Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 109.182 | EURUSD 1.24138 | AUDUSD 0.80563 | NZDUSD 0.73657 | USDCAD 1.23141 | USDCHF 0.93125 | GBPUSD 1.41876 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.24290 | 1.24056

USDJPY                 109.413 | 109.129

GBPUSD               1.42140 | 1.41856

USDCHF               0.93256 | 0.93049

AUDUSD              0.80674 | 0.80345

USDCAD               1.23200 | 1.22937

NZDUSD               0.73817 | 0.73524

EURCHF                1.15771 | 1.15497

EURGBP               0.87559 | 0.8736

EURJPY                 135.904 | 135.472

For today

• EUR: A quiet ever decreasing range through the session with the market opening around the 1.2410 levels and rising to the high into the Tokyo session, the market made a weak move to the 1.2430 levels before reversing and dipping through to just below 1.2410 and the market range then narrowing through to the grey hours holding just below the highs. Downside bids light through to the 1.2340 levels with possible weak stops on a solid move through to test the stronger 1.2300 areas a move through that level will likely see weak stops appearing however, some congestion should slow any dips with possibly stronger bids around the 1.2250 level limiting the downside to some extent, Topside offers light through the 1.2440-60 areas and then increasing the closer the market moves towards the 1.2500 levels with significant offers likely on a move through and into the 1.2540 levels, strong stops likely on a test through the level and the market more sentimental than anything else on a push to the 1.2600 level.
• GBP: Cable started the day as with the Euro with the market rising from the opening towards the 1.4215 levels before dropping back in the same fashion to the opening 1.4185-90 area, however, the market rose quickly from the low to test the highs and then spent the rest of the session drifting to the opening levels and holding there into the grey hours. Topside offers light through the 1.4250 levels with light congestion likely through to the 1.4300 level, with stronger offers then reappearing and continuing through to the 1.4350 level where stronger stops are likely and the market opens to further gains. Downside light bids through to the 1.4100 level with a base starting to form around the 1.4000 level and likely to be strong for the moment however, Cable remains vulnerable to bad Brexit news although more resilient to the byplays between the two factions.
• JPY: USDJPY slipped lower from the opening around the 109.20 level to test only to the 109.10 areas before starting a steady rise through to test the 109.40 and ranging in a narrow band around the 109.35 level through to the grey hours, Topside offers through the 109.50 level with weak stops on the other side before finding stronger offers on any attempt to push the 110.00 level, some congestion beyond that level with the market likely to struggle on any further gains with the 111.00 level particularly tough for the moment however, a push through the level will likely see the market squeezing through to the 111.40 levels and then struggling from then on. Downside bids light through to the 109.00 level however, beyond that the market is likely to see bids moving in on any dips with particular strength from the 108.50 level onwards with weak stops only on a dip below 108.00 level.
• AUD: The Oz peaked above the 0.8065 area and drifted back as the market moved into the Tokyo session and testing the 0.8035 level before ranging around the 0.8050 level for the balance of the session moving into the grey hours around the 0.8045 level. Downside bids into the 80 cent level with possible weak stops on a push through the 0.7950 levels and congestion between those two levels, a break through the 0.7940 level will likely see strong stops appearing and the market quickly testing the 79 cent level with some support through to 0.7880 before further selling increases. Topside offers light through to the 0.8120 levels where stronger offers appear through to the 0.8150 levels and light stops beyond.

Overnight News

GBP:

Brexit haunts May as she seeks China trade post EU

EUR:

EU seeks to soften rules for tackling failing banks

Today’s data

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

0:30        AUD       Import price index Q/Q Q4 A 1.50% | C 1.50% | P -1.60%

0:30        AUD       Building Approvals M/M Dec A -20.00% | C -7.60% | P 11.70% | R 12.60%

0:30        JPY         PMI Manufacturing Jan (F) A 54.8 | P 54.4

1:45        CNY        Caixin PMI Manufacturing Jan A 51.5 | C 51.5 | P 51.5

06:45     CHF        SECO Consumer Confidence Jan C 2 | P -2

08:15     CHF        Retail Sales Y/Y Dec P -0.20%

08:30     CHF        PMI Manufacturing Jan C 64.1 | P 65.2

08:45     EUR        Italy Manufacturing PMI Jan C 57.3 | P 57.4

08:50     EUR        France Manufacturing PMI Jan (F) C 58.1 | P 58.1

08:55     EUR        Germany Manufacturing PMI Jan (F) C 61.2 | P 61.2

09:00     EUR        Eurozone Manufacturing PMI Jan (F) C 59.6 | P 59.6

09:30     GBP       PMI Manufacturing Jan C 56.5 | P 56.3

12:30     USD       Challenger Job Cuts Y/Y Jan P -3.60%

13:30     USD       Nonfarm Productivity Q4 (P) C 1.10% | P 3.00%

13:30     USD       Unit Labor Costs Q4 (P) C 1.00% | P -0.20%

13:30     USD       Initial Jobless Claims (JAN 27) C 236K | P 233K

14:45     USD       Manufacturing PMI Jan (F) C 55.5 | P 55.5

15:00     USD       Construction Spending M/M Dec C 0.40% | P 0.80%

15:00     USD       ISM Manufacturing Jan C 58.6 | P 59.7

15:00     USD       ISM Prices Paid Jan C 69.5 | P 69

15:30     USD       Natural Gas Storage P -288B

 

Harry Hindsight

• EUR: Opening just above the 1.2400 levels the market limped into the Tokyo session pushing off the 1.2395 levels to test through to the 1.2425 areas, the market drifted through the morning part of the Asian session with the state of Union triggering the Euro eventually higher and the market pushing through to the 1.2435 level before holding through to the grey hours, early London buying saw the market rising slowly through to the 1.2450 level, the market gyrated around the level for several hours moving into the NYK session with the market pushing through to the 1.2475 levels before dropping back a lot quicker than it rose, dipping back to the 1.2435 levels before pushing through for a quick drop to the 1.2415 level, the market held the short period to the FOMC release and the unchanged initially seeing the market push to the 1.2440 levels before falling back to trigger weak stops on a move to the 1.2390 levels, with US inflation expected to rise this year and stabilize around the 2% levels the market moved to hold the 1.2415 areas into the close.
• GBP: Pushing slowly through the 1.4150 level the market stalled around the 1.4165 areas and drifting through the early part of the session before starting another rally through to the 1.4190 areas the market held the level through to the grey hours with the market eventually finding early European buyers to push above the 1.4200 levels testing to the 1.4215 level before running out of steam and slipping back a little as EURGBP buying moving into the market and the market triggering some weak stops on the move back to the opening levels eventually testing to the 1.4125 areas before finding a base. A slow tight channel higher from the lows saw the market moving through into the NYK session rising lightly through to the 1.4180 level before holding for a short period, the market eventually pushed a little higher testing through the 1.4200 and extending the day’s highs through to the 1.4235 level before slipping back for the release of the FOMC decision, a little whippy on the release with the market again spiking above the 1.4200 level and dropping back to the 1.4150 before recovering an hour later to finish the day quietly testing the 1.4200 level to the close.
• JPY: A very quiet session for USDJPY for the bulk of the day with the market moving off the 108.80 level opening to test a little lower before rising through into the Tokyo session to the 109.10 areas, a repeat performance then left the market holding around the 108.85 areas before dipping on a move to the grey hours, the move through to the London opening saw the market dipping and holding 108.65, London saw a slow rise through the session deep into the NYK period with the market eventually pushing through the 109.00 levels and triggering limited stops on a move through the 109.20 areas and pushing towards the 109.45 level and holding through to the FOMC release, no change saw the USDJPY dip and then back to test the highs again before dropping back after an hour to test the 109.00 for the second time, the run to the close saw a slow rise to the 109.20 areas.
• AUD: Still caught for direction with the Oz rising in early trading through the 81 cet levels before the release of the CPI numbers and a weaker reading leaving the market drifting through to the 0.8050 levels from that early high, the market ranged for a period around the 50-75 range and although the low was extended slightly the market recovered from the lows and moved into the grey hours pushing slowly for the opening levels around 0.8085 moving into the London session slowly testing the 81 cent level again, the move into the NYK session saw the highs just above the 0.8115 area and the market then drifting around the 81 cent level for several hours, NYK option cut saw the Oz dropping quickly away from the 81 cent areas and the market slowly testing through to the 0.8050 levels and the release of the FOMC, limited movement of the release saw the market testing through to the 0.8035 levels before holding quietly into the 0.8055 areas.

Yesterday’s premiership results

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%

EUR        German Retail Sales M/M Dec A -1.90% | C -0.40% | P 2.30%

CHF        UBS Consumption Indicator Dec A 1.69 | P 1.67 | R 1.73

EUR        German Unemployment Change Jan A -25K | C -20K | P -29K

EUR        German Unemployment Claims Rate Jan A 5.40% | C 5.40% | P 5.50%

EUR        Eurozone Unemployment Rate Dec A 8.70% | C 8.70% | P 8.70%

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

EUR        Eurozone CPI Estimate Y/Y Jan A 1.30% | C 1.30% | P 1.40%

USD       ADP Employment Change Jan A 234K | C 183K | P 250K | R 242K

USD       Employment Cost Index Q4 A 0.60% | C 0.60% | P 0.70%

CAD       GDP M/M Nov A 0.40% | C 0.40% | P 0.00%

CAD       Industrial Product Price M/M Dec A -0.10% | C 0.00% | P 1.40%

CAD       Raw Materials Price Index M/M Dec A -0.90% | C -2.50% | P 5.50% | R 5.40%

USD       Chicago PMI Jan A 65.7 | C 64 | P 67.6

USD       Pending Home Sales M/M Dec A 0.50% | C 0.50% | P 0.20%

USD       Crude Oil Inventories A 6.8M | C 0.1M | P -1.1M

USD       FOMC Rate Decision A 1.50% | C 1.50% | P 1.50%

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