Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 114.255 | EURUSD 1.05778 | AUDUSD 0.76632 | NZDUSD 0.7153 | USDCAD 1.30727 | USDCHF 1.00624 | GBPUSD 1.24678 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.05865 | 1.05651

USDJPY                 114.511 | 114.237

GBPUSD               1.25750 | 1.24454

USDCHF               1.00743 | 1.00572

AUDUSD              0.76795 | 0.76545

USDCAD               1.30957 | 1.30656

NZDUSD               0.71815 | 0.71532

EURCHF                1.06500 | 1.06432

EURGBP               0.84929 | 0.84785

EURJPY                 121.062 | 120.838

For Today

• EUR: A very quiet session with another batch of numbers for the day, opening around the 1.0580 areas before drifting into the Tokyo session a little higher before moving into the Tokyo session and testing through to the lows around the 1.0565 areas, and then gradually moving off those lows in a very slow rise through to the highs around the 1.0585 levels before settling back to the opening levels for the move into the grey hours, Topside offers light through the 1.0600 areas and likely to increase in size around the 1.0640-60 with stronger offers on the approach to the 1.0680-1.0700 levels, downside bids into the 1.0560-40 areas being more sentimental than strong leaves the market with better bids on a test through down through the 1.0520 areas and likely to extend to the 1.0480 areas with possibly strong stops on a move through however, congestive bids to the downside from the end of last year.
• GBP: The Cable tested to its highs before Tokyo and only just from the opening around the 1.2470 levels the market drifted from the early 1.2475 areas and the move into the Tokyo session dropping back quickly through the 1.2450 area but basing there for a couple of hours, before pushing back to the opening levels and then drifting slightly into the grey hours, Downside bids into the 1.2450 levels seem to be fairly resilient for the moment but then I don’t think the level has been truly tested with very little impetus over the past 24hrs however, a push through will likely see some weak stops and limited bids into the 1.2400 areas, with stronger bids likely into the 1.2350 areas and employment numbers the focus for the day, Topside offers light through the 1.2500 areas but increasing on a test towards the 1.2550 and through to the 1.2600 areas with possible weak stops on a move towards the level, with the 1.2630 areas likely to be a stronger stop area.
• JPY: USDJPY remained quiet through the session with plenty of interesting data for the day in the US stalling the movement from yesterday, opening around the 114.25 areas the market rose into the Tokyo session to briefly push the 114.50 areas before ranging from the opening level to the 114.40 once the high was made. Topside offers light through the 114.50 with weak stops likely through the level before running into the ubiquitous offers from 114.80 through to the 115.10 with weak stops likely and then offers into the 1.1550 levels and the sticking point since moving down below the level in early January, a move through could see a better move with congestive offers through the 116.00 areas and then limited till the 117.00 level. Downside bids light through the 114.00 level and not really improving until the market tests towards the 113.20 levels with possibly stronger bids, a dip through that level likely to see stronger stops and the market leaving the 112.00 area vulnerable to a test.
• AUD: A narrow range for the Oz with the market testing towards the 0.7680 areas before drifting through into Tokyo to test to the lows around the 0.7655 areas, the rest of the session saw the market slowly rising back towards the highs but unable to really test the level before drifting to the grey hours holding around the 0.7670 level. Topside offers still remain around the 77 cent levels and given the moves yesterday the day traders are likely to be lined up around the level again with weak stops appearing on a break through the 0.7720 quickly opening to the 0.7775 areas and possibly stronger offers continuing from there into the 78 cent level. Downside bids into the 76 cent area and those bids dependent on the move through the day with early tests higher likely to see the weak shorts looking for a quick profit towards the 76 cent level, a push through the level will likely see congestion through the next big figure and the market struggling again.

Overnight News

JPY:

Kuroda Says BOJ Will Lower Target Rates If More Easing Needed

USD/JPY:

Aso: Want to Tell Mnuchin That Can’t Call It a Weak Yen Now

SoftBank to Buy Fortress Investment Group for $3.3 Billion

KRW: S. Korea to Hold National Security Council Meeting: Yonhap News

USD/GBP:

Mnuchin, U.K.’s Hammond Discuss Economic Ties, Brexit

CNY:

Chinese Local Govt. Incentives Hinder Reform Agenda, Moody’s Says

SGD:

Singapore December Retail Sales +0.4% Y/y; Est. +1.4%

AUD:

Australia Feb. Consumer Confidence Rises 2.3% M/m to 99.6

NZD:

New Zealand Expectations for House-Price Gains Fall to 5-Yr Low

Today’s data

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

AUD       Westpac Consumer Confidence Feb A 2.30% | P 0.10%

09:30     GBP       Jobless Claims Change Jan C 1.0K | P -10.1K

09:30     GBP       Claimant Count Rate Jan C 2.30% | P 2.30%

09:30     GBP       ILO Unemployment Rate 3M Dec C 4.80% | P 4.80%

09:30     GBP       Average Weekly Earnings 3M/Y Dec C 2.80% | P 2.80%

10:00     EUR        Eurozone Trade Balance (EUR) Dec C 22.5B | P 22.7B

13:30     CAD       Manufacturing Shipments M/M Dec C 0.30% | P 1.50%

13:30     USD       Empire State Manufacturing Feb C 7 | P 6.5

13:30     USD       CPI M/M Jan C 0.30% | P 0.30%

13:30     USD       CPI Y/Y Jan C 2.40% | P 2.10%

13:30     USD       CPI Core M/M Jan C 0.20% | P 0.20%

13:30     USD       CPI Core Y/Y Jan C 2.10% | P 2.20%

13:30     USD       Advance Retail Sales Jan C 0.10% | P 0.60%

13:30     USD       Retail Sales Less Autos Jan C 0.40% | P 0.20%

14:15     USD       Industrial Production Jan C 0.00% | P 0.80%

14:15     USD       Capacity Utilization Jan C 75.50% | P 75.50%

15:00     USD       NAHB Housing Market Index Feb C 67 | P 67

15:00     USD       Business Inventories Dec C 0.40% | P 0.70%

15:00     USD       Fed Chair Yellen Testimony

15:30     USD       Crude Oil Inventories P 13.8M

21:00     USD       Net Long-term TIC Flows Dec P $30.8B

Harry Hindsight

• EUR: A quiet start to the day saw the market test to the 1.0610 levels into early Tokyo before dropping back through towards the 1.0590 levels into midsession, the move through to the grey hours the market rose steadily through to the 1.0620 levels, the movement through into the London session saw the market test to the 1.0635 level with the market ranging through to the NYK session between the 1.0610-35 levels before slipping slowly lower once NYK moved in, the move back to the 1.0600 level was orderly and only once Yellen started to speak did the market move for the Euro with the move to the 1.0585 level quick on the talk of rate hikes, there was different readings on her words with differences of when the hikes may take place with current economics possibly suggesting not as quick as they would like, and the wording not that much different from the FOMC statement, light stops through the 1.0580 levels and the market dipping to the 1.0560 areas and holding that level through to the close with the market slowly rising to the 1.0580 areas. The early choppiness in the market from London opening saw the Eurozone GDP figures drifting lower for the final qtr. And while it wasn’t an awful number it does make a little bit of a mockery of EU/UK running commentaries on GDP numbers pre/post Brexit.
• GBP: Cable gradually moved higher through the Asian session with inflationary numbers to come through the day, opening around the 1.2525 areas and the market tested lightly through the early part of the day holding between the 1.2520-30 levels before pushing quietly higher as the market moved towards the grey hours to push towards the 1.2550 areas before dipping on the opening in London and then once the data was released dropping back quickly as the inflationary numbers hit, the numbers were softer generally than expected and that backdrop saw the market dropping as a consequence however, this belays the point that PPI is still rising and sooner or later these costs have to be passed on into the economy, the fall saw the knee jerk reaction and the market testing to the 1.2450 levels repeatedly with strong bids from real money types willing to buy into the limited weakness and the level forming a base line through to the close ranging around the 1.2460-70 areas for the most part to the close.
• JPY: USDJPY saw light selling pressure through the Asian session with stronger IP numbers figuring after the previous days GDP number, the market held through the first half of Asia around the 113.70 levels until the IP numbers were released and the market quickly tested down to the 113.30 areas for the move into the grey hours, London saw very little movement with the market continuing to base along the 113.30 area through to the Yellen commentary before pushing quickly through the opening levels around the 113.70 area and triggering weak stops on a move through to the 114.10 level and then a slower rise from there to top around the 114.50 areas, the close in London saw the market steadily drift off from the highs to hold the 114.30 areas.
• AUD: Pushing from the 0.7640 areas saw the Oz quiet until the Tokyo session and with the fall back of the USDJPY and the NAB business number saw the market to test through the 0.7670 levels, the market continued to rise through the Asian session, the market moved through to the 0.7685 areas before moving into the grey hours the market moved quietly through London ranging around the 0.7675 levels before testing to the 0.7695 areas as NYK entered the fray, the market held for an hour or so before starting a slow drift back to the 0.7680 areas and then dropping quickly on the Yellen commentary, dropping back from the level and testing through to the 0.7620 area before bouncing a little and starting a steady rise through to the close around the 0.7660 area.

Yesterday’s premiership results

AUD       NAB Business Confidence Jan A 10 | P 6

CNY        CPI Y/Y Jan A 2.50% | C 2.40% | P 2.10%

CNY        PPI Y/Y Jan A 6.90% | C 6.60% | P 5.50%

JPY         Industrial Production M/M Dec (F) A 0.70% | C 0.50% | P 0.50%

EUR        German GDP Q/Q Q4 (P) A 0.40% | C 0.50% | P 0.20%

EUR        German CPI M/M Jan (F) A -0.60% | C -0.60% | P -0.60%

EUR        German CPI Y/Y Jan (F) A 1.90% | C 1.90% | P 1.90%

CHF        CPI M/M Jan A 0.00% | C -0.10% | P -0.10%

CHF        CPI Y/Y Jan A 0.30% | C 0.30% | P 0.00%

CHF        Producer & Import Prices M/M Jan A 0.40% | C 0.20% | P 0.20%

CHF        Producer & Import Prices Y/Y Jan A 0.80% | C 0.50% | P 0.00%

EUR        Italian GDP Q/Q Q4 (P) A 0.20% | C 0.30% | P 0.30%

GBP       CPI M/M Jan A -0.50% | C -0.50% | P 0.50%

GBP       CPI Y/Y Jan A 1.80% | C 1.90% | P 1.60%

GBP       Core CPI Y/Y Jan A 1.60% | C 1.70% | P 1.60%

GBP       RPI M/M Jan A -0.60% | C -0.40% | P 0.60%

GBP       RPI Y/Y Jan A 2.60% | C 2.80% | P 2.50%

GBP       PPI Input M/M Jan A 1.70% | C 1.00% | P 1.80% | R 2.70%

GBP       PPI Input Y/Y Jan A 20.50% | C 18.50% | P 15.80% | R 17.00%

GBP       PPI Output M/M Jan A 0.60% | C 0.30% | P 0.10%

GBP       PPI Output Y/Y Jan A 3.50% | C 3.20% | P 2.70% | R 2.80%

GBP       PPI Output Core M/M Jan A 0.50% | C 0.30% | P 0.00%

GBP       PPI Output Core Y/Y Jan A 2.40% | C 2.20% | P 2.10%

GBP       House Price Index Y/Y Dec A 7.20% | C 6.50% | P 6.70%

EUR        Eurozone Industrial Production M/M Dec A -1.60% | C -1.50% | P 1.50%

EUR        German ZEW Survey (Economic Sentiment) Feb A 10.4 | C 15.1 | P 16.6

EUR        German ZEW Survey (Current Situation) Feb A 76.4 | C 77 | P 77.3

EUR        Eurozone ZEW Survey (Economic Sentiment) Feb A 17.1 | C 22.3 | P 23.2

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

USD       PPI M/M Jan A 0.60% | C 0.30% | P 0.30%

USD       PPI Y/Y Jan A 1.60% | C 1.50% | P 1.60%

USD       PPI Core M/M Jan A 0.40% | C 0.20% | P 0.20%

USD       PPI Core Y/Y Jan A 1.20% | C 1.10% | P 1.60%

USD       Fed Chair Yellen Testimony

Good Luck,

Andy

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