Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 108.782 | EURUSD 1.24024 | AUDUSD 0.80845 | NZDUSD 0.73329 | USDCAD 1.23377 | USDCHF 0.93409 | GBPUSD 1.41504 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.24387 | 1.23964

USDJPY                 109.095 | 108.676

GBPUSD               1.41910 | 1.41362

USDCHF               0.93587 | 0.93271

AUDUSD              0.81051 | 0.80465

USDCAD               1.23476 | 1.23064

NZDUSD               0.73902 | 0.73286

EURCHF                1.16100 | 1.15839

EURGBP               0.87748 | 0.87608

EURJPY                 135.345 | 134.863

For today

• EUR: Opening around the 1.2400 levels the market moved into the Tokyo session testing through the 1.2420 levels before drifting back off into the State of the Union address, Early comments had the Euro rallying and the market pushing through to the grey hours testing the 1.2440 levels again and then holding through to the grey hours, a run of data through the day could see some volatility moving through the market Topside offers through the 1.2450-60 levels before weak stops are likely to appear with limited congestion around the 1.2500 level and more a stronger sentimental level with possible option interest on any test of the level, a push through with likely see a quick test to the 1.2550 areas with stronger offers then appearing on any further gains above the 1.2560 level. Downside bids light through to the 1.2350 areas with the market finding some support on a move through the level with weak stops on a move through the 1.2340 level and opening to the congested 1.2250 areas.
• GBP: Very little movement until after the State of the Union, with the market holding around the 1.4150 with the move towards the address seeing the Cable setting its lows before rising steadily during the address to test the 1.4180 level and gradually crawl into the grey hours pushing towards the 1.4200 level. Light offers through the 1.4200 levels with possible weak stops on a break above the 1.4220 areas and stronger offers then appearing on a test through the 1.4250 level with some congestion as well as sentimental selling likely to continue through to 1.4300-40 levels only a strong break through that topside will open up further gains and for the moment that has not been apparent, downside bids light to the 1.4000 level where better supportive bids start to appear as the base forms during the consolidating period any strong break through the 1.3980 level is likely to reverse the good moves this month and open the market possibly to a deeper move with 1.3850 likely to be the last defence to negating this month.
• JPY: USDJPY opened around the 108.80 levels with a couple of tests to the 108.70 levels before moving into the Tokyo session testing through the 109.00 level with BoJ summary doing very little, an expanded purchase of JGB’s saw the market testing higher each time returning to the starting levels and then the market drifting after the State of Union to push into the grey hours around the opening levels. Downside bids through the 108.50 level and likely to continue through to the 108.00 areas however, as the market pushes beyond the previous lows the market will become weaker the deeper you go with strong stops on a break through the 107.80 areas if not before to 107.50 and a light supportive line. Topside offers light through the 109.20 level with some offers in the area the market does have the chance of squeezing through the level and pushing to the 110.00 areas before meeting further resistance to the move.
• AUD: Rising steadily into the Tokyo session to test above the 81 cent levels before dropping back quickly with weaker CPI numbers coming through to test quickly to the 0.8050 levels and bouncing and renewing the selling to extend the lows just through the 0.8050 level before returning slowly through to the opening levels into the grey hours, For the moment the Oz seems to be dead in the water and remaining on the 80 cent level any move above the 81 cent has repeatedly found strong offers appearing with the market likely to be better defended the closer you get to the 0.8140 levels with weak stops and break out stops above and the market opening to a quick test to the 0.8180-0.8200 levels and a return to the 84 cent then opening for the medium term, Downside bids congested on any dips to the 80 cent level and the market will need to test strongly through the 0.7980 level to open any prospect of a strong downside move.

Overnight News

NZD:

Robertson: Drop in business confidence not unusual (change of Govt.)

Robertson: Underlying economic indicators are good

Robertson: Budget will be delivered on May 17^th

JPY:

One member: BoJ may need to consider adjusting rates in future

One Member: Better not to let market expect policy change early

BoJ lifts 3-5yr JGB buys to 330B yen, was 300B in last operation

USD:

State of Union address

Trump: he wants congress to produce legislation that generates at least $1.5T for new infrastructure investment

Trump: Drug prices will come down substantially watch

Trump: Reiterates to expect strong enforcement on trade rules

Trump: Every Federal infrastructure USD should be leveraged

Trump: State of the Union is strong

Trump: Together we are rediscovering the American way

Trump: We have ended the war on American energy and coal

Trump: We’ll work to fix bad trade deals

USD inches lower barely reacting to State of Union

Today’s data

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

JPY         BOJ Summary of Opinions

JPY         Industrial Production M/M Dec (P) A 2.70% | C 1.50% | P 0.50%

GBP       GfK Consumer Confidence Jan A -9 | C -13 | P -13

GBP       BRC Shop Price Index Y/Y Jan A -0.50% | C -0.40% | P -0.60%

AUD       CPI Q/Q Q4 A 0.60% | C 0.70% | P 0.60%

AUD       CPI Y/Y Q4 A 1.90% | C 2.00% | P 1.80%

AUD       CPI RBA Trimmed Mean Q/Q Q4 A 0.40% | C 0.50% | P 0.40%

AUD       CPI RBA Trimmed Mean Y/Y Q4 A 1.80% | C 1.90% | P 1.80%

AUD       CPI RBA Weighted Median Q/Q Q4 A 0.40% | C 0.50% | P 0.30%

AUD       CPI RBA Weighted Median Y/Y Q4 A 2.00% | C 1.90% | P 1.90%

CNY        Manufacturing PMI Jan A 51.3 | C 51.5 | P 51.6

CNY        Non-manufacturing PMI Jan A 55.3 | C 55 | P 55

JPY         Consumer Confidence Jan A 44.7 | C 44.9 | P 44.7

JPY         Housing Starts Y/Y Dec A -2.10% | C 1.10% | P -0.40%

07:00     EUR        German Retail Sales M/M Dec C -0.40% | P 2.30%

07:00     CHF        UBS Consumption Indicator Dec  P 1.67

08:55     EUR        German Unemployment Change Jan C -20K | P -29K

08:55     EUR        German Unemployment Claims Rate Jan C 5.40% | P 5.50%

10:00     EUR        Eurozone Unemployment Rate Dec C 8.70% | P 8.70%

10:00     EUR        Eurozone CPI Core Y/Y Jan (A) C 1.00% | P 0.90%

10:00     EUR        Eurozone CPI Estimate Y/Y Jan C 1.30% | P 1.40%

13:15     USD       ADP Employment Change Jan C 183K | P 250K

13:30     USD       Employment Cost Index Q4 C 0.60% | P 0.70%

13:30     CAD       GDP M/M Nov C 0.40% | P 0.00%

13:30     CAD       Industrial Product Price M/M Dec C 0.00% | P 1.40%

13:30     CAD       Raw Materials Price Index M/M Dec C -2.50% | P 5.50%

14:45     USD       Chicago PMI Jan C 64 | P 67.6

15:00     USD       Pending Home Sales M/M Dec C 0.50% | P 0.20%

15:30     USD       Crude Oil Inventories P -1.1M

19:00     USD       FOMC Rate Decision C 1.50% | P 1.50%

 

Harry Hindsight

• EUR: Euro’s slipped lower through the Asian session with limited USD strength driven by continuing upsets with Brexit and Trump, opening around the 1.2380 levels the market was unable to move much beyond the 1.2390 areas the market slipped into the mid-session testing to the 1.2365 levels with reasonable volumes going through the market held the two levels until the move into the grey hours, steady selling through to the early London guys sitting down at their desks saw the market test the 1.2350 level and bounce French GDP helped the market to rise back to the 12370 level before dropping quickly back on the opening to test to the 1.2335 level, from that point it was all Euro buying through the morning session in London with the market moving steadily through to the 1.2440 levels with little problem, with confidence numbers showing weakly in the Eurozone area the market ignored and the market pushing for a final push through to the 1.2450 levels before dropping back as the US numbers saw improvement and the Euro slipping back to the 1.2400 level and running quietly to the close in an ever declining range.
• GBP: Early Cable selling saw the Cable slip slowly through the Asian session testing steadily from the opening around the 1.4075 level through the 1.4050 areas and holding for a few hours before slowly starting the drift into the grey hours, the move into the London opening saw the market pushing the 1.4020 levels and the market giving quickly through to the 1.3980 area before finding sufficient support in the area and a steady climb higher again triggering weak stops on the movement through the 1.4050 level and the market stepping higher through to the opening levels and again to the 1.4100 level before slowing its ascent and moving into the NYK session pressing the 1.4150 levels for a steady range through to late in the session holding 1.4120-50 for the most part, a late attempt saw the market pushing through to the 1.4170 levels and then settling again to trade around the 1.4150 level.
• JPY: USDJPY saw movement into the Tokyo session after a dull start to the session testing initially slightly higher on the fix and dropping back and pushing quickly through to the 109.20 levels in a quick stab higher the balance of the session saw the market move just as quickly off the highs and tip to the 108.65 levels to range quietly through to the London session and a slow drift through to NYK, testing the lows through 108.45 into the early part of the session and then rallying after the US numbers to return to the 108.75-90 areas through to the close.
• AUD: A quiet start for the day with the Oz marking time around the 0.8095 levels through to the fall back of the USDJPY this taking AUDJPY lower and the Oz in particular suffering a little and making its way through to the opening in London to test the 0.8040’s before finding support into the London opening with the market finding stronger buying from that point and testing back to the opening levels, small stops saw the market testing through the 0.8110 levels however, as the movement suggests it was limited at best and only on the move into the NYK session did the market test through the level once more before slipping back and returning to below the 81 cent levels and drifing through to the close only slightly below the opening levels.

Yesterday’s premiership results

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

EUR        French GDP Q/Q Q4 (A) A 0.60% | C 0.60% | P 0.60% | R 0.60%

CHF        Trade Balance (CHF) Dec A 2.63B | C 2.54B | P 2.63B | R 2.58B

CHF        KOF Leading Indicator Jan A 106.9 | C 110.8 | P 111.3 | R 111.4

GBP       Mortgage Approvals Dec A 61.0K | C 63.5K | P 65.1K | R 64.7K

GBP       Money Supply M4 M/M Dec A -0.60% | C 0.20% | P 0.10%

EUR        Eurozone Business Climate Indicator Jan A 1.54 | C 1.68 | P 1.66

EUR        Eurozone Economic Confidence Jan A 114.7 | C 116.2 | P 116

EUR        Eurozone Industrial Confidence Jan A 8.8 | C 8.9 | P 9.1

EUR        Eurozone Services Confidence Jan A 16.7 | C 18.5 | P 18.4

EUR        Eurozone Consumer Confidence Jan (F) A 1.3 | C 1.3 | P 1.3

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

EUR        German CPI M/M Jan (P) A -0.70% | C -0.60% | P 0.60%

EUR        German CPI Y/Y Jan (P) A 1.60% | C 1.70% | P 1.70%

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

USD       Consumer Confidence Jan A 125.4 | C 123 | P 122.1 | R 123.1

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