Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 111.266 | EURUSD 1.20318 | AUDUSD 0.78915 | NZDUSD 0.7245 | USDCAD 1.25204 | USDCHF 0.97595 | GBPUSD 1.35399 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.20667 | 1.20309

USDJPY                 111.350 | 111.062

GBPUSD               1.35651 | 1.35314

USDCHF               0.97710 | 0.9741

AUDUSD              0.79052 | 0.78753

USDCAD               1.25409 | 1.25091

NZDUSD               0.72762 | 0.72453

EURCHF                1.17657 | 1.1738

EURGBP               0.88985 | 0.8881

EURJPY                 134.154 | 133.864

For today

• EUR: Early rise in the Euro saw Tokyo buying after the run in the previous session, the market tested towards the 1.2070 levels before slowly dipping through to trade around the 1.2050 areas and slipping towards the opening levels into the grey hours, Topside offers into the 1.2100 areas with the market likely to continue until 1.2120 and weak stops joined by possible breakout stops appearing, while the market opens up to a higher move the market is likely to see sentimental offers through the 1.2150 areas and into the 1.2200 level however, its possible that the higher it goes the more chatter from the ECB, ultimately the 1.2300 is likely to be the next medium term target with possibly stronger offers through to the 1.2340 level. Downside bids light through the 1.2040 levels with limited stops on a move through the 1.2000 areas to open up the market to the weak downside with stronger bids not expected until a push through onto the 1.19 handle with some stubborn bids likely into the 1.1940-60 areas.
• GBP: Similar rise in Cable and strong buying pushing the Cable to the 1.3560 areas before holding around the 1.3550 level before slowly slipping a little as the market moved towards the grey hours and into the opening 1.3540 areas. Cable for the moment is range bound with light bids into the 1.3500 areas and continuing in stronger bids into the 1.3450 areas to limit the downside for the moment with congestion likely continuing deeper, Topside offers into the 1.3600 levels with possibly weak stops through the 1.3620 areas and then opening a test to 1.3660 level and the 2017 highs which are likely to be very strong with just as strong stops hanging around just behind the level.
• JPY: Little bit of a chop on the opening in USDJPY with the market testing towards the 111.35 level and then dropping quickly to the 111.10 level setting the range for the day with slightly lower dip before a slightly higher high in early trading from there the market settled to trade around the opening levels. Downside is likely to see strong bids into the 111.00 areas and continuing through to 110.80, any push through the level will see weak stops however, stronger bids are suspected into the 110.50 areas and are likely to slow any decent, topside offers weak back through the 111.50 areas and the offers into the 111.80 should pose little resistance to a concerted push from the USDJPY with offers limited through the 112.00 area and weak stops appearing before running into the 112.50 level and possibly stronger offers from then on.
• AUD: Early trading was quiet with some strong buying pushing the market above the 79 cent level in early Tokyo before dropping back again on China’s poor import numbers drifting back to the 0.7875 level and holding just above through into the grey hours, for the time being watch USDJPY for the movement in Oz, with the market remaining in a tight range and offers continuing through the 79 cent into the 0.7920 level likely to be fairly strong, a push through 110.50 level in USDJPY is likely to allow the Oz to push through those offers and test into congestion around the 0.7950 level however, the 80 cent level is then likely to become vulnerable as Oz starts to reassert itself over the AUD/JPY cross, Downside bids are likely to be weak on a move back through the 0.7840-60 areas with some limited strength into the 78 cent level, a break below the 0.7780 level is likely to see stops appearing and the recent rally under threat of coming undone and any push through to the 0.7730-10 areas is likely to confirm the end of the rally.

Overnight News

CNY:

China chides tech firms over privacy safeguards

China’s imports from N. Korea plummet in Dec to lowest in 4 yrs

China 2017 trade surplus with US tops USD$275B to record high

China Dec imports growth slows to 4.5% YoY, exports beat forecast at 10.9% YoY

SGD:

Credit Suisse cautions on outlook for Singapore’s surging Reits

Singapore retail sales to 5.3% YoY in November, reversing slump in Oct

EUR:

Euro rises and ECB says it could revisit policy message soon

JPY:

Japan PM heads to Europe amid N. Korea tensions

GBP:

UK won’t pay to access single market post-Brexit: – Government

Today’s data

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

CNY        Trade Balance (USD) Dec A 54.7B | C 37.4B | P 40.2B

CNY        Trade Balance (CNY) Dec A 362B | C 235B | P 264B

NZD       Building Permits M/M Nov A 10.80% | P -9.60% | R -10.40%

JPY         Current Account Total (JPY) Nov A 1.70T | C 2.19T | P 2.44T

JPY         Eco Watchers Survey Current Dec A 53.9 | C 55.1 | P 55.1

13:30     USD       CPI M/M Dec C 0.10% | P 0.40%

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

13:30     USD       CPI Core M/M Dec C 0.20% | P 0.10%

13:30     USD       CPI Core Y/Y Dec C 1.70% | P 1.70%

13:30     USD       Retail Sales Advance M/M Dec C 0.40% | P 0.80%

13:30     USD       Retail Sales Ex Auto M/M Dec C 0.40% | P 1.00%

15:00     USD       Business Inventories Nov C 0.30% | P -0.10%

 

Harry Hindsight

• EUR: Opening around the 1.1950 level the market traded quietly through the Asian session basing along the opening levels and moving to touch the 1.1970 areas into the mid-Tokyo session before slipping back and ranging in a narrow range around the 1.1950 level and moving into the London session pushing to the 1.1930 level and the lows for the day, the quiet session continued through to NYK before the release ECB monetary policy, no change and after a stronger industrial production number saw limited comments with QE tapering starting the market talked of possible rate increases, possibly too soon for me however, the market took to the 1.2000 levels quickly before slowing for the US numbers, the market continued pushing ahead with weaker PPI numbers again clouding the FED’s interest rate hikes and the market pushed to the 1.2060 areas before drifting through the session around the 1.2030-40 levels.
• GBP: From the opening 1.3510 level the market eased into the Tokyo session unable to push much beyond the mid-teens before drifting late in the session through to the grey hours testing the 1.3490 levels, early London continued the selling weakly with the market pushing through into the 1.3470’s and holding through towards midday before dropping again but only extending the low to 1.3460 level before starting a steady rise through into the NYK session with the market testing back through the 1.3500 areas on the Eurozone policy meeting and then continuing in the same fashion into the US numbers testing the 1.3530 level before finding some resistance, the market again moved a little higher through the US session testing above the 1.3550 areas before ranging around the 1.3540 levels through to the close on decent volumes in early trading and fading to the end.
• JPY: Asian session saw steady gains through the session opening around the 111.40 level and testing just below the 35 level to set the early lows, the move into the Tokyo session saw a steady stream of buying as the market recovered some of the weeks losses slowly pushing to the 111.80 level before moving fully into the London session and a test above the 111.85 level to set the highs and a slow drift through London to the NYK session holding around the 111.65 areas into the US numbers, the market dropped on the initial claims falling back to the opening levels and then drifted steadily lower into the London close before dropping back late in the session to the 111.05 areas before bouncing back to finish the day just off the 111.30 level.
• AUD: Decent retail sales numbers saw the market move into the Tokyo session quietly and then move quickly off the 0.7840 lows to test the 0.7880 areas, the market then traded for the most part in a narrow range through to the NYK session holding around the 0.7865-75 levels for much of the time testing 0.7880 to the topside a couple of times before dipping of the 0.7860 level, the end of London saw the market rising slowly to the close to push the 0.7895 levels before the close.

Yesterday’s premiership results

AUD       Retail Sales M/M Nov A 1.20% | C 0.40% | P 0.50%

JPY         Leading Index Nov (P) A 108.6 | C 108.6 | P 106.5

EUR        Eurozone Industrial Production M/M Nov A 1.00% | C 0.80% | P 0.20% | R 0.40%

EUR        ECB Monetary Policy Meeting Accounts

CAD       New Housing Price Index M/M Nov A 0.10% | C 0.20% | P 0.10%

USD       PPI M/M Dec A -0.10% | C 0.20% | P 0.40%

USD       PPI Y/Y Dec A 2.60% | C 3.00% | P 3.10%

USD       PPI Core M/M Dec A -0.10% | C 0.20% | P 0.30%

USD       PPI Core Y/Y Dec A 2.30% | C 2.50% | P 2.40%

USD       Initial Jobless Claims (JAN 06) A 261K | C 248K | P 250K

USD       Natural Gas Storage A -359B | C -333B | P -206B

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