.50% | C 0.40% | P 0.30%

EUR        Eurozone CPI Estimate Y/Y Jan A 1.80% | C 1.50% | P 1.10%

EUR        Eurozone CPI – Core Y/Y Jan (A) A 0.90% | C 0.90% | P 0.90%

CAD       GDP M/M Nov A 0.40% | C 0.30% | P -0.30% | R -0.20%

CAD       Industrial Product Price M/M Dec A 0.40% | C 0.60% | P 0.30% | R 0.40%

CAD       Raw Materials Price Index M/M Dec A 6.50% | C 2.80% | P -2.00% | R -1.60%

USD       Employment Cost Index Q4 A 0.50% | C 0.60% | P 0.60%

USD       S&P/Case-Shiller Composite-20 Y/Y Nov A 5.30% | C 5.00% | P 5.10%

USD       Chicago PMI Jan A 50.3 | C 55 | P 54.6

USD       Consumer Confidence Jan A 111.8 | C 112.9 | P 113.7

Good Luck,

Andy

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