Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 110.534 | EURUSD 1.22656 | AUDUSD 0.7965 | NZDUSD 0.73066 | USDCAD 1.24291 | USDCHF 0.96304 | GBPUSD 1.37955 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.22801 | 1.22479

USDJPY                 110.984 | 110.456

GBPUSD               1.38062 | 1.37831

USDCHF               0.96462 | 0.96267

AUDUSD              0.79750 | 0.79497

USDCAD               1.24443 | 1.24189

NZDUSD               0.73076 | 0.72808

EURCHF                1.18255 | 1.18084

EURGBP               0.88971 | 0.88845

EURJPY                 136.099 | 135.511

For today

• EUR: A reasonably quiet session with the Euro dominated by JPY in early trading and falling back from the opening levels to test the 1.2250 level before rising back after the initial rally in USDJPY to test the 1.2280 level before ranging quietly around the 1.2260-70 areas through to the grey hours, Topside bids start to increase the closer the market pushes towards the 1.2300 areas with particular strength likely through the 1.2280 level with the possibility of congestive bids competing behind the 1.2310 areas with weak stops however, the move through to the 1.2340 level will likely see offers again increasing with congestion likely to be a little more stubborn as the market pushes through the 2015 breakdown point however, weak stops are likely to increase if the market squeezes higher. Downside bids light on a move back through to the 1.2120 areas with stops likely to appear on a dip through the level and the downside quickly opening up for a strong test back.
• GBP: A slightly larger range than the Euro the market initially saw some GBPJPY buying holding the Cable and taking it lightly through the 1.3800 levels however, the market dipped eventually through to the mid 1.3780’s as the USDJPY continued to push, as the market moved deeper in the session it again pushed above the 1.3800 level to extend the highs “just” before settling down to range around the 1.3790 areas and just a little below the opening level. Topside offers into the 1.3840 levels and the bottom of the 2016 pre-general election range likely to be defended for the moment with offers been joined by longs lightening their positons, a push through will likely see weak stops appearing once the market clears the 1.3850 areas and opening a deeper move higher. Downside bids light back through the 1.3700 level with weak stops on a dip beyond the 1.3680 levels before the market starts to increase on the bid and the possibility of weak London if the market can build up any momentum through that 1.3680 areas with better bids not seen until closer to the 1.3500 areas. Inflationary numbers of import today
• JPY: Opening just above the 110.50 levels the market moved into the Tokyo session quietly before an FT article hit the airways with talk of Kuroda comments tilting towards dovish, the market tested through to the 110.90 levels and remained in that area through to the grey hours with only light attempts at the 111.00 areas. Topside offers into the 111.00-20 areas with weak stops on a move through the level and opening up a test to the 112.00 where stronger offers are likely to have formed, downside bids into the 110.50-40 areas are likely to have been replenished for the moment with weak stops below the level and 110.00 while possibly strongly congested limited through to the 109.60 areas where firmer bids start to appear.
• AUD: Oz drifted from the opening with a test back to the 0.7950 level however, carry trade buying moved in on the dipper in Oz and the weakness of the JPY helping the Oz to push through the 0.7970 level however, the rest of the day was spent just below that level and was unable to test back through the 0.7960 level and into the grey hours, Topside offers into the 0.7980-0.8000 level with some congestion behind the level could see stronger stops on a move through the 0.8060 levels and the market opening to test the 81 cent level with the right impetus, downside bids light through to the 0.7850 level with congestion limited somewhat before stronger stops appear on a move below the 78 cent levels and the market opening for a return to the 77 cent handle

Overnight News

NZD:

NZ Confidence drop adds to signs of moderating growth

RBNZ should have more than one policy committee treasury says

USD:

Republican tax bill widens trade deficit

Shutdown looms as Republicans seek short term spending deal for government

USD/CNY:

Trump sharpens knives for US-China trade war UKT

GBP:

May faces tougher transition stance from EU amid Norway pressure

CNY:

China property sees official warnings over price bubble

Today’s data

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

JPY         Domestic CGPI Y/Y Dec A 3.10% | C 3.20% | P 3.50% | R 3.60%

JPY         Tertiary Industry Index M/M Nov A 1.10% | C 0.30% | P 0.30% | R 0.20%

07:00     EUR        German WPI M/M Dec P 0.50%

07:00     EUR        German CPI M/M Dec (F) C 0.60% | P 0.60%

07:00     EUR        German CPI Y/Y Dec (F) C 1.70% | P 1.70%

09:30     GBP       CPI M/M Dec C 0.40% | P 0.30%

09:30     GBP       CPI Y/Y Dec C 3.00% | P 3.10%

09:30     GBP       Core CPI Y/Y Dec C 2.60% | P 2.70%

09:30     GBP       RPI M/M Dec C 0.60% | P 0.20%

09:30     GBP       RPI Y/Y Dec C 3.90% | P 3.90%

09:30     GBP       PPI Input M/M Dec C 0.40% | P 1.80%

09:30     GBP       PPI Input Y/Y Dec C 5.30% | P 7.30%

09:30     GBP       PPI Output M/M Dec C 0.20% | P 0.30%

09:30     GBP       PPI Output Y/Y Dec C 2.90% | P 3.00%

09:30     GBP       PPI Output Core M/M Dec C 0.20% | P 0.20%

09:30     GBP       PPI Output Core Y/Y Dec C 2.30% | P 2.20%

09:30     GBP       House Price Index Y/Y Nov C 4.20% | P 4.50%

13:30     USD       Empire State Manufacturing Index Jan C 19 | P 18

 

Harry Hindsight

• EUR: Opening around the 1.2200 areas the market ranged through to late in the session around the opening areas with the market unable to push to far below the 1.2190 areas and unable to push beyond the 1.2210 level until the final hour and into the grey hours, the market pushed through the previous highs and triggered weak stops in a spike to the 1.2240 level before drifting back through the grey hours, the move into the London session saw the market start to move higher again pushing through to the 1.2750 level with limited resistance to the move with the move in Cable again pulling the Euro along for the most part, the release of a slightly better trade balance helping the market to push off the 1.2260 level and test towards the 1.2300 level for the first time, the move through the balance of the day with the US out for the day saw an ever decreasing range with several further attempts to test towards the 1.2300 levels however, once the extended London session finished the range tightened to the close.
• GBP: A steady rise through the Asian session opening around the 1.3730 levels and pushing the 1.3750 area through into the grey hours before passing through the level however, it was short lived and the market slipped a little back again to the opening areas, the move into London saw a quiet first hour before the market started to push higher testing the 1.3760 level before breaking through and triggering some weak stops on a move through to test lightly through the 1.3810 dropping back quickly before running a second time to test the 1.3820 areas, the market then drifted through to midday slipping back through to the 1.3770 areas before slowly rising through the balance of the day again pushing above the 1.3800 levels but unable to push beyond the 1.3820 level and drifting once the London session left for the day and finishing just below the level.
• JPY: With BoJ releasing pleasing economic growth in 3 of the 9 sectors the JPY strengthened opening around the 111.00 areas the early move towards the 111.20 level saw the market slipping back to the 110.80 level before pausing, the selloff continued over the next hour in a slower fashion and the market based around the 110.70 areas before rising a little through to the 110.90 on the move into the grey hours and dropping back once the market moved into the London session, the market based along the 110.55 areas through to deep in the session and only as the market moved to the London close did the market push through the 110.50 level with weak stops triggered on a move into the 110.35 area before slowly rising through to the close just above the 110.50 areas.
• AUD: With the strengthening of the JPY so rose the Oz moving from the opening around the 0.7910 levels the market quickly pushed to the 0.7930 levels, holding the level briefly the market eventually started to rise again pushing this time through the 0.7950 level and touching the 0.7960 area on a little run of stops before drifting into the grey hours and London, the move through to the end of the day saw the market basing along the 0.7940 areas until the run to the end of London with market pushing through to the 0.7970 areas in quiet trading into the close.

Yesterday’s premiership results

JPY         Japan Money Stock M2+CD Y/Y Dec A 3.60% | C 4.00% | P 4.00%

AUD       TD Securities Inflation M/M Dec A 0.10% | P 0.20%

EUR        Eurozone Trade Balance (EUR) Nov A 22.5B | C 22.4B | P 19.0B

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