Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 106.118 | EURUSD 1.24049 | AUDUSD 0.78281 | NZDUSD 0.72966 | USDCAD 1.28766 | USDCHF 0.9406 | GBPUSD 1.3887 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.24292 | 1.24062

USDJPY                 106.181 | 105.455

GBPUSD               1.39087 | 1.38821

USDCHF               0.94076 | 0.93666

AUDUSD              0.78294 | 0.77719

USDCAD               1.29609 | 1.28762

NZDUSD               0.73016 | 0.72759

EURCHF                1.16719 | 1.16316

EURGBP               0.89465 | 0.89315

EURJPY                 131.731 | 130.923

For today

• EUR: News that Gary Cohn one of Pres. Trumps top economic advisors is to resign saw the USD drop quickly and the Euro rising towards the 1.2430 levels from the opening around the 1.2405 areas, the market ranged for a period around the 1.2420 level before drifting a little lower through the bulk of the session around the 1.2415 areas, the move towards the grey hours again saw the market rising slowly through the 1.2420 levels on good volume, Topside offers are likely to remain fairly strong on any move through to the 1.2440-60 areas with plenty of congestive offers and while there may be some brief weakness on a move through the offers are likely to increase on any move towards the 1.2500 level and through to the 1.2520 areas however, any break here is likely to be a false dawn with stronger offers likely to appear on any attempt to push through the years highs around the 1.2560 level. Downside bids likely to be weak through to the 1.2340-00 areas with congestion through that area and weak stops on a push through the 1.2280 areas to open a test in to the 1.2240-20 areas and stronger bids then through to the figure level, with some light stops on a move through the 1.2190 level the market still faces strong bids into the 1.2160 level and opening up to further downside potential through that level.
• GBP: USD falls back and the Cable rose through to the 1.3905 areas before holding through into early Tokyo and a slow drift back through the opening 1.3890 areas to test down initially to the 1.3885 areas, the market held above the opening levels for the bulk of the session before heading towards the grey hours again drifting a little lower, downside weak bids through the 1.3860 level leaves the market open to a test of the 1.3800 with this level likely to be the strongest level for the near term, any test through the level could see stops appearing and a run down to the 1.3750 areas and bids reappearing from short term buyers. Topside offers through the 1.3940-50 areas likely to increase on any move towards the 1.4000 level however, even through the level the market is likely to be congestive more than technically strong and only once the market pushes to the 1.4050 does the market likely increase in volume.
• JPY: The Gary Cohn news saw the USDJPY take the brunt of the movement with the move quick and savage from the 106.15 level to the 105.60 areas before finding some support moving in, the market continued to decline slowly testing through the 105.50 levels, holding into the Tokyo session the market slowly started a recovery through to the 105.85 areas however, it was short lived and the market again started to drift as the volumes faded away and the market moves into the grey hours around the 105.60 areas. Downside bids through the 105.50 level and likely into increase on a move to the 105.20 areas, with weak stops and technical stops likely to be the focus on a break through the level and into the 104.80 level, this opens a deeper channel through to the 103.50 areas, sentimental bids around the 104.20-103.80 standing in the way. Topside offers weak through to the 106.40 with some residual congestive offers then opening the market to a quick push towards the 107.00 and possibly short term profit taking sitting in the area.
• AUD: AUDJPY dominated the opening with the fall of the USDJPY forcing the Oz lower dropping back from the 0.7830 level to test into the Tokyo se3ssion to the 0.7795 levels, the move lower continued at a slower pace and the market eventually pushed to the 0.7775 areas in early trading in Tokyo, the recovery was slower and the market again made its way back to the 78 cent level and ranged around the level for most of the session in limited trading. Downside bids inot the 0.7720 levels with a push through the 77 cent level opening the market to a dip into the 0.7660-40 areas and stronger congestive bids slowing any further descent but pushing firmly into ranges from 2016-17 period. Topside offers into the 0.7850 slowing the market however a strong push through the 0.7880 level will likely see the 79 cent level becoming a target and possible weak stops on a move through the level and congestive offers reappearing on any test into the 0.7930 areas.

Overnight News

USD:

Gary Cohn to resign as Trump’s top economic adviser

Fed’s Brainard (dove) remarks in text of speech in NYK

Brainard: Cites tax- cut est. boosting 2018-19 growth 0.5% points

Brainard: Mild overshoot of 2% inflation consistent with goal

Brainard: Tailwinds may help re-anchor inflation expectations

Brainard: Financial conditions supporting growth

Brainard: US growth headwinds have become tailwinds

Brainard: FED ought to be ready to adjust policy either direction

Brainard: Fiscal stimulus is most notable tailwind

Brainard: Wage gains still fall short of pre-crisis levels

Brainard: More confidence on inflation warrants gradual hikes

Brainard: Suggests tailwinds could speed up pace of rate hikes

Brainard: Asset valuations elevated but risks moderate overall

US considers broad curbs on Chinese imports, takeovers BBG

Cites sources saying US looking to punish China for alleged IP theft

Worst scenario would be tariffs on imports from shoes to consumer electronics

Could combine tariffs with curbs on Chinese investments in US

More targeted action would involve enforcing reciprocity on foreign investment

Officials still examining options, USTR may decide to do nothing

FED Dallas: Rising public debt to GDP can harm economic growth

US Sues California seeking to nullify State immigration laws

USD/CNY:

Every 10% Tariff the US imposes on China seen cutting 1% off China’s GDP

NZD:

NZ construction work rose more than forecast the final quarter of last year 1.4% Est. 1.0%

10,000 property buyers caught in lender collapse

CAD:

Toronto home sales plummet 35% from a year ago as new mortgage rules bite

Today’s data

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

AUD       GDP Q/Q Q4 A 0.40% | C 0.50% | P 0.60% | R 0.70%

JPY         Leading Index CI Jan (P) A 104.8 | C 106.1 | P 107.4

08:00     CHF        Foreign Currency Reserves (CHF) Feb C 735B | P 731B

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

13:15     USD       ADP Employment Change Feb C 200K | P 234K

13:30     USD       Nonfarm Productivity Q4 (F) C -0.10% | P -0.10%

13:30     USD       Unit Labour Costs Q4 (F) C 2.10% | P 2.00%

13:30     USD       Trade Balance Jan C -52.6B | P -53.1B

13:30     CAD       Labour Productivity Q/Q Q4 P -0.60%

13:30     CAD       International Merchandise Trade (CAD) Jan C -2.50B | P -3.2B

15:00     CAD       BoC Rate Decision C 1.25% | P 1.25%

15:30     USD       Crude Oil Inventories P 3.0M

19:00     USD       Federal Reserve Beige Book

21:45     NZD       Manufacturing Activity Q4 P 0.50%

23:50     JPY         Current Account (JPY) Jan C 1.76T | P 1.48T

23:50     JPY         GDP Q/Q Q4 (F) C 0.20% | P 0.10%

23:50     JPY         GDP Deflator Y/Y Q4 (F) C 0.00% | P 0.00%

 

Harry Hindsight

• EUR: The move into the Tokyo session saw the USD dropping back as NAFTA commentary was released to the market with the Euro quickly rising through the 1.2350 and then steadily pushing to the 1.2365 areas before drifting through to the grey hours, the move into the London session saw the lows moving off the 1.2325 areas and holding steadily around the 1.2340 level deeper into the London session, better retail sales saw the market eventually start to rise pushing through to the 1.2400 level as France rejects the UK’s plan for banks after Brexit, the Euro continued to hold through the session around the 1.2400 areas with marginal attempts to push through the 1.2420 levels but unable to push through the level clearly and slipping slowly back to finish just above the 1.2400 level.
• GBP: Cable made early gains pushing from the opening around the 1.3850 level to test through the 1.3860 level before grinding to a halt and drifting through into the grey hours testing quickly bak to the 1.3815 areas before finding some support into the London session, chatter about trade wars and Brexit saw the GBP climbing with weak stops on a push through the highs, the rise was steady and strong through to the 1.3930 levels before stopping and slowly drifting into the NYK session to test back to the 1.3875 level and then holding through to the close around the 1.3885-90 areas.
• JPY: Limited movement through the day with the market opening around the 106.20 levels and rising steadily through to the 106.45 areas before meeting resistance and the market holding the level for an hour or so before the market started to drift lower through to the grey hours, the move through to the London session continued to see some limited selling and only once the market moved deeper into the London session did the selling reverse and the market quickly rise towards the highs again, the market then held into the NYK session around the highs before starting a slow drift lower through the session to test towards the lows 105.85 areas and then ranging above the 106.00 level around the 106.20 areas to the close.
• AUD: The Oz saw quiet trading through the Asian session rising from the 0.7760 level through to the 0.7790 area before holding quietly through the Asian session, as the session ran towards the grey hours the market began to drift pushing through to the 0.7755 levels into early London before rising quickly as the USDJPY pushed higher cross buying helped the Oz pushing through the 78 cent levels and triggering minor stops on a push to the 0.7840 level and the resistance, the market drifted back and held through to the close with most of the gains intact around the 0.7820 areas to the close.

Yesterday’s premiership results

GBP       BRC Retail Sales Monitor Y/Y Feb A 0.60% | C 0.50% | P 0.60%

AUD       Current Account Balance (AUD) Q4 A -14.0B | C -12.3B | P -9.1B | R -11.0B

AUD       Retail Sales M/M Jan A 0.10% | C 0.40% | P -0.50%

AUD       RBA Rate Decision A 1.50% | C 1.50% | P 1.50%

CHF        CPI M/M Feb A 0.40% | C 0.30% | P -0.10%

CHF        CPI Y/Y Feb A 0.60% | C 0.60% | P 0.70%

EUR        Eurozone Retail PMI Feb A 52.3 | P 50.8

USD       Factory Orders Jan A -1.40% | C -1.30% | P 1.70% | R 1.80%

CAD       Ivey PMI Feb A 59.6 | C 56.3 | P 55.2

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