Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 109.223 | EURUSD 1.24077 | AUDUSD 0.80649 | NZDUSD 0.7407 | USDCAD 1.2346 | USDCHF 0.94554 | GBPUSD 1.42391 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.24488 | 1.23846

USDJPY                 109.473 | 108.909

GBPUSD               1.43058 | 1.4214

USDCHF               0.94699 | 0.94195

AUDUSD              0.81065 | 0.80432

USDCAD               1.23553 | 1.23018

NZDUSD               0.73916 | 0.73252

EURCHF                1.17364 | 1.17163

EURGBP               0.87180 | 0.86955

EURJPY                 135.723 | 135.36

For today

• EUR: USD continues to weaken across the board with the Euro initially slipping back from the opening levels to test to the 1.2390 areas before moving into the Tokyo session pushing back through the 1.2400 level and a steady move through to the 1.2440 level before finding some resistance to curb the rise. Topside offers through the 1.2440-60 level are likely to be light with stronger offers then appearing from the 1.2480 areas and into the 1.2500 level with weak stops likely on a push through the 1.2520 areas and the market likely to see congestion through the area with stronger offers around the 1.2550 areas. Downside bids light through to the 1.2300 levels with weak stops likely on a break lower and the market quickly opening up for a deeper move and a vulnerable 1.22-1.21 levels.
• GBP: Opening around the 1.4250 levels Sydney saw some limited profit taking moving in and the market drifting into the Tokyo session testing back to the 1.4220 levels the move into the Tokyo session saw the market start to recover with several little bits of news about Trump and investment rules and plans, the market then started a slow push through the next 3 or 4 hours pushing to test the 1.4300 level and new highs before holding around the 1.4290 areas through to the grey hours, Topside offers likely through the 1.4300 level and those offers mixed with stops, those offers are likely to be towards the 1.4340 level with suggestion of congestion through to the 1.4350 areas, with sentimental levels of import and stronger offers likely into the 1.4400 level. Downside bids light through to the 1.4000 areas and likely to see some weak stops behind sentimental levels on the way, a test here is likely to cause some movement and the market now needs a period of consolidation and downside bids to become more familiar with the current levels, a dip through could see the market reversing quickly but with economic and current news running ok difficult to see for the moment.
• JPY: Early trading saw a steady rise from the opening lows around the 109.15 level and the market pushing through to the 109.45 into early morning in Tokyo, however, as with the rest of the market the early gains were lost as USD again came under pressure with the USDJPY taking only a short time to drop back to the 109.20 levels and then drifting through the 109.00 level and then ranging through to the grey hours around the figure areas, Downside bids through into the 108.50 areas with congestive bids likely to continue through to the 108.00 areas where bids are possibly stronger, a breach of the level still leaves the lows from September to tend with and possibly strong bids appearing into that level to slow any strong dip. Topside offers light through to the 109.80-110.00 level with weak stops on a move through the area and the market opening up for a short squeeze to the 110.50 areas.
• AUD: The Oz gapped a little lower on the opening testing through to the 0.8045 areas before starting a steady rise through the session on a weakening USD and balancing of the AUDJPY pushing through to the 81 cent level testing a little through on weak stops before holding just below the level through to the grey hours, topside offers likely to be strong into the 0.8145-50 areas and the highs from last year, a push through the 0.8150 areas is likely to see strong stops appearing and the market possibly testing quickly to 82 cent areas with limited congestion before opening up to a larger potential, downside bids light through to the 80 cent levels with weak stops through the level and congestion through to the 0.7940-60 areas.

Overnight News

USD:

Evidence suggests a massive scandal is brewing at the FBI NY Post

Wall st warns of seismic pension shift into bonds this month

Trump administration backs bills to toughen foreign investment rules

Trump willing to be questioned under oath in Russia probe

Trump raises infrastructure investment plan to US$1.7t

GBP:

UK turnover of ministers disrupting Brexit

USD/CNY:

Chinese wind turbine maker found guilty of stealing US trade secrets

NZD:

NZ inflation unexpectedly slows on cheaper imported goods

RBNZ core inflation gauge unchanged at 1.4% in Q4

Employment changes will reduce job opportunities – Adams

CNY:

China’s media told not to play up conglomerates debt woes – BFW

Today’s data

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

NZD       CPI Q/Q Q4 A 0.10% | C 0.40% | P 0.50%

NZD       CPI Y/Y Q4 A 1.60% | C 1.90% | P 1.90%

07:00     EUR        German GfK Consumer Confidence Feb C 10.8 | P 10.8

09:00     EUR        German IFO Business Climate Jan C 117 | P 117.2

09:00     EUR        German IFO Expectations Jan C 109.2 | P 109.5

09:00     EUR        German IFO Current Assessment Jan C 125.3 | P 125.4

09:30     GBP       BBA Loans for House Purchase Dec C 39.7K | P 39.5K

11:00     GBP       CBI Reported Sales Jan C 13 | P 20

12:45     EUR        ECB Rate Decision C 0.00% | P 0.00%

13:30     EUR        ECB Press Conference

13:30     USD       Advance Goods Trade Balance Dec C -68.6B | P -70.0B

13:30     USD       Wholesale Inventories M/M Dec (P) C 0.30% | P 0.80%

13:30     USD       Initial Jobless Claims (JAN 20) C 236K | P 220K

13:30     CAD       Retail Sales M/M Nov C 0.80% | P 1.50%

13:30     CAD       Retail Sales Ex Auto M/M Nov C 0.90% | P 0.80%

15:00     USD       New Home Sales Dec C 676K | P 733K

15:00     USD       Leading Index Dec C 0.50% | P 0.40%

15:30     USD       Natural Gas Storage P -183B

 

Harry Hindsight

• EUR: A steady rise through the day with Cable leading the move and dragging Euro higher, opening around the 1.2300 levels the market struggled through the Asian session making some gains through to mid-Tokyo testing towards the 1.2335 areas before slipping back and moving into the grey hours the market was only just above the opening levels, PMI numbers were mixed at best with the stronger numbers coming in the Eurozone and manufacturing slipping fairing less well than services. The market pushed through the 1.2340 levels just before the numbers and then struggled with the 1.2350 levels, the move into the NYK session saw the market gradually rising as Cable pushed higher with the market reaching the 1.2400 level after a couple of hours before holding in the area through to the close ranging in a tight range around the level.
• GBP: Cable pushed higher from the opening just above the 1.4000 level and rising into the Tokyo session and eventually testing through the 1.4050 levels, the move into the London session saw further gains with the market rising through to the 1.4115 areas before hitting anything meaningful on the offer side and the market contained through to just before Tokyo, media made a lot of noise about employment numbers and the impact on interest rates however, the difference between last month and this month is neither here or there however, the move came late in the day on the move into the NYK session rising through the resistance and pushing steadily through the 1.4150 level with little difficulty and testing above the 1.4200 levels, the buying continued and seemed more like larger fund buying with the Cable testing to the 1.4240 before running out of steam, EURGBP selling was the early trigger for GBP movement with the market moving into the London session dropping from the 0.8780 areas and trading steadily through to 0.8700, now whether this was triggered by loose tongues admitting that while Brexit was a disaster, its not been as bad as expected, of course everyone jumped on the comments and unable to clarify the not being as bad bit (economically, negotiation’s) Media talk of stronger employment the more likely of interest rate rises however, the higher the GBP the less interest there will be seen as most of the inflation was created by the lower GBP so for me nothing has really changed.
• JPY: With the USD under pressure as Washington reopens and forward discussions ramble on the subject the market refocuses on either isolation or market protection in the US, depending on your view point, the simple fact that Pres. Trump has ordered levies on solar panels and washers seems to indicate that it won’t be the only items that are going to attract attention, the move through into the Tokyo session saw the market drifting from the opening 110.35 levels returning again into the Tokyo fix before resuming the drop selling through to the 109.95 levels and ranging around the 110. Level through to the grey hours, the move into the London session saw the market slipping again testing to the lows again and eventually triggering some weak stops to chase the market to the 109.70 before slowing taking several hours to move a further 20 pips lower, the move deeper into the NYK session saw the market dropping a little faster pushing through the 109.35 areas easily and testing to the London close of the 109.00 level and basing there through too late in the session before rising for the close.
• AUD: With Cable rallying and USD under pressure for diverse reasoning the Oz found the market limited through the Asian session holding around the 80 cent areas through too late in the session unable to push much beyond 0.7995 area and limited for a period at the 0.8010 level, Tokyo lunch allowed the Oz to push to the 0.8015 levels for the move into the grey hours and a test to the 0.8030 level before moving into the London session and a slow but steady rise through into the Tokyo session pushing to the 0.8075 areas, from there the market did extend the highs through to the 0.8080 area however, the move through NYK saw the market ranging around the 0.8070 levels.

Yesterday’s premiership results

AUD       Westpac Leading Index M/M Dec A 30% | P 0.10%

JPY         Trade Balance (JPY) Dec A 0.09T | C 0.27T | P 0.36T | R 0.29T

JPY         PMI Manufacturing Jan (P) A 54.4 | C 54.3 | P 54

EUR        France Manufacturing PMI Jan (P) A 58.1 | C 58.6 | P 58.8

EUR        France Services PMI Jan (P) A 59.3 | C 58.9 | P 59.1

EUR        Germany Manufacturing PMI Jan (P) A 61.2 | C 63 | P 63.3

EUR        Germany Services PMI Jan (P) A 57 | C 55.5 | P 55.8

EUR        Eurozone Manufacturing PMI Jan (P) A 59.6 | C 60.3 | P 60.6

EUR        Eurozone Services PMI Jan (P) A 57.6 | C 56.4 | P 56.6

GBP       Jobless Claims Change Dec A 8.6K | C 2.3K | P 5.9K

GBP       Claimant Count Rate Dec A 2.40% | C 2.30% | P 2.30%

GBP       Average Weekly Earnings 3M/Y Nov A 2.50% | C 2.50% | P 2.50%

GBP       ILO Unemployment Rate 3Mths Nov A 4.30% | C 4.30% | P 4.30%

USD       House Price Index M/M Nov A 0.40% | C 0.40% | P 0.50% | R 0.60%

USD       US Manufacturing PMI Jan (P) A 55.5 | C 55 | P 55.1

USD       US Services PMI Jan (P) A 53.3 | C 54.4 | P 53.7

USD       Existing Home Sales Dec A 5.57M | C 5.72M | P 5.81M | R 5.78M

USD       Crude Oil Inventories A -1.1M | C -1.0M | P -6.9M

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