Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 107.819 | EURUSD 1.23522 | AUDUSD 0.78595 | NZDUSD 0.7279 | USDCAD 1.25928 | USDCHF 0.93497 | GBPUSD 1.38927 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.23926 | 1.23475

USDJPY                 107.904 | 106.841

GBPUSD               1.39209 | 1.38831

USDCHF               0.93613 | 0.93076

AUDUSD              0.78896 | 0.78522

USDCAD               1.25944 | 1.2561

NZDUSD               0.73359 | 0.72733

EURCHF                1.15564 | 1.15319

EURGBP               0.89086 | 0.8890

EURJPY                 133.359 | 132.367

For today

• EUR: USDJPY selling eventually gave the Euro a boost higher with the market moving quietly around the 1.2350-60 levels through into the Tokyo session, then starting to rise through the midsession period to slowly test to above the 1.2390 levels before slipping back a little after an hour or so attempting to push through, the market then drifted quietly again into the grey hours around the level. Topside congestion into the 1.2400 level with limited stops on a push through the 1.2420 areas however, as the market moves higher the offers are likely to increase with further strong resistance into the 1.2450 and then increasing further as the market presses towards the 1.2500-20 levels, a break of the 1.2540 level with possibly stronger stops on a move through the level and opening a test through to the 1.2580 areas where strong offers could appear, Downside bids light through to the 1.2260-40 levels with the market finding congestion in the area and continuing in a lighter mode through to the 1.2220 and strong bids likely to appear, a push through the 1.2180 level is likely to open the downside areas for further tests.
• GBP: Quiet trading early in the session saw the market rising through the 1.3900 level and testing to the 1.3920 areas as USD dipped with movement of the JPY, the market failed just short of yesterday’s levels again and the market moved to hold around the 1.3900 level through into the grey hours, weak offers on a move through the 1.3950 with stronger offers above the 1.4000 level with stops likely to appear on a move through with limited offers likely to the 1.4050 areas. Downside bids light through to the 1.3850 areas with some congestion appearing on a move down to 1.3800 and stronger bids around the level, a breakthrough of the 1.3750 areas will likely see a congregation of stops appearing and the downside opening to a larger drop.
• JPY: Opening around the 107.85 areas the market moved into the Tokyo session holding the area and testing lightly through to the 107.90 areas before dropping back quickly with Kuroda reluctance in accepting the next term, the dip through the 107.50 areas saw the market trigger weak stops and a quick dip to the 107.00 levels before holding for a short period, the market attempted a further test lower however, the dip to the 106.85 areas was rejected and the market made steady inroads to recapture some of the losses testing to the 107.25 and holding through the grey hours, with the break below the 107.50 the market opens a little with sentimental values likely to be key to further downside movement, yield interest could underpin the market however, the market is likely to remain weak through to the 106.00 areas before anything particularly strong appear with weak stops then appearing through the 105.80 areas and another step lower and into the ranges from 2016. Topside offers light through to the 108.50 areas where light offers and some light congestion will see the market struggle for a short period however; any move through the level could see a limited short squeeze higher and through the 109.00 level.
• AUD: With the market rising through to the 0.7870 levels in early trading the market then dipped back to the opening around the 0.7860-55 areas through to the comments on Kuroda, the market moved quickly through to the 0.7890 areas before hitting offers and the market then drifting through into the grey hours around the 0.7875 level. Topside offers into the 0.7890-0.7900 areas are likely to be limited with a push through the 0.7920 level likely to see weak stops and the market opening only lightly with further offers appearing quickly around the 0.7940-60 areas and congested through to the 0.8020 level, and while there maybe stops appearing above the level those stops are likely to be quickly absorbed with short term sellers entering the market, with stronger offers moving in around the 0.8050 level, Downside bids light through to the 0.7800 areas with bids likely to continue through to the 0.7760 areas and some weak stops a possibility however, this will likely open a test to the 0.7650 areas where congestion abounds.

Overnight News

NZD:

ASB bank now sees RBNZ cash rate unchanged until 2H 2019

NZ inflation expectations climb in RBNZ survey

CNY:

PBoC names JPMorgan first non-Chinese yuan clearing bank

USD:

Powell suggests Fed to go ahead with rate hikes after share rout

FED says US household debt rose 1.5% in 4Q to $13.15T

Trump tells lawmakers he’s mulling limits on imported steel

AUD:

Risky property loans targeted in Australian regulatory changes

EUR:

Dutch PM Rutte survives no confidence vote after FinMin steps down

JPY:

USDJPY weakness is said to be related to Kuroda’s reluctance to accept the 5yr term

Today’s data

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

AUD       Westpac Consumer Confidence Feb A -2.30% | P 1.80%

JPY         GDP Q/Q Q4 (P) A 0.10% | C 0.20% | P 0.60%

JPY         GDP Deflator Y/Y Q4 (P) A 0.00% | C 0.00% | P 0.10% | R 0.20%

NZD       RBNZ 2-Year Inflation Expectation Q1 A 2.10% | P 2.00%

07:00     EUR        German GDP Q/Q Q4 (P) C 0.60% | P 0.80%

07:00     EUR        German CPI M/M Jan (F) C -0.70% | P -0.70%

07:00     EUR        German CPI Y/Y Jan (F) C 1.60% | P 1.60%

10:00     EUR        Eurozone Industrial Production M/M Dec C 0.10% | P 1.00%

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

13:30     USD       CPI M/M Jan C 0.30% | P 0.10%

13:30     USD       CPI Y/Y Jan C 1.90% | P 2.10%

13:30     USD       CPI Core M/M Jan C 0.20% | P 0.30%

13:30     USD       CPI Core Y/Y Jan C 1.70% | P 1.80%

13:30     USD       Retail Sales Advance M/M Jan C 0.20% | P 0.40%

13:30     USD       Retail Sales Ex Auto M/M Jan C 0.50% | P 0.40%

15:00     USD       Business Inventories Dec C 0.30% | P 0.40%

15:30     USD       Crude Oil Inventories P 1.9M

23:50     JPY         Machine Orders M/M Dec C -2.30% | P 5.70%

 

Harry Hindsight

• EUR: Euro’s headed slowly higher through the day with the market opening around the 1.2290 levels and pushing through the 1.2300 level into the Tokyo session before settling back a little for period holding the 1.2285 areas before again starting a slow rise through to the 1.2340 levels into the London morning, Initially the Euro struggled in the area and had to wait through to NYK for a limited push through beyond the 1.2350 levels with the market basing on that level through to the close and extending the high towards the 1.2370 level with UK’s inflationary news unchanged for the month of January helping the market.
• GBP: A fairly quiet start to the day with the market rising from the opening to test above the 1.3850 levels before basing along the opening 1.3835 levels for the bulk of the Asian session, before making its way into the grey hours testing above the 1.3850 levels and ranging a bit wider through to the inflationary numbers, the headline number came in unchanged to Dec number and above expectations giving rise to speculation of rates likely to rise in the near time, the market tested quickly through to the 1.3925 areas holding for a short period before dropping back quickly to test to the 1.3850 again and a slower move back to the 1.3900 level, and then ranging through the session in the 1.3870-95 level through to the close.
• JPY: Early trading was limited with the market holding around the 108.70 level through towards midday in Asia before starting a slow drift lower testing into the grey hours pushing through the 108.00 areas with weak stops into the London opening forcing the market through to the 107.50 areas and basing in that area with limited dips through the level and the market eventually rising into the NYK session back to the 107.80 areas.
• AUD: A very quiet range through the Asian session and for that matter London with the market holding round the opening 0.7860 areas with early Tokyo trading pushing lightly through the 0.7850 area and then rising through to the 0.7875 area to set the range through to NYK, NYK saw some movement with the market dropping back through the opening levels on the opening to test through to the 0.7850 areas with some weak stops then triggering a test of the 0.7830 levels before bouncing back from those lows to gain range quietly in the opening areas around the 0.7855 area to the close.

Yesterday’s premiership results

JPY         Domestic CGPI Y/Y Jan A 2.70% | C 2.70% | P 3.10% | R 3.00%

AUD       NAB Business Conditions Jan A 10 | C 12 | P 13

AUD       NAB Business Confidence Jan A 12 | C 10 | P 11

JPY         Machine Tool Orders Y/Y Jan (P) A 48.80% | P 48.30%

CHF        PPI M/M Jan A 0.30% | C 0.20% | P 0.20%

CHF        PPI Y/Y Jan A 1.80% | C 0.90% | P 1.80%

GBP       CPI M/M Jan A -0.50% | C -0.60% | P 0.40%

GBP       CPI Y/Y Jan A 3.00% | C 2.90% | P 3.00%

GBP       Core CPI Y/Y Jan A 2.70% | C 2.60% | P 2.50%

GBP       RPI M/M Jan A -0.80% | C -0.70% | P 0.80%

GBP       RPI Y/Y Jan A 4.00% | C 4.10% | P 4.10%

GBP       PPI Input M/M Jan A 0.70% | C 0.60% | P 0.10%

GBP       PPI Input Y/Y Jan A 4.70% | C 4.10% | P 4.90% | R 5.40%

GBP       PPI Output M/M Jan A 0.10% | C 0.20% | P 0.40%

GBP       PPI Output Y/Y Jan A 2.80% | C 3.00% | P 3.30%

GBP       PPI Output Core M/M Jan A 0.30% | C 0.20% | P 0.30%

GBP       PPI Output Core Y/Y Jan A 2.20% | C 2.30% | P 2.50% | R 2.40%

GBP       House Price Index Y/Y Dec A 5.20% | C 4.90% | P 5.10% | R 5.00%

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