Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 111.10 | EURUSD 1.22389 | AUDUSD 0.79985 | NZDUSD 0.73084 | USDCAD 1.24171 | USDCHF 0.95902 | GBPUSD 1.38937 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.22703 | 1.22319

USDJPY                 111.144 | 110.786

GBPUSD               1.39243 | 1.38861

USDCHF               0.95960 | 0.95631

AUDUSD              0.80213 | 0.79962

USDCAD               1.24309 | 1.24000

NZDUSD               0.73119 | 0.72882

EURCHF                1.17433 | 1.17321

EURGBP               0.88171 | 0.87992

EURJPY                 136.048 | 135.802

For today

• EUR: A rather quiet session with the Euro holding quietly through into the Tokyo session before heading a little higher to challenge the 1.2270 level before drifting back to trade into the grey hours holding just above the 1.2250 areas. Topside offers through the 1.2300 levels and into the 1.2340 area, a push above the level will likely see some stops and a move into congestive offers running through to the 1.2360 areas and then opening to a test through the 1.2400 level with possibly better offers in that area. Downside bids lighter down through the 1.2200 areas with limited stops on a dip through the level and then again returning to stronger bids into the 1.2160 areas and through to the 1.2140 area.
• GBP: Opening just below the 1.3900 level the market traded quietly for several hours before making a quiet move through to the 1.3925 areas to make the highs and then holding for a short period and then drifting for the move into the grey hours. Topside offers likely to be light through to the 1.39 handle with limited offers through 1.3950 and stronger offers into the 1.4000 with possible option interest into the level given its sentimental value, a break through the level could see some limited congestion but then the market opens to possibly stronger stops opening a path into the ranges post Brexit vote and closer to true value for the pair. Downside bids light through to the 1.3700 levels where better bids appear and a tentative nervousness over the recovering push, a drop through the level will likely see weak stops and some panicky longs cutting and the market falling quickly into the stronger supportive levels around the 1.3650-1.3600 areas.
• JPY: Quiet with the market ranging around the 111.00 level and concerns for the USD as the weekend shutdown gets closer with little resolution for the moment, the move through to the later part of Tokyo saw the market dipping back to base around the 110.80 levels through to the grey hours, Topside offers light through the 111.90 level with a little stronger into the 112.00 areas before weak stops appear and the market free to make its way into the 112.50 levels, any return to the 113.00 area is likely to find profit taking in the way and the market struggling with those offers, however, an announcement that Washington is not closing and funding is found well possibly give the market impetus enough to push towards those areas but don’t hold your breath. Downside bids light until the 110.50 area and then strong bids start to appear as the market moves through the level and closes to the 110.20 level where stronger buying may materialize from yield buyers, a dip below the 109.80 areas could see some weak stops and possibly stronger stops from a breakout play and the market looking for support into the 109.50 areas.
• AUD: The Oz saw a slow rise through the session with the market pushing up to the 0.8020 levels before holding quietly through to the grey hours and very little news to move on, Topside offers into the 0.8020 levels with weak stops possibly once through the level and opening a fresh test to the 0.8040-60 areas and sentimental offers lightly spaced, 81 cent is likely to see some stronger offers and that is likely to extend through to the 0.8140 areas and possibly a slow grind similar to the move to 80 cent. Downside bids light through to the 79 cent level with some bids around the level and weak stops on a drop through the 0.7880 areas.

Overnight News

USD:

US house intelligence panel top democrat says transcripts of fusion GBPS founders testimony reveal serious allegations that the Trump organization may have engaged in money laundering with Russian nationals

Fed’s Dudley sees above trend growth, wary of overheating FT

White house considering San Francisco Fed president John Williams for Vice Chairman of Fed

NZD:

NZ Manufacturing growth weakest in 5 years PMI

EUR:

Germany digs in heels as world anger mounts over its toxic trade surplus UKT

MXN:

Mexico may need to raise rates again in near future – Guzman

Today’s data

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

NZD       Business NZ Manufacturing PMI Dec A 51.2 | P 57.7

07:00     EUR        German PPI M/M Dec C 0.20% | P 0.10%

07:00     EUR        German PPI Y/Y Dec C 2.30% | P 2.50%

08:15     CHF        Producer & Import Prices M/M Dec P 0.60%

08:15     CHF        Producer & Import Prices Y/Y Dec P 1.80%

09:00     EUR        Eurozone Current Account (EUR) Nov C 31.3B | P 30.8B

09:30     GBP       Retail Sales M/M Dec C -0.90% | P 1.10%

13:30     CAD       Manufacturing Sales M/M Nov C 2.00% | P -0.40%

13:30     CAD       International Securities Transactions (CAD) Nov P 20.81B

15:00     USD       U. of Mich. Sentiment (JAN P) C 97 | P 95.9

 

Harry Hindsight

• EUR: Opening around the 1.2190 levels the market dipped initially through to the 1.2165 area before moving into the Tokyo session rising back through the opening level to test the 1.2200 areas, the market made several attempts above the 1.2200 level however, the breakthrough was always limited, the move towards the grey hours saw the market gradually move higher pushing through to the 1.2210 level and ranging quietly through into the London session fully, A steady rise quickend for the move into the NYK session with the market breaking through the 1.2220 and pushing through to the 1.2250 areas topping around 1.2265 but unable to push any further and ranging around the 1.2250 levels through to the London close before slipping back a little and running to a quiet end to the day.
• GBP: A very quiet move through the Tokyo session with the market early highs just below the 1.3840 areas the market dipped back through the opening level and then held quietly through to the grey hours where it rose through towards the 1.3850 level before dropping back on early London selling to make the low of the day around the 1.3805 level, London were quick buyers off the lows with one suspects the early sellers revising the wisdom of there selling and the market holding quietly just below the highs again, midmorning saw the market break higher through the 1.3850 level with some weak stops helping the market to eventually push to the 1.3890 levels before holding quietly through deep into the NYK session, end of London saw the market again pushing higher and the market tested just above the 1.3900 level and flirted with the level through to the close.
• JPY: Opening towards the highs the market pushed through to mid Tokyo before posting the highs just short of the 111.50 levels before slipping back through to the 111.10 level and then ranging quietly through into the London session, the move into the NYK session saw the market slowly slipping even though there was a dip in Initial claims the USDJPY continued down through to the 110.80 levels in a steady move before recovering a little only to dip through to the 110.70 level, no real bounce as such with news that shale oil production is increasing to record highs and the USD started a slow recover back through the 111.00 levels and ranging quietly through to the close.
• AUD: A slow steady push higher through the day, the market opened around the 0.7970 level and slowly pushed through into the Tokyo session and the employment numbers, with decent numbers again on the face of it however, as normal the detail saw the market dropping from a quick peak to the 0.7995 level and then dropping back into the low 0.7940 before slowly pushing to the opening levels on the move into the grey hours, weak shorts saw the market test the 0.7985 level and then a return to the slow rise through into the NYK session pushing the 80 cent levels and holding around the level through to the close.

Yesterday’s premiership results

AUD       Consumer Inflation Expectation Jan A 3.70% | P 3.70%

GBP       RICS House Price Balance Dec A 0.00% | C -1.00% | P 0.00%

AUD       Employment Change Dec A 34.7K | C 15.2K | P 61.6K | R 63.6K

AUD       Unemployment Rate Dec A 5.50% | C 5.40% | P 5.40%

JPY         Industrial Production M/M Nov (F) A 0.50% | C 0.60% | P 0.60%

CNY        GDP Y/Y Q4 A 6.80% | C 6.70% | P 6.80%

CNY        Retail Sales Y/Y Dec A 9.40% | C 10.20% | P 10.20%

CNY        Industrial Production Y/Y Dec A 6.20% | C 6.10% | P 6.10%

CNY        Fixed Assets Ex Rural YTD Y/Y Dec A 7.20% | C 7.10% | P 7.20%

CAD       ADP Employment Dec A -7.1K | P 59.2K

USD       Housing Starts Dec A 1.19M | C 1.27M | P 1.30M

USD       Building Permits Dec A 1.30M | C 1.29M | P 1.30M

USD       Philadelphia Fed Business Outlook Jan A 22.2 | C 24 | P 26.2

USD       Initial Jobless Claims (JAN 13) A 220K | C 251K | P 261K

USD       Natural Gas Storage A -183B | C -201B | P -359B

USD       Crude Oil Inventories A -6.9M | C -1.4M | P -4.9M

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