Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 113.089 | EURUSD 1.19675 | AUDUSD 0.78409 | NZDUSD 0.71787 | USDCAD 1.24202 | USDCHF 0.97729 | GBPUSD 1.35672 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.19757 | 1.1958

USDJPY                 113.179 | 112.497

GBPUSD               1.35824 | 1.35573

USDCHF               0.97824 | 0.97634

AUDUSD              0.78649 | 0.78385

USDCAD               1.24243 | 1.24048

NZDUSD               0.71972 | 0.71668

EURCHF                1.17079 | 1.16889

EURGBP               0.88250 | 0.88135

EURJPY                 135.479 | 134.688

For today

• EUR: A very quiet range with the Euro benefitting from Yen strength to hold quietly around the opening levels with one minor dip below the 1.1960 levels and then holding again around the 1.1970 areas. Downside bids light through the 1.1950 levels with weak stops likely on a break below the current lows, some congestion remaining on a move to the 1.1900 levels and the market likely to see support until testing the 1.1880 areas with weak stops and possibly some other mid-term stops appearing on a test through to the 1.1850 areas and stronger congestion, the market is likely to struggle in the area and a move to the 1.1800 areas likely to be slow going with bids likely to increase into the 1.1800 levels. Topside offers light into the 1.2000 level with congestion light but increasing as the market pushes through to the 1.2060 areas beyond this level the market is likely to see stronger resistance appearing on a move into the 1.2100 with a move beyond that level likely to see stronger stops appearing and the topside opening for further gains to the 1.23-1.25 areas however, unlikely that may seem.
• GBP: Cable saw a dip into the Tokyo session opening around the 1.3565 levels the market edged into the Tokyo session around the 1.3570 level and then dipping back to the 1.3560 areas before rising steadily through to the 1.3580 areas as the JPY strengthened before moving into the grey hours just below the highs. A resilient Cable over all sees topside offers again appearing to be strong around the 1.3600 levels with some weak stops possibly beyond and the 1.3660 area becoming the target for the day/week, a push through this level could see some weak option barriers appearing in the 1.3700 areas however, the topside truly opens for a test back to the low range pre general election. Downside bids light through to the 1.3500 level with some congestion appearing in the area and although there is likely to be weak stops behind the level the market again sees a very congested 1.34 handle with the sentimental levels possibly holding the bulk of that congestion with the 1.3450 and 1.3400 areas likely to be very strong for the moment.
• JPY: USDJPY opened around the 113.10 levels and saw a minor rise to the 113.15-18 areas before dropping off quickly on the BoJ long end bond purchases with the market dropping quickly back to test the 112.50 level before holding around the 112.60 areas through to the grey hours, USDJPY while having a decent quick move remains caught in the 112-113.50 range we’ve seen since the beginning of Dec 17, a break through to the 112.00 supportive area will see plenty bids appearing however, a push through the level will likely see weak stops appearing quickly and the 111.80 areas adding to the selling pressure and the market quickly dipping through the 111.50 level, further bids appearing on a test to the 111.20-00 areas could see weak stops continue through the level and the 110.50 stronger level under threat and likely to be key to a deeper move if the market can move through the congestive areas. Topside offers light back through the 113.00 levels with the offers increasing on a push above the 113.50 levels and very little in the way of stops until the strong resistance in the 114.00 areas is cleared with possibly larger stops on a test through the 114.10 levels.
• AUD: Stronger JPY, stronger Oz with the market opening around the 0.7840 level and rising slowly into the Tokyo session, early morning saw the market rising in steps to test the 0.7865 areas before holding quietly through to the grey hours, The strong rally from mid- Dec is now showing signs of weakening with the market stalled above the 0.7800 level, topside offers remain from the 0.7870 areas onwards and only a strong push through the 79 cent level can save the rally, a push through could see stops appearing on the break and a stronger rally appearing for a run through the 0.7950 areas with limited offers appearing on a move towards the 0.7980 areas and some stronger offers reappearing into the 80 cent level with limited potential for option plays, Downside bids light through the 78 cent level with some stubborn bids a possibility until the market pushes through the 0.7775 areas and opening the market to a quick test lower into the 0.7735-10 areas with to old trend lines in the area, even so the market has gyrated around these levels for much of the last two years so on a longer term have less importance apart from signifying the top end of a range with plenty of room below to move slowly.

Overnight News

JPY:

JGB Futures hit day’s low as BoJ trims long end purchase size

GBP:

UK retailers report biggest fall in non-food spending since 2009 BRC

USD:

Fed’s William’s low neutral rates problem in most advanced economies

William’s US economy has fully recovered from recession

William’s Fed’s goal is returning inflation to 2% next few years

William’s Price level targeting really a very modest change

William’s Central banks have less room to cut rates next crisis

Fed’s Rosengren says worth re-assessing Fed’s 2% inflation goal

Today’s data

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

JPY         Labour Cash Earnings Y/Y Nov A 0.90% | C 0.60% | P 0.60% | R 0.20%

GBP       BRC Retail Sales Monitor Y/Y Dec A 0.60% | C 0.30% | P 0.60%

AUD       Building Approvals M/M Nov A 11.70% | C -1.00% | P 0.90%

JPY         Consumer Confidence Index Dec A 44.7 | C 45 | P 44.9

06:45     CHF        Unemployment Rate Dec A C 3.00% | P 3.00%

07:00     EUR        German Industrial Production M/M Nov C 1.80% | P -1.40%

07:00     EUR        German Trade Balance Nov C 20.7B | P 19.9B

08:00     CHF        Foreign Currency Reserves Dec P 738B

08:15     CHF        Retail Sales Real Y/Y Nov C -2.50% | P -3.00%

10:00     EUR        Eurozone Unemployment Rate Nov C 8.70% | P 8.80%

13:15     CAD       Housing Starts Dec C 240K | P 252K

 

Harry Hindsight

• EUR: The Asian session saw the highs for the days with the market opening unchanged from Friday and slowly rising slowly through to test the 1.2050 levels, weekend news saw commentary to suggest either the currency is to fall back a little or inflation needs to rise and not fall as Fridays numbers suggested, so from that point onwards the market drifted steadily lower through the session and testing to the 1.2015 areas into the grey hours, early London saw the market continuing the move and only on the release of the confidence numbers did the market show any signs of reversing its trend moving back to the 1.2000 level having drifted through to the 1.1985 areas, the rally was limited and having pushed towards the 1.2010 areas again resumed its steady trend lower to base along the 1.1960 levels through to the close with the NYK session spending much of its time around the 1.1970 levels to the close.
• GBP: The Asian session saw very little in it with the market reacting the same as the Euro with the move into the Tokyo session seeing Cable test to the 1.3585 levels having opened around the 1.3560 level, having hit the top the market held for a short period before starting a slow slip lower, the move into the grey hours saw the market testing the 1.3550 levels, the move into the London session saw the steady decline continuing with the market test to the 1.3525 levels, the Eurozone numbers did very little for the market with the UK government changing some key members and the Cable jumped off the lows and back to the 1.3550 level to range around the level through into the NYK session, and only once the market moved to the London close did it again attempt the highs with a quick strong move back to the 1.3585 level and then dropping back on the second failure of the day and a slow drift to the close holding in the mid 1.3560’s
• JPY: A quiet day for the USDJPY opening around the 113.10 areas the market slowly pushed through to the grey hours testing the 113.25 areas and early London pushed the market towards the 113.40 level before dipping back as EURJPY selling moved into the market and the USDJPY falling into the NYK session testing the lows around the 112.90 levels, the run to the close saw the market rising back through the 113.00 areas and ranging around the 113.10 level to the close in quiet trading.
• AUD: The Oz started the day quietly with the market rising to the 0.7870 levels before dipping back through the opening just below and then rising again as early AUDJPY buying in Tokyo took the market back to the highs again with talk of Iron prices are likely to drop by 20% in the coming year the Oz struggled and the market again dipped in mid-morning in Tokyo to test through to the 0.7845 areas before slowing a little and drifting into the grey hours testing the 0.7835, London continued the movement however, it was limited and the market based around the 0.7835 areas through the balance of the day with the market rising back to the 0.7840 areas into the close.

Yesterday’s premiership results

EUR        German Factory Orders M/M Nov A -0.40% | C 0.00% | P 0.50%

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

CHF        CPI Y/Y Dec A 0.80% | C 0.80% | P 0.80%

EUR        Eurozone Sentix Investor Confidence Jan A 32.9 | C 31.3 | P 31.1

EUR        Eurozone Retail Sales M/M Nov A 1.50% | C 1.30% | P -1.10%

EUR        Eurozone Consumer Confidence Dec (F) A 0.5 | C 0.5 | P 0.5

EUR        Eurozone Economic Confidence Dec A 116 | C 114.8 | P 114.6

EUR        Eurozone Business Climate Indicator Dec A 1.66 | C 1.5 | P 1.49

EUR        Eurozone Industrial Confidence Dec A 9.1 | C 8.4 | P 8.2

EUR        Eurozone Services Confidence Dec A 18.4 | C 16.5 | P 16.3 | R 16.4

CAD       BOC Business Outlook Survey

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