Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 112.585 | EURUSD 1.07865 | AUDUSD 0.76834 | NZDUSD 0.73155 | USDCAD 1.30242 | USDCHF 0.99272 | GBPUSD 1.24846 |

 

LMAX Ranges 6am London time

Highs    Lows

EURUSD               1.07886 | 1.07732

USDJPY                 112.701 | 112.230

GBPUSD               1.24990 | 1.2477

AUDUSD              0.76808 | 0.76588

USDCHF               0.99248 | 0.99165

USDCAD               1.30281 | 1.30115

NZDUSD               0.73266 | 0.7309

EURGBP               0.86458 | 0.86256

EURCHF                1.07008 | 1.06926

EURJPY                 121.489 | 121.07

For today

• EUR: Very quiet session range wise with limited volumes as the market awaits the next set of numbers or commentary, Opening around the 1.0790 levels the market drifted lower through the session dipping into the 1.0775 areas with limited news overall for the weekend to effect the Euro with Schaeuble’s comments over the weekend more as an agreement with Pres. Trump than anything else however, as we’ve noted in the past the current ECB rates do not suit Germany in general. Topside offers into the 1.0800 level with the offers likely to continue through to the 1.0820 before weak stops appear and the market opens a little to the 1.0850 area, a push through the 1.0860 area could see the market open to the sentimental 1.0900 areas with the topside opening to a larger move through that level, Downside bids seeing light congestive bids into the 1.0750 areas before the stronger 1.0720-00 area appears, with a move through the area seeing congestive bids running for a good way and likely to be a slow grind to the 1.0600 areas and strong bids. with only Factory orders and retail sales to worry about for the day.
• GBP: As with the Euro, a quiet session that is with the Cable opening around the 1.2490 levels before dipping to the 1.2480 areas on early selling before moving slowly through into the Tokyo session and testing towards the 1.2500 areas before drifting through to session ranging from the 1.2480-95 areas into the grey hours pushing towards the high again. Weak offers through the 1.2500 levels with the market with stronger congestive offers likely into the 1.2550 areas, with limited data for the day the market is likely to be a little dull unless the market can test the 1.2600 levels on some comments, Downside bids into the 1.2450 areas likely to be sticky and a push through will likely see stronger bids moving in around the 1.2400 areas and continuing through lightly to 1.2350.
• JPY: Opening a little lower on the day the 112.50 level, the gap on the charts was quickly filled on the charts as the market moved to the Tokyo session setting the high just beyond the 112.70 areas before seeing steady selling through the early part of the session to test into the 112.20 levels, once the fixing out of the way saw the market trade slowly higher through the session stalling initially at the 112.50 areas before pushing through to range through the 112.50-60 levels to the grey hours. Topside offers light through to the 113.00 with weak offers likely through the level to the 113.20 level and weak stops on a push through the area and then congestive offers likely into the 113.50 areas with stronger offers likely beyond that level. Downside bids into the 112.00 levels have been only lightly tested with possible decent bids in the area however, a push through the 111.80 areas are likely to see weak stops and break out stops appearing for a move quickly to the 111.00 levels and possibly through to the 110. Handle.
• AUD: Oz opened in line with expectation around the 0.7680 areas, before drifting through to the Tokyo session holding the 0.7670 areas, the market gapped lower on the release of the retail sales number and tested the 0.7660 in a large drop (not) and held the level basing along there for the balance of the session to move into the grey hours just off those lows. Topside offers remain around the 0.7700 areas with those offers likely to be reasonably strong some congestive offers likely through the level to 0.7750 with a mix of weak stops possible however, that 0.7740-60 areas are likely to absorb the bulk of the move and a move through to the 0.7780 area likely to be limited and offers increasing in size. Downside bids into the 76 cent levels likely to see some strength with weak stops on a move through however, below is the sticky range that too 3 weeks to push higher out of and likely to slow the markets decline with little data over the course of the day to really threaten the Oz.

Overnight News                                                                  

JPY:

Japanese Wages Rise 0.5% in 2016 in Biggest Increase Since 2010

Japan Carriers to Raise Fuel Surcharges, Nikkei Says

Bank of Japan Keeps Purchase Amount for 5-10 Year Debt

CNY:

China Should Guard Against Volatility From Trump Policies: News

China to Increase Penalties for Market Manipulation: Xinhua

Caixin China Jan. Services PMI 53.1 vs 53.4 in Dec.

Caixin China Jan. Composite PMI 52.2 vs 53.5 in Dec.

AUD:

Australia Dec. Retail Sales Drop 0.1% M/M; Est. 0.3% Gain

Australia Jan. Melbourne Inst. Inflation Gauge Rises 0.6% M/m

CHF:

SNB’s Jordan Says Negative Rates Are Currently Indispensable: SZ

GBP:

U.K. Profits Squeezed as Pound’s Drop Ramps Up Company Costs

Today’s data

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

JPY         Labour Cash Earnings Y/Y Dec A 0.10% | C 0.40% | P 0.20% | R 0.50%

AUD       TD Securities Inflation M/M Jan A 0.60% | P 0.50%

AUD       Retail Sales M/M Dec A -0.10% | C 0.30% | P 0.20% | R 0.10%

CNY        Caixin PMI Services Jan A 53.1 | C 53.6 | P 53.4

07:00     EUR        German Factory Orders M/M Dec C 0.70% | P -2.50%

09:10     EUR        Eurozone Retail PMI Jan P 50.4

09:30     EUR        Eurozone Sentix Investor Confidence Feb C 16.8 | P 18.2

Weekend News

EUR:

Schaeuble: Euro Exchange Rate Too Low for German Competitiveness
JPY:

Japan to Sell More 40-Year Bonds as Yields Low, Mainichi Says
USD:

Travel Ban Block Appealed as Trump Slams ‘So-Called’ Judge
Trump: Big Trouble When Country Cannot Decide Who Enters Safely
Trump Defence Chief Seeks Diplomatic Push in South China Sea
IRR/USD:

Iran Carries Out New Missile Tests After Trump Imposes Sanctions
CNY/USD:

China Says Disappointed at U.S. Dumping Ruling on Steel Products
CNY:

China Banking Watchdog to Target Illegal Arbitrage: 21st Century
GBP:

May’s Brexit Plan Imperilled by Tory Rebellion, Lawmaker Says
U.K. to Show Ready on Corporate Tax Cuts in Draft Law: Telegraph
EUR/USD:

EU’s Maelstrom Warns Trump against Provoking Trade War: WamS
EUR/RUB/USD:

As Trump Weighs Thaw With Putin, EU Set to Renew Its Blacklist
USD/UAH:

Trump, Poroshenko Call for Stop to Ukraine Fighting: Spokesman
KRW/USD:

S.Korea, U.S. Foreign Ministers Expected to Talk Tuesday: Yonhap
INR/USD:

Indian Internet Companies Eye NASDAQ Listing: Economic Times
PLN:

Polish Banks Attacked by Hackers after FSA Site Breach: Parkiet

Harry Hindsight

• EUR: Opening around the 1.0760 level the market traded sideways for the most part pushing to the 1.0770 levels before settling down to test through the 1.0750 level and then ranging the 1.0750-60 areas into the grey hours, the opening in London saw the market slowly drifting through to NYK with the market pressing to the 1.0730 level, the market dipped on the release of the NFP while bouncing quickly higher as the Unemployment number rose to 4.80% and the Euro quickly tested through the 1.0770 and then gradually pushed ahead to test towards the 1.0800 levels, the market failed the level again and the close of the London session saw the Euro slipping back towards the opening levels only to slowly rise to the close finishing around the 1.0790 areas.
• GBP: Cable moved from the 1.2530 to slip to the 1.2510 on the move into the Tokyo session and then ranged around the 1.2520 levels for the session, the move into London saw the market push slowly through the opening levels with mixed numbers out of Europe before hitting the Services PMI number and dropping quickly back to the 1.2470 levels, the market ranged through to the NFP testing the 1.2465 levels and back to just above the 1.2500 areas, the release of the NFP saw the market dipping quickly to the 1.2460 areas before bouncing on the unemployment number to the 1.2525 area, the market for Cable was then dragged a lower by weakness in the USD however, a weaker ISM number in the US saw Cable detaching itself and rallying back through the 1.2500 levels to test towards the opening levels and the end of the London session, the end of the session saw Cable weakening and slipping back to finish the day around the 1.2485 areas.
• JPY: Having opened a little higher than the close the USDJPY moved quietly through into the Tokyo session dipping a little before recovering and pushing to just below the 113.00 areas, a 5-10yr auction saw BoJ buying 450B of them and above the expected 410B leaving the USDJPY dropping back to the 112.50 levels, with Kuroda speaking later after the auction the market moved back through the 113.00 levels as he spoke of a strong commitment to the 2% target still and a stronger commitment to the yield curve control than in previous announcements. The move through to the London session saw the USDJPY holding in a tight range around the 113.20 levels and it wasn’t until the NFP number that the market finally moved with the market spiking towards the 113.50 areas before dropping back on the unemployment number and testing the 112.60 areas, the market then remained in the areas deep into the NYK session before testing through and triggering weak stops on a move to 112.30 levels the close in London saw the market moving back higher to test through the 113.00 but the momentum was weak and slipping back through the last few hours to hit 112.60 areas.
• AUD: A slow drift through the Asian session with the market moving from the 0.7660 areas to test through to the 0.7640 areas into midsession in Tokyo, the market then ranged around the 0.7650 areas through deep into London before sliding slowly through to the release of the NFP testing the 0.7635 areas, the numbers saw the market dip to the 0.7620 levels before jumping through to the 0.7680 areas and then slowly rise to test towards the 77 cent level, the market saw some limited range through the session between the 0.7670-85 areas.

Yesterday’s premiership results

CNY        Caixin PMI Manufacturing Jan A 51 | C 51.8 | P 51.9

EUR        Italy Services PMI Jan A 52.4 | C 52.6 | P 52.3

EUR        France Services PMI Jan (F) A 54.1 | C 53.9 | P 53.9

EUR        Germany Services PMI Jan (F) A 53.4 | C 53.2 | P 53.2

EUR        Eurozone Services PMI Jan (F) A 53.7 | C 53.6 | P 53.6

GBP       Services PMI Jan A 54.8 | C 55.8 | P 56.2

EUR        Eurozone Retail Sales M/M Dec A -0.30% | C 0.30% | P -0.40% | R -0.60%

USD       Change in Non-farm Payrolls Jan A 227K | C 175K | P 156K | R 157K

USD       Unemployment Rate Jan A 4.80% | C 4.70% | P 4.70%

USD       Average Hourly Earnings M/M Jan A 0.10% | C 0.30% | P 0.40%

USD       ISM Non-Manufacturing Composite Jan A 56.5 | C 57 | P 57.2

USD       Factory Orders Dec A 1.30% | C 1.00% | P -2.40%

Stay lucky

Andy

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