Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 111.74 | EURUSD 1.07504 | AUDUSD 0.76601 | NZDUSD 0.73078 | USDCAD 1.30847 | USDCHF 0.99087 | GBPUSD 1.24674 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.07498 | 1.07044

USDJPY                 111.964 | 111.593

GBPUSD               1.24873 | 1.24584

USDCHF               0.99448 | 0.99075

AUDUSD              0.76810 | 0.76336

USDCAD               1.31088 | 1.30748

NZDUSD               0.73760 | 0.73027

EURCHF                1.06518 | 1.06452

EURGBP               0.86214 | 0.85852

EURJPY                 120.223 | 119.731

For Today

• EUR: Late in the previous session Draghi comments on a liquidity shock when the ECB starts tapering this didn’t deflect from the general outfall in France as the election favourite comes under pressure and German headline inflation picking up there is becoming very little room to manoeuvre, the net effect was a gradual slip lower from the opening just below the 1.0750 areas to test to the 1.0710 areas into the grey hours, Downside bids into the 1.0700 areas with possibly strong congestion through the level before weak stops on a move through the 1.0680 areas with similar sort of congestion into the 1.0650 areas and through to the 1.0600 areas and decent bids likely again, upside offers congestion around the 1.0750 areas likely to be weak with the market increasing on a move to the 1.0800 levels a solid break through the 1.0820 areas opens up the topside only a little with a light trend line just above the 1.0850 areas and coinciding with natural interest through to the 1.0900 levels.
• GBP: Limited day for Cable with the market drifting from the opening 1.2470 areas and basing along the 1.2460 areas, limited fixing demand in GBPJPY saw the Cable push through towards the 1.2490 areas before dropping back once the buying was finished with, and again basing along the 1.2460 levels into the grey hours, Topside offers likely around the 1.2500 levels but possibly light with the market able to push through to the 1.2550 levels likely to be a little more formidable and then continuing with congestion through to the 1.2600 areas, from then on the offers are likely to be patchy but likely to see top pickers through to the 1.2630-50 areas. Downside bids light through the 1.2450 areas and then likely to increase a little on a dip into the 1.2400 area, a move through this level will likely see weak stops appearing and possibly increasing bids into the 1.2350 areas.
• JPY: The USDJPY traded quietly through the early part of the session dipped a little on the fix in Tokyo to test the 111.60 areas before running back to the opening level and then trading steadily higher through the session but unable to test through the 112.00 levels and running into the grey hours around the 111.80 areas. Topside offers light through the 112.50 areas with possible weak stops on a move through the level with better offers likely through to the 113.00 areas with congestive offers likely to move through the 113.50 areas into the 114.00 and likely to cause trouble. Downside bids limited through the current level with weak bids likely into the 111.20-00 areas and stops appearing through on a break better bids likely into the mid 110 handle and possibly key to holding above the 110 level and a much deeper move over the coming months.
• AUD: Another day in paradise for the Oz with an uptick in NZD inflation expectation seeing a little AUDNZD selling in the market with the market dipping from the opening 0.7660 areas before moving through to the RBA announcement and the Oz almost back to the opening levels from the 0.7635 area lows, the no change release saw the market initially dip to extend the lows but only just before bouncing quickly higher to test towards the 0.7680 and hold in a 0.7680-70 range through to the grey hours, Topside offers into the 77 cent levels and a move through the level likely to see some weak stops but further offers likely as the RBA seems to be relaxed with the current levels however, with elevated commodity prices helping the economy the question is for how long and when will inflation become the focus for the RBA. Downside bids into the 0.7600 areas with plenty of congestion through the level will likely see those bids problematic on a move lower, even through the level the market continues to find congestive bids through the 75 cent level to 0.7450 before the bids are likely to subside a little.

Overnight News

USD:

Fed’s Harker Says ‘I Think March Is on the Table’ for Rate Hike

Fed’s Harker: ‘I Don’t See Globalization Going Backward’

Fed’s Harker Says Fintech Regulation Is in Industry’s Interest

JPY/USD:

Asakawa Seeks U.S. Understanding on Japan FX Policy: TV Asahi

Aso, Kishida and Seko Said to Join Abe for U.S.-Japan Summit

Abe Says GPIF Can Make Its Own Call on U.S. Infra Investment

JPY:

Aso: Objective of Japan’s Monetary Policy Is Not a Weak Yen

CNY/HKD:

China Supports Lam as Hong Kong Leader, NPC Head Says: Standard

CNY:

PBOC Skips Reverse Repurchase Operations for Third Day

PBOC Says Markets Drove Reverse Repo Rate Rise Friday: Xinhua

AUD:

RBA Leaves Key Rate at 1.5% as Seen by 27 of 28 Economists

Aussie Rating Cut Wouldn’t Automatically Hit AA+, AA States: S&P

EUR:

Greece Won’t Meet Fiscal Surplus Targets Set By Europe, IMF Says

GBP:

U.K. LFL Jan. Retail Sales Fall 0.6% Y/y, BRC Says

NZD:

New Zealand Inflation Expectations Jumped in First Quarter

RBNZ’s Wheeler to Step Down When Term Ends in September

N.Z. Treasury Says Consumer Inflation Pressures Re-Emerging

Today’s data

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

GBP       BRC Retail Sales Monitor Y/Y Jan A -0.60% | C 0.90% | P 1.00%

NZD       RBNZ 2-Year Inflation Expectation Q1 A 1.90% | P 1.70%

AUD       RBA Rate Decision A 1.50% | C 1.50% | P 1.50%

JPY         Leading Index Dec (P) A 105.2 | C 105.5 | P 102.8

06:45     CHF        SECO Consumer Confidence Jan C -11 | P -13

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

08:00     CHF        Foreign Currency Reserves Jan C 646B | P 645B

13:30     USD       Trade Balance Dec C -45.0B | P -45.2B

13:30     CAD       International Merchandise Trade (CAD) Dec C 0.3B | P 0.5B

13:30     CAD       Building Permits M/M Dec C -2.50% | P -0.10%

15:00     CAD       Ivey PMI Jan C 58.3 | P 60.8

Harry Hindsight

• EUR: Opening around the 1.0790 levels the market drifted through the Asian session trading into the grey hours testing into the 1.0770’s with limited action during this part of the session, grey hours selling saw the market testing to the 1.0750 levels, the move through into the London session saw the market holding its levels with the decent German numbers offset by Eurozone retail PMI numbers and the ongoing rumbles in France as the leading contender finds the going getting tough with Jobs for the boys or the wife as it seems leaving the field open for Le Pen, bond spreads between France and Germany widened and the Euro continued to come under pressure, the move towards the NYK session saw the market slipping through the 1.0710 levels before starting a steady recovery through the NYK session to finish the day around the 1.0750.
• GBP: Cable rose slightly from the opening 1.2490 levels to test weakly towards the 1.2500 areas but with little movement the market slipped back to trade around the opening levels through into the grey hours, the move towards the London session saw a dip to the 1.2470 levels and then dropped quickly to the 1.2450 level on the opening before rebounding and trading in a range through to the NYK session holding the 1.2460-90 level, the move into NYK saw the market drop steadily back to the 1.2430 areas, the move through to the end of the session saw the market rising again as the USD gave up most of its gains to test through to the 1.2480 and then relaxing to the 1.2470 areas.
• JPY: The USDJPY steadily lost ground through the day, early trading saw a limited test to the 112.70 areas before moving into the Tokyo session the market slipped steadily down into the 112.20 areas and then held below the 112.50 areas through to the grey hours, London bought a little to make the highs towards the 112.80 area before starting another steady decline through into the NYK session testing the 112.00 before bouncing a little to the 112.50 areas, the end of the London session saw the USDJPY again slipping lower and the push through the 112.00 levels saw some weak stops triggered and the market attempting to push lower however, bids into the 111.60 areas held and the market was unable to grind through the level and held to the close.
• AUD: Opening around the 0.7680 areas the market tested weakly above the 0.7685 areas from the opening before slipping back through to the release of the retail sales numbers and a quick dip through to the 0.7660 levels and based along this level through into the grey hours, limited selling into the grey hours saw the lows extended a little however, the market ranged through to the NYK session holding around the 0.7660, from the opening in NYK the Oz tested lower through to the 0.7630 areas in the same manner as the other pairs and recovering to the 0.7660 for the close.

Yesterday’s premiership results

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

EUR        German Factory Orders M/M Dec A 5.20% | C 0.70% | P -2.50% | R -3.60%

EUR        Eurozone Retail PMI Jan A 50.1 | P 50.4

EUR        Eurozone Sentix Investor Confidence Feb A 17.4 | C 16.8 | P 18.2

Good Luck,

Andy

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