Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 106.678 | EURUSD 1.21941 | AUDUSD 0.77616 | NZDUSD 0.72162 | USDCAD 1.28332 | USDCHF 0.94455 | GBPUSD 1.37598 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.22000 | 1.21836

USDJPY                 106.871 | 106.546

GBPUSD               1.37637 | 1.37423

USDCHF               0.94600 | 0.9439

AUDUSD              0.77655 | 0.77173

USDCAD               1.28484 | 1.28298

NZDUSD               0.72106 | 0.71862

EURCHF                1.15279 | 1.15145

EURGBP               0.88701 | 0.88596

EURJPY                 130.318 | 129.851

For today

EUR: Volumes a little better however, the ranges were worse for the Euro with the market holding for the most part in the 1.2185-1.2200 level through the session moving into the grey hours a little lower than the opening and just above the lows so far, Topside offers light through to the 1.2240 level with those offers likely to be limited and slightly stronger offers then into the 1.2280-1.2300 level, weak stops on a push through the 1.2340 level is likely to be absorbed up to the 1.2350 level before the market opening a little through to the 1.2380 stronger offers. Downside bids into the 1.2180 level have held the light probes so far, however, a dip through the level could see stronger stops appearing with limited bids into the sentimental 1.2150 areas and stronger bids not expected until the 1.2120-1.2100 areas with a strong push here opening the way to the 1.2050 lightly congestive areas. With a good run of numbers through the day and particularly PMI numbers across Europe there could be some potential for movement.

GBP: Very little in the Cable with the market slipping a couch from the opening levels and then trading around the 1.3750 areas through to the grey hours, Topside offers light back through the 1.3800 levels with some weak congestion likely into the 1.3820 level before weak stops appear and the market quickly able to reach the 1.3900 level and possibly stiffer offers through the level, even so there is likely to be very little substance in either the weak stops or offers and the market sees limited congestion on any move to the stronger 1.4000 areas. Downside bids light and a push through the current levels around the 1.3750 level will likely see the market opening easily to downside pressure with sentimental levels the only protection to returning to the ranges from the beginning of the year, maybe not today but the downside is open to the 1.3550 before any substantial congestion reappears in the market.

JPY: Opening around the 106.70 level the market drifted in to the Tokyo session testing through to the 106.55 levels before steadily rising back through the opening and eventually testing into the grey hours pushing against the 106.85 areas and the highs for the moment, Topside offers light through to the 107.20 level with limited offers even at that level, a push through the 107.50 level is easily attainable however, having pushed that area offers start to increase on any move to test the 108.00 areas and that for the moment is the short term key level to a renewed challenge of February’s range. Downside bids light for the moment on any dip to the 106.00 level with bids then starting to increase on any attempt to test the years lows around the 105.50 area, a push through the level will likely see some stronger stops appearing and the market opening to a test of the 105.00 level and possibly deeper move if the market can test through 104.80.

AUD: A weakening Oz through the session with AUDJPY selling of more import throughout the session, the move into the Tokyo session saw the Oz quickly come under pressure and the market dipping through the 0.7750 areas triggering some light stops on a gradual move through to the 0.7715 areas to post the lows however, having reached the level and bids the market struggled to regain some of its losses and unable to regain the 0.7735 with any conviction, Topside offers light through to the 0.7760 level with the market then limited around the 0.7780 area with weak stops not likely to appear unless the market can grind through the 0.7820 areas on limited volume, US data could have some bearing on the matter especially with the amount of data today that has potential to upset the market, and a limited short squeeze could be possible through to the 79 cent level, downside bids cleared and limited interest into the 77 cent level will likely see some congestive bids on a dip to the 0.7660 level with any weak stops likely to absorbed on the move, however, a push through the level could see a quick challenge of the 76 cent level.

Overnight News

NZD:

NZ recruitment firm says soft labour market will curb profits

USD:

Trump says US will use all tools to pressure China on trade

Trump is said to likely impose stiff steel, aluminium tariffs

JPY:

M&A happy Japanese companies shit assets to stocks

BoJ board member Kataoka says BoJ must ease more to achieve price goal quickly

BoJ’s Kataoka, BoJ must further promote powerful easing to show strong commitment to hit price goal

BoJ’s Kataoka: Japan is still quite distant from mulling shift from easy policy

Kataoka: premature shift from easy policy could push Japan back into delation

Kataoka: sales tax hike in 2019 may put downward pressure on prices

Kataoka: must be vigilant to risk US monetary policy normalisation could weigh on global growth, Japan’s economy

Kataoka: Chance of inflation hitting 2% during fiscal 2019 is low

Kataoka: current policy framework has yet to prompt firms to raise prices, heighten inflation expectations

Kataoka: pushing down yields of 10yr or longer will boost capex, housing investment and maximise impact of fiscal policy

Kataoka: Policy coordination between govt. BoJ is crucial to heighten inflation expectations

Kataoka: is risk of deflation if policy direction changed now

Kataoka: was referring to speculation about tightening

Kataoka: further stimulus is needed to hit target soon

Kataoka: Japan likely to keep growing at 1%-1.5% but weak emini’s weighing on cross JPY

GBP:

Remoaners are trying to stop Brexit with a proxy way says Boris’s allies UKT

AUD:

Australian home prices fall again in further sign boom is over

EUR:

Investors beware: Italy tail risk has quite the sting for bonds

USD/CNY:

US-China trade war could hinge on agricultural trade wars

Today’s data

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

NZD       Terms of Trade Index Q/Q Q4 A -0.20% | C 0.50% | P 0.70% | R 1.30%

JPY         Capital Spending Q4 A 4.30% | C 3.00% | P 4.20%

AUD       Private Capital Expenditure Q4 A -0.20% | C 1.00% | P 1.00% | R 1.90%

JPY         PMI Manufacturing Feb (F) A 54.1 | C 54 | P 54

CNY        Caixin PMI Manufacturing Feb A 51.6 | C 51.3 | P 51.5

JPY         Consumer Confidence Index Feb A 44.3 | C 44.8 | P 44.7

06:45     CHF        GDP Q/Q Q4 C 0.50% | P 0.60%

06:45     CHF        GDP Y/Y Q4 C 1.70% | P 1.20%

08:15     CHF        Retail Sales Y/Y Jan C 1.10% | P 0.60%

08:30     CHF        PMI Manufacturing Feb C 64.1 | P 65.3

08:45     EUR        Italy Manufacturing PMI Feb C 58 | P 59

08:50     EUR        France Manufacturing PMI Feb (F) C 56.1 | P 56.1

08:55     EUR        Germany Manufacturing PMI Feb (F) C 60.3 | P 60.3

09:00     EUR        Eurozone Manufacturing PMI Feb (F) C 58.5 | P 58.5

09:30     GBP       Mortgage Approvals Jan C 62K | P 61K

09:30     GBP       M4 Money Supply M/M Jan C 0.40% | P -0.60%

09:30     GBP       PMI Manufacturing Feb C 55 | P 55.3

10:00     EUR        Eurozone Unemployment Rate Jan C 8.60% | P 8.70%

13:30     CAD       Current Account Balance (CAD) Q4 P -19.3B

13:30     USD       Personal Income Jan C 0.30% | P 0.40%

13:30     USD       Personal Spending Jan C 0.20% | P 0.40%

13:30     USD       Real Personal Spending Jan C -0.10% | P 0.30%

13:30     USD       PCE Deflator M/M Jan C 0.40% | P 0.10%

13:30     USD       PCE Deflator Y/Y Jan C 1.70% | P 1.70%

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

13:30     USD       PCE Core Y/Y Jan C 1.50% | P 1.50%

13:30     USD       Initial Jobless Claims (24 FEB) C 226K | P 222K

14:30     CAD       RBC Canadian Manufacturing PMI Feb P 55.9

14:45     USD       US Manufacturing PMI Feb (F) C 55.8 | P 55.9

15:00     USD       Construction Spending M/M Jan C 0.20% | P 0.70%

15:00     USD       ISM Manufacturing Feb C 58.7 | P 59.1

15:00     USD       ISM Prices Paid Feb C 70 | P 72.7

15:30     USD       Natural Gas Storage P -124B

 

Harry Hindsight

• EUR: Opening around the 1.2230 levels the move through the Asian session was quiet, holding in a tight range through early Tokyo around the 1.2235-1.2225 before drifting through to the 1.2215 areas and then holding quietly above 1.2220, the move into the grey hours saw the market rising a little to the 1.2240 level before dropping quickly lower into the London opening, the market tested the 1.2200 level before rising slightly off the lows to the 1.2230 level again, the move through to the NYK session saw little difference dipping only after the late USD numbers were released dropping through the 1.2200 levels to make the lows for the day bouncing slowly again and then drifting to the close slipping back to the 1.2195 areas.
• GBP: Brexit rhetoric going back and further pull the rug from below the opening levels, drifting from the 1.3910 level to move into the London session creeping through the 1.3900 level, the market continued to range through the early London period with the range increasing but remaining quiet until the market moved towards the NYK session and the market dropping through the 1.3870 levels with weak stops on the dip through the 1.3850 level and hitting the 1.3810 areas before finding some support however, the support lasted only a few hours before the market broke through the 1.3800 level and tested slowly through to the close in a slow drift.
• JPY: USDJPY made some early gains with the market edging up through the 107.50 levels in early Tokyo before starting a quick dip through to the 107.10 levels before holding quietly through the session around the 10720 levels, the move into the grey hours saw the market slipping again a little and extending the lows to the 107.00 through into the London opening, although the London opening saw the market regaining the 107.20 levels the market struggled to gain traction and was ranging slowly through to the NYK session finally dipping through the 107.00 level into the NYK opening, US numbers saw the USDJPY dipping quickly through to the 106.55 areas and once there struggled throughout the balance of the session with the level to a close not that much higher.
• AUD: A very slow range through the session for the Oz with the market opening around the 0.7790 levels and holding quietly around that level through to the grey hours, the move into London saw the market rising however, it was slow and ponderous making the highs around the 0.7820 level into the NYK opening before starting just as slow drift lower through to the last couple of hours, the push through the opening levels saw the Oz falling back as Sydney entered the market and the Oz slipped to the 0.7765 to make the lows of the day.

Yesterday’s premiership results

JPY         Retail Trade Y/Y Jan A 1.60% | C 2.50% | P 3.60%

JPY         Industrial Production M/M Jan (P) A -6.60% | C -4.20% | P 2.90%

NZD       ANZ Business Confidence Feb A -19.0 | P -37.8

GBP       GfK Consumer Confidence Feb A -10 | C -10 | P -9

GBP       BRC Shop Price Index Y/Y Feb A -0.80% | C -0.60% | P -0.50%

CNY        Manufacturing PMI Feb A 50.3 | C 51.2 | P 51.3

CNY        Non-manufacturing PMI Feb A 54.4 | C 55 | P 55.3

JPY         Housing Starts Y/Y Jan A -13.20% | C -4.70% | P -2.10%

EUR        German GfK Consumer Confidence Mar A 10.8 | C 10.9 | P 11

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

EUR        French GDP Y/Y Q4 (P) A 2.50% | C 2.40% | P 2.40%

CHF        KOF Leading Indicator Feb A 108 | C 106 | P 106.9 | R 107.6

EUR        German Unemployment Change Feb A -22K | C -17K | P -25K

EUR        German Unemployment Rate Feb A 5.40% | C 5.40% | P 5.40%

EUR        Eurozone CPI Estimate Y/Y Feb A 1.20% | C 1.20% | P 1.30%

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

CAD       Industrial Product Price M/M Jan A 0.30% | C 0.50% | P -0.10%

CAD       Raw Materials Price Index M/M Jan A 3.30% | C 1.80% | P -0.90%

USD       GDP Annualized Q/Q Q4 (S) A 2.50% | C 2.50% | P 2.60%

USD       GDP Price Index Q4 (S) A 2.30% | C 2.40% | P 2.40%

USD       Chicago PMI Feb A 61.9 | C 64.6 | P 65.7

USD       Pending Home Sales M/M Jan A -4.70% | C 0.50% | P 0.50% | R 0.00%

USD       Crude Oil Inventories A 3.0M | C 2.4M | P -1.6M

 

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