Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 110.452 | EURUSD 1.22602 | AUDUSD 0.7961 | NZDUSD 0.72749 | USDCAD 1.24353 | USDCHF 0.95953 | GBPUSD 1.37908 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.23201 | 1.22372

USDJPY                 110.929 | 110.206

GBPUSD               1.38300 | 1.37694

USDCHF               0.96310 | 0.95726

AUDUSD              0.79982 | 0.79472

USDCAD               1.24563 | 1.24127

NZDUSD               0.72906 | 0.72372

EURCHF                1.18012 | 1.17599

EURGBP               0.89083 | 0.88829

EURJPY                 135.906 | 135.301

For today

• EUR: A quiet move through into the Tokyo session before US headlines on funding bill to avert the weekend shutdown of agencies, leading to a drop in the USD and the Euro quickly pushing through to the 1.2320 level before running into stronger offers and a steady drift off through the balance of the session testing back to the 1.2250 and through the opening levels, with decent volumes going through across the board todays Eurozone inflationary data will be of import as US IP numbers, Topside offers remain possibly into the 1.2340 level before weak stops and a possible push to the 1.2400 levels and limited congestion beyond that point however, it does suggest that a push through that level could see the market opening a little too the 1.26 levels with some grinding out the move, downside bids light through to the 1.2200 area with weak stops likely to be substantial as longer term buyers look to lighten those longs, a drop below will likely find limited bids then through to the 1.2120 areas with possible chatter increasing as the ECB mob look to counter the strong Euro.
• GBP: Cable reacted to the US news in the same manner with cable drifting above the 1.3790 levels before popping higher and trading through to the 1.3835 level and the resistance level, the market then drifted back through the session towards the 1.3770 levels for the move into the grey hours, Another push today set a new high and a look at the ranges from the first half of 2016 however, for the moment the market needs to open up that 1.3840 level to have a chance to push through to the next levels with some congestion above 1.4000 really the only technical levels beyond and sentimental values likely to slow the market in places if it can find the impetus, downside bids likely to be weak through the 1.3700 level with bids starting to build into the 1.3750 areas before opening to a slip back to the 1.3500 area and negating the move somewhat, however, the market seems focused on the topside and while inflationary numbers seem to be settling with the new levels in Cable the strong chance of another rise slips behind a little.
• JPY: Initial dip from the opening to the 110.20 level saw the market start a steady rise through the session pushing above the 110.70 levels before pausing and renewing the rally deeper in the session to test through the 110.90 level and away from those now vulnerable low 110 area. Downside bids into the 110.00 level with possibly strong stops on a push through to the 109.80 areas opening up the chance of a larger decline however, for the moment yield buyers have been willing to pick up the bids and buy back to the 110.20 areas with congestion likely to kick in around the 109.60 level and continue through to the 109.30 areas to slow any decent, from that point the market does seem to open a little with the potential for a decline back to the 108.00 areas for the medium term, Topside offers weak through the 111.00 areas with the market then seeing weak stops and the market moving into the lower end of last year’s winter range, stronger offers into the 112.00 level and then plenty of congestion from there onwards.
• AUD: A weaker consumer confidence number barely dented the market and the Oz lifted off its lows to push into the Tokyo session testing the 0.7975 areas, the US news sent the Oz higher again and stalled just below the 80 cent area and drifted through to the 0.7965 areas before pausing for a couple of hours and then dipping to test back to the 0.7950 levels before holding into the grey hours, falling just short of the 80 cent level the topside offers remain into the level with some weak stops on a push through, some congestion around the 0.8040-60 areas more sentimental than anything with the stronger offers likely to appear on a move through to the 81 cent areas and as with this move a lot of work to do possibly, downside bids light through to the 79 cent areas with some limited bids into the area before weak stops open the market to the 0.7840 areas and stronger bids appearing, 78 cent bids and congestion through the level are possibly all the downside needs for the moment with sentiment and trend dominated through cross trading.

Overnight News

NZD:

Whole milk powder average price rises to $3010 a ton

NZ Commodity price falls signal weaker terms of trade ANZ

EUR:

ECB’s Villeroy de Galhau strength a source of uncertainty

Catalan crisis drags Rajoy down as his party whispers of change

ECB’s Constancio says does not rule out that monetary policy will continue to be very accommodating for a long time (in other words Euro’s too strong)

USD:

A record Chinese annual trade surplus with the US is the potential catalyst for hostilities WSJ

New Jersey Governor says Trump has already done tremendous damage

US funding headline appears to have spooked markets into selling USD’s

Republicans express optimism on averting shutdown after meeting

Today’s data

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

AUD       Westpac Consumer Confidence Jan A 1.80% | P 3.60%

JPY         Machine Orders M/M Nov A 5.70% | C -1.20% | P 5.00%

AUD       Home Loans M/M Nov A 2.10% | C 0.00% | P -0.60%

10:00     EUR        Eurozone CPI Y/Y Dec (F) C 1.40% | P 1.50%

10:00     EUR        Eurozone CPI M/M Dec C 0.40% | P 0.10%

10:00     EUR        Eurozone CPI Core Y/Y Dec (F) C 0.90% | P 0.90%

14:15     USD       Industrial Production M/M Dec C 0.40% | P 0.20%

14:15     USD       Capacity Utilization Dec C 77.30% | P 77.10%

15:00     CAD       BoC Rate Decision C 1.25% | P 1.00%

15:00     USD       NAHB Housing Market Index Jan C 72 | P 74

19:00     USD       Federal Reserve Beige Book

21:00     USD       Net Long-term TIC Flows Nov P 23.2B

 

Harry Hindsight

• EUR: Opening around the 1.2270 levels the market continued to range quietly through to the into the Tokyo session before dipping through to the 1.2250 level as JPY weakened across the market, as the initial weakness dissipated EURJPY buying helped the Euro to recover to its previous levels, the move into the grey hours saw decent volumes going through and the Euro made an early move towards the 1.2280 level before dropping back as early London sold the market back with the help of East European selling, the market triggered some minor stops on a move through the 1.2250 levels testing to the 1.2220 level before recovering to the opening levels again into the London official opening saw the market rising back to the 1.2270 level before ranging through early morning around the 1.2230 levels, a weaker WPI in Germany was possibly a mixed blessing for the EU, strong EURGBP selling saw the market dip through the lows and testing towards the 1.2200 level for the first time recovering a little before testing low again touching lightly through into the start of the NYK before starting a long steady rise through deep into NYK to push back to test the 1.2280 level before drifting into the close around the 1.2260 level.
• GBP: The Cable moved through the Asian session flirting with the 1.3800 level with early trading testing the level almost continuously, the move into Tokyo saw the range widen a little and the topside highs extended to the 1.3805 areas but no further with the lows increasing in a similar fashion testing into the 1.3780 level through into the London session, slightly better inflationary news saw the Cable drift though the London session to make the lows just below the 1.3750 level before eventually starting a steady rise taking the market most of the remaining session through NYK to recover to the opening levels again.
• JPY: Moving through the early part of the session quietly the market pushed quickly through to the 110.75 into the Tokyo session before slowing but continuing its rise through to the 110.95 levels into the midway part of the Tokyo day, the market drifted through into the grey hours and tested down into the London session to the 110.60 levels basing around that level deep into the NYK session with ranging through to the 110.85 levels, the end of the London session before starting a slow move back towards the 110.50 level and light selling dropping the USDJPY through to test into the 110.20 areas bouncing for the close.
• AUD: Overall a quiet session for the Oz with the movement in other currencies keeping the market in a 25 pip range for the most part with Asia ranging around the opening 0.7965 levels, the market initially dipped to the 0.7950 levels before recovering to the 0.7975 areas with AUDJPY buying moving through the market returning to the opening levels again, the move into London saw light cross trading again pushing the Oz lower this time extending to the 0.7940 levels and although the NYK session repeated the move the market eventually drifted through to the close.

Yesterday’s premiership results

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%

EUR        German WPI M/M Dec A -0.30% | C 0.30% | P 0.50%

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

EUR        German CPI Y/Y Dec (F) A 1.70% | C 1.70% | P 1.70%

GBP       CPI M/M Dec A 0.40% | C 0.40% | P 0.30%

GBP       CPI Y/Y Dec A 3.00% | C 3.00% | P 3.10%

GBP       Core CPI Y/Y Dec A 2.50% | C 2.60% | P 2.70%

GBP       RPI M/M Dec A 0.80% | C 0.60% | P 0.20%

GBP       RPI Y/Y Dec A 4.10% | C 3.90% | P 3.90%

GBP       PPI Input M/M Dec A 0.10% | C 0.40% | P 1.80% | R 1.60%

GBP       PPI Input Y/Y Dec A 4.90% | C 5.30% | P 7.30%

GBP       PPI Output M/M Dec A 0.40% | C 0.20% | P 0.30% | R 0.40%

GBP       PPI Output Y/Y Dec A 3.30% | C 2.90% | P 3.00%  | R 2.90%

GBP       PPI Output Core M/M Dec A 0.30% | C 0.20% | P 0.20%

GBP       PPI Output Core Y/Y Dec A 2.50% | C 2.30% | P 2.20%

GBP       House Price Index Y/Y Nov A 4.10% | C 4.20% | P 4.50% | R 5.40%

USD       Empire State Manufacturing Index Jan A 17.7 | C 19 | P 18

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