Daily FX Market Commentary

Andy Harrison

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 110.933 | EURUSD 1.22618 | AUDUSD 0.80173 | NZDUSD 0.73073 | USDCAD 1.24439 | USDCHF 0.96191 | GBPUSD 1.39883 |

 

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.22762 | 1.22508

USDJPY                 111.029 | 110.545

GBPUSD               1.40040 | 1.39724

USDCHF               0.96252 | 0.96069

AUDUSD              0.80300 | 0.79819

USDCAD               1.24650 | 1.24386

NZDUSD               0.73550 | 0.73149

EURCHF                1.17991 | 1.17825

EURGBP               0.87728 | 0.87623

EURJPY                 136.176 | 135.61

 

For today

EUR: Limited range but a little choppy overall with the market trading around the opening level for the most part, early buying saw the Euro testing through to the 1.2276 areas before dropping back and unable to penetrate the 1.2250 level in tight trading, Topside offers into the 1.2300 areas and congestion likely to continue through to the 1.2330 area before stops are likely to appear and the market opens a little with limited congestion and sentimental offers through the 1.2340-60 areas and stronger offers likely to appear on any move towards the 1.2400 areas, Downside bids light through to the 1.2200 areas with those bids extending through to the 1.2180 areas with weak stops possibly through the level however, some bids into the 1.2160 level are likely to slow the decent and those bids possibly extending to the 1.2140 before opening to a test of the 1.2120 levels.

GBP: A quiet session with the Cable with early trading flirting with the 1.4000 level penetrating it quickly on two occasion but eventually returning to the opening 1.3990 level and then trading around the 1.3985 level through into the grey hours with a minor dip below the 1.3975 level to set the low. Topside offers remain possibly through to the 1.4020 areas, with congestion ahead but the market in the pre general election ranges at the beginning of 2016, limited offers likely through the 1.4100 level with stronger offers then appearing above and through to 1.4200 areas with limited stops and profit taking likely to be mixed along the way, downside bids light through the 1.3900 area with some stops likely on a break lower and limited bids until the market tests the 1.3850 areas and increasing into 1.3800 level.

JPY: The market drifted in the early part of the session with the market testing through the 111.00 levels before dipping back to trade around the 110.90 levels into the BoJ decision, no change saw the USDJPY drop quickly back to the 110.50 areas before holding around the 110.70 level to slowly push back into the 110.80’s for the move into the grey hours, downside bids through the 110.50 level and likely to continue through to the 110.00 areas, possibly limited stops along the way however, stronger stops likely on a dip through the 109.80 areas and the downside vulnerable if 109.60 is broken with any impetus. Topside offers into the 111.40 level is likely to be a little stronger however, stops through the level will likely open the market to a quick move to the stronger 112.00 areas.

AUD: Opening just short of the 0.8020 levels the market drifted into the Tokyo session to the 0.8005 level before taking a step to the topside and push through the previous high and test the 0.8030 in a stab for the stops above, however the move was quickly squashed and the market dropped back quickly pausing around the 80 cent level before slipping quietly through to the 0.7885 areas to hold around the level into the grey hours. Topside offers into the 0.8050 areas, with weak stops opening the 81 cent level and possibly another grind to move through the level, a push through here and the 0.8140 level is likely to be key to the new range opening to the 90 cent levels, “dare I say” however, that is far beyond current economics I think and day trading may filter through and contain the market each day, downside bids light through the 79 cent levels with weak stops on a move through and the market opening to the stronger 0.7840 areas, With congestion in that area.

 

Overnight News

JPY:

BoJ maintains 10 year JGB yield target at about 0.000%

BoJ maintains policy balance rate at -0.10%

BoJ keeps price outlook unchanged in outlook report

BoJ inflation expectations have been more or less unchanged

BoJ previously said inflation expectations were weakening

BoJ board votes 8-1 to keep policy unchanged

BOJ Kuroda:

Japan economy to continue growing above potential

See downside risks to prices as larger

BoJ’s Kataoka opposed wording on inflation outlook

Even through economy growing prices still weak

Still distant from 2% price target

Need to continue current powerful monetary easing

BoJ isn’t at stage to consider exit

Japan’s economy needs persistent monetary easing

No need to adjust ETF purchases now

Haven’t observed excessive expectations in Stock market

No excessively bullish expectations in Stock market

EUR:

Hurry up, German conservative urges SDP on coalition

CNY:

China sends mixed messages about economic policies WSJ

China Commerce ministry says expresses strong dissatisfaction regarding US tariffs on washers, solar cells

CCM says US decision further deteriorates global trade environment

CCM says China will resolutely safeguard China’s interests

AUD:

Australia weekly consumer confidence falls 3.3% to 119.4

IMF:

Traders ignore the fine print in IMF report, but then it’s been a while since they got it right

IMF Comments on world economic outlook update on its website

IMF cuts S. Africa 2018 GDP growth forecast to 0.9% vs. 1.1%

USD:

Trump imposes Tariffs on imported solar cells and washing machines

Trump signs stopgap funding bill to reopen US government

 

Today’s data

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

JPY         BoJ Rate Decision A -0.10% | C -0.10% | P -0.10%

JPY         All Industry Activity Index M/M Nov A 1.00% | C 0.90% | P 0.30%

09:30     GBP       Public Sector Net Borrowing Dec C 4.2B | P 8.1B

10:00     EUR        German ZEW (Economic Sentiment) Jan C 17.9 | P 17.4

10:00     EUR        German ZEW (Current Situation) Jan C 89.5 | P 89.3

10:00     EUR        Eurozone ZEW (Economic Sentiment) Jan C 29.7 | P 29

11:00     GBP       CBI Trends Total Orders Jan C 12 | P 17

15:00     EUR        Eurozone Consumer Confidence Jan (A) C 1 | P 1

 

Harry Hindsight

  • EUR: The opening was around the 1.226 levels peaking just above 1.2265 before staring a steady slip lower to fill the gap on the charts with the USD sell off relevant to the Washington close down over the weekend, the market tripped some weak stops in a spike down to the 1.2235 level before continuing its slow decline through into the grey hours holding the 1.2215 level before early London took the market slowly back through the morning to the highs again, the move through into the NYK session saw the market ranging around the 1.2250 levels with a dip back towards the lows on the London close before rising back towards the highs on the move to the close.
  • GBP: Cable was no different with the market opening around the 1.3890 levels and some 40 pips higher from the close Friday, the market held a little longer in the 1.3885-90 levels before dropping back to hold around the 1.3865 levels through to the grey hours, the move into the grey hours saw the market slowly rise through into the London session the market pushed through the 1.3900 and held in the areas until the NYK session started, the market started a steady rise through the NYK session with some fund buying suspected on the move through the 1.3950 levels and holding for the close of London in the areas and then continuing late in the session to range quietly through to the close 1.3985-90 areas.
  • JPY: Opening lower than Fridays close the market moved off the lows around the 110.50 areas to test through towards early Tokyo quietly before closing the gap quickly testing to the 110.80 areas and then slipping a little and pushing again slowly through to the grey hours ranging around the 110.80 level and testing briefly to the 110.90 before drifting off through early London, before slipping back a little to rest around the 110.70 levels into NYK, the move through to the close of London saw the market rising quickly through to the 111.20 level but unable to push through the level and drifted back to the 110.90 levels for the close.
  • AUD: Opening around the 0.8000 areas the market flirted with the level for a couple of hours before dipping back through to the 0.7980 areas before holding quietly around the 0.7990 area through to the London session, early London pushed the market back to the 80 cent areas, London eventually penetrated the 80 cent levels again and testing steadily towards the 0.8020 levels and ranged into the NYK session testing a little higher to the 0.8026 areas before slipping back on the London close before drifting higher to the close.

 

Yesterday’s premiership results

CAD       Wholesale Trade Sales M/M Nov A 0.70% | C 1.00% | P 1.50%

 

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