Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 109.959 | EURUSD 1.23828 | AUDUSD 0.80954 | NZDUSD 0.7312 | USDCAD 1.23404 | USDCHF 0.93753 | GBPUSD 1.4075 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.23883 | 1.23601

USDJPY                 109.209 | 108.661

GBPUSD               1.40767 | 1.40355

USDCHF               0.93940 | 0.93661

AUDUSD              0.80996 | 0.80634

USDCAD               1.23635 | 1.23306

NZDUSD               0.73374 | 0.7314

EURCHF                1.16202 | 1.15981

EURGBP               0.88151 | 0.87966

EURJPY                 134.994 | 134.374

For today

• EUR: Limited range through the Tokyo session with the market opening around the 1.2380 level and trading quietly through into the Tokyo period dipping through to the 1.2370 levels before returning and pushing through towards the 1.2390 levels to post the high of the day, comments from Governor of Dutch central bank saw the market dip a little to set the lows just above the 1.2360 level and slowly rose to the opening levels again and then drifting through to the grey hours, Topside offers through the 1.2420 areas with possibly stronger levels on a push towards the 1.2440-60 and likely to increase on a test to the 1.2480-1.2500 levels with stops possibly on a push above the 1.2540 level opening stronger gains. Downside bids light into the 1.2340 levels with stronger bids from the 1.2300 level and congestion through to the 1.2250 areas lighter congestion below the level and any attempt to test the 1.2200 areas could see a deeper move with possibly strong stops on a move through that level.
• GBP: Limited action for the Cable and the market unable to hold onto the opening 1.4070 levels moving into the Tokyo session slipping a little lower to test the 1.4060 areas and holding the level for a couple of hours before its last chance ride towards the opening level, from there the market slipped steadily lower and the market based along the 1.4035 areas through to the grey hours in quiet trading to the grey hours, Topside offers light back through the 1.4100 level with light congestion through to the 1.4120 areas, the move through will likely see weak sentimental offers into 1.4150 and possibly light stops and the market opening for another run above the 1.4200 areas with some stronger offers in the area but still limited to some extent with stronger offers likely through the 1.4300 level and continuing to the 1.4340 and the level to break for any further gains. Downside bids light through to the 1.4000 level where stronger bids are likely with light congestion through the level likely to be covered by weak stops and the market having room for further declines.
• JPY: USDDJPY saw some movement however, the market was contained for the most part in a 50 pip range, opening quietly the market moved into the Tokyo session trading around the opening 108.95 level before testing lightly above the 109.00 area into the Tokyo fix and dropping back immediately after, the market slipped to the 108.80 levels, the pattern was repeated with a greater range, the market pushing through this time to the 109.20 levels before finding sufficient offers to chase it lower and triggering some light stops from early buyers and the market slipping through to post the low into the 108.65 areas before holding quietly through to the grey hours, Topside offers into the 109.20 areas with possible weak stops on a move through the level with weak resistance lines around the 109.35 and 109.60 areas likely to slow a move but not stop it I think, any push above the level will likely see weakness continuing to the sentimental 110.00 level with stronger offers only as the market approaches the 110.50 areas and stops through the level, Downside bids light through to the 108.40 areas and likely to be reasonably strong and continuing into the 108.00 level, possible weak stops hanging around the 107.80 levels however, stronger bids are then likely to appear on any approach to the 107.50 level.
• AUD: Dec numbers undercut a quiet start in the Oz with the market initially trading around the opening 0.8085 levels and trading tightly into with a 0.8090-0.8100 range before dropping back quickly through to the 0.8070 level, a little bounce however, the move towards the grey hours saw the market drifting into the 0.8065 areas, Topside offers likely to be increasing above the 0.81 cent level with the market needing to push strongly through the 0.8140 areas and possible weak stops on a move through the level and opening the way for a strong test of the 82 cent levels, with some resistance into the area. Downside bids light through the 0.8060-40 level with stronger bids likely into the 80 cent level and continuing through there with congestion expected, weak stops on a dip through the 0.7980 area and the market likely to test the 0.7950 levels quickly.

Overnight News

CNY:

China banks told to curb non-banking overnight lending

GBP:

Govt. analysis says Brexit to hit UK in every scenario Buzzfeed

PM May to reject EU transition offer and fight over citizens’ rights UKT

London home prices rise at slowest pace since 2011 in buyer’s market

May is said to face donor revolt, growing pressure to quit as soon as outline of a trade deal is done

USD:

US says no need for new Russia sanctions

US businesses optimistic on China growth, bemoan unfair treatment

Progress in Nafta talks, but very slow US trade official

US budget deficit to top USD1T in 2019 Budget experts

JPY:

Japan’s Aso tells cryptocurrency exchanges to strengthen controls after 58B yen theft

Japanese spending slips in December

BoJ should stick with Abenomics whomever the next governor is Japan PM adviser

AUD:

Australia business conditions strong in Dec, confidence grows Survey

EUR:

Top Dutch banks, government service hit by cyber attacks

ECB must halt bond buying says Dutch bank governor

NZD:

S&P warns of possible sharp correction in NZ property

Today’s data

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

NZD       Trade Balance Dec A 640M | C -125M | P -1193M | R -1233M

JPY         Jobless Rate Dec A 2.80% | C 2.70% | P 2.70%

JPY         Household Spending Y/Y Dec A -0.10% | C 1.50% | P 1.70%

JPY         Retail Trade Y/Y Dec A 3.60% | C 2.10% | P 2.20% | R 2.10%

AUD       NAB Business Conditions Dec A 13 | C 15 | P 12

AUD       NAB Business Confidence Dec A 11 | C 12 | P 6 | R 7

06:30     EUR        French GDP Q/Q Q4 (A) C 0.60% | P 0.60%

07:00     CHF        Trade Balance (CHF) Dec C 2.54B | P 2.63B

08:00     CHF        KOF Leading Indicator Jan C 110.8 | P 111.3

09:30     GBP       Mortgage Approvals Dec C 63.5K | P 65.1K

09:30     GBP       Money Supply M4 M/M Dec C 0.20% | P 0.10%

10:00     EUR        Eurozone Business Climate Indicator Jan C 1.68 | P 1.66

10:00     EUR        Eurozone Economic Confidence Jan C 116.2 | P 116

10:00     EUR        Eurozone Industrial Confidence Jan C 8.9 | P 9.1

10:00     EUR        Eurozone Services Confidence Jan C 18.5 | P 18.4

10:00     EUR        Eurozone Consumer Confidence Jan (F) C 1.3 | P 1.3

10:00     EUR        Eurozone GDP Q/Q Q4 (A) C 0.60% | P 0.60%

13:00     EUR        German CPI M/M Jan (P) C -0.60% | P 0.60%

13:00     EUR        German CPI Y/Y Jan (P) C 1.70% | P 1.70%

14:00     USD       S&P/Case-Shiller Composite-20 Y/Y Nov C 6.30% | P 6.40%

15:00     USD       Consumer Confidence Jan C 123 | P 122.1

 

Harry Hindsight

• EUR: Plenty of weekend news from both sides of what is becoming a divide over Brexit and Trump at Davos, opening around the 1.2425 levels the market held quietly through into the Tokyo session slipping a little lower and then dropping through the 1.2400 levels with Trumps negative tone about trade with the EU, the market recovered after the initial dip and rose back to the 124.15 levels having tested the 1.2385 areas, the move into the London session saw the market dipping again through the 1.2400 areas and held quietly through to the NYK session before starting a slow drift lower through to test the 1.2335 levels before holding and rising into the close of the London session, the market rose slowly but steadily through to the 1.2390 level before holding quietly to the close.
• GBP: Opening a little lower the market moved through into the Tokyo session filling the small gap and ranging through the early part of Tokyo around the 1.4150 levels before dipping back to test the 1.4115 areas and ranging between the two through to the London opening before dropping quickly through to the 1.4070 levels with the market ranging through into the NYK session from the 1.4060 areas and making another dip from the 1.4080 levels to make the lows around the 1.4025 area before recovering a little into the London close, the market made some limited continuation through to the 1.4080 levels and was quiet through the balance of the session with no more Brexit speculation as such.
• JPY: A limited day for the USDJPY with the market opening around the 108.75 areas and then ranging around the 108.65 levels through to early Tokyo where the first run higher saw the market pushing towards the 109.00 level with Davos and Brexit news over the weekend driving the market through the system, the market again settled back a little to the 108.70 levels and the move into the grey hours saw early London pushing the market again to take it above the 109.00 levels and holding through early morning before dropping back again to the 108.65 areas and through into the NYK session, the final move came late in the NYK session with stronger income and spending data giving a boost to the USD and testing to the 109.20 level and the final push with the market remaining in touch with the level for an hour or so before dropping back through the 109 figure level for the run to the close.
• AUD: Opening a little weaker early trading saw the market drift through into the grey hours before a weaker JPY saw the AUDJPY trading take the Oz to its highs pushing the 0.8110 areas holding for a short period before dropping back quickly to test through to test through the 81 cent levels and falling back to 0.8080 cent level and the base for much of the day, the move through the day saw the market trading around the 0.8090 level and caught in the 0.8080-0.8100 levels with only minor pushes above the topside the move into the NYK session saw very little difference with only one minor push below the 0.8074 level to set the low with the market recovering for the run to the close.

Yesterday’s premiership results

EUR        German Import Price Index M/M Dec A 0.30% | C 0.20% | P 0.80%

USD       Personal Income Dec A 0.40% | C 0.30% | P 0.30%

USD       Personal Spending Dec A 0.40% | C 0.40% | P 0.60% | R 0.80%

USD       PCE Deflator Y/Y Dec A 1.70% | C 1.70% | P 1.80%

USD       PCE Core M/M Dec A 0.20% | C 0.20% | P 0.10%

USD       PCE Core Y/Y Dec A 1.50% | C 1.50% | P 1.50%

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