Daily FX Market Commentary

Good Morning,

 

LMAX Close

USDJPY 108.882 | EURUSD 1.13439 | AUDUSD 0.69854 | NZDUSD 0.66633 | USDCAD 1.35791 | USDCHF 0.99007 | GBPUSD 1.26087 |

LMAX highs and Lows 06.00 GMT

                                Highs | Lows

EURUSD               1.13717 | 1.1305

USDJPY                 108.953 | 105.795

GBPUSD               1.26171 | 1.24125

USDCHF               0.99093 | 0.9859

AUDUSD              0.69849 | 0.67392

USDCAD               1.36580 | 1.35496

NZDUSD               0.67095 | 0.65879

EURCHF                1.12445 | 1.11857

EURGBP               0.91166 | 0.8997

EURJPY                 123.517 | 120.696

For Today

  • GBP: Opening in the Asian market was Carnage, Cable opened quietly just above  the 1.2600 level and discussions over what followed continue however, it was all JPY related with some crosses such as TRYJPY showing 20x there normal volume,  the market dropped through the 1.2570 and quickly gapped down to below the 1.2450 levels with the market widening excessively at that point but starting a bounce back strongly in limited liquidity holding the 1.2550 level and trading widely into the Tokyo bank holiday session once through into deeper liquidity the market settled into a quiet range around the 1.2550 level and unable to do anything further. Downside open through to the 1.2400 level after the flash crash, with possible stronger bids into that level with limited congestion below opening up possibilities of a deeper move if any further actions like the start were to occur with possibly better bids available into 1.2300 areas. Topside offers light through to the 1.2650-1.2700 level with stronger offers the closer the market move towards that level, a push through will likely see stronger congestion continuing through to the 1.2750 areas.
  • JPY: The end of the session should have warned people that something was a little awry, the reopening for the new day saw the JPY rallying across the board with USDJPY quickly dropping lower in what has been termed a flash crash, pricing disappeared from the gap lower with discussions still going on about what the low was, with our low into the new session showing around the 105.795 level some are calling 105.20 as the true low in the interbank areas, the market bounced off the lows and once above the 106.50 level traded more steadily to push through to fill the gap on the charts towards the 107.90 area before holding through into the Tokyo bank holiday session, once deep into the session pressure from Emini’s saw the USDJPY in particular coming again under pressure and dipping through to the 106.80 levels for the move to the grey hours, downside bids through the 105.00 level still remain and the lows from Mar2018 with those bids likely to be strong through to the 104.70-80 areas before the market sees strong stops and opens to another deeper step through to the 103.50 area with only sentimental values available, topside offers weak through to the 109.00 areas however, it may be possible that stronger offers could be present with longer term longs and exporters drop to the areas having seen todays moves. Any push through the level will see congestion continuing for a good distance and increasing into the 110.00 level.
  • AUD: With JPY buying against everything the AUDJPY was quickly much lower and the Oz dropped quickly from the opening 0.6990 level to push quickly through the 69 cents level and stops a plenty being triggered on a very deep move through the 0.6750 level before finding some support starting to move in to slow the descent, the market bounced filling in the gap and quickly rising to the 69 cents level only slightly slower than the descent pushing through the level to then slowly rise into the Tokyo session testing through the 0.6920 areas and then drifting higher to move through ranging in the 0.6930-50 areas to the grey hours with volumes a lot larger than normal. Topside offers into the 0.6950 areas light with possibly further sellers following sentiment through to the 0.7000 areas with weak stops possibly on a break back through the 0.7020 areas however, the topside could see further weak selling until moving through the 0.7060 area and weak stops likely to start appearing. Downside bids limited through to the 67 cents level with 0.6650 through to the 0.6600 level likely to find stronger bids appear and lows not seen since 2008/9.
  • EUR: A lesser reaction overall for the Euro to the movements in JPY with the market initially with a dip through to the 1.1305 levels as some weaker longs were squeezed out, the market pushed to the 1.1350 level in reply to the initial selling before drifting off again and setting lows around the 1.1305 area, the market held the level for the second time and the move into the Tokyo session saw the market rising steadily through to the 1.1350 level pausing and eventually slowly pushing through to make a high just above the 1.1370 level and holding in the 1.1360-70 areas to the grey hours. Congestive downside bids into the 1.1300-1.1280 areas with an old trendline showing around the 1.1275 areas likely to see stops below, a breakthrough could see a run towards the Nov lows and the 1.1220-00 areas likely to be strongly contested. Topside offers light through to the 1.1400 areas with some congestion around the level but limited and stronger offers not likely to be seen until the market pushes beyond the 1.1440 area and increasing in size through to the 1.1500 areas.

 

Overnight News

CNY:

China slowdown sends industrial metals to two-year lows.

Taiwan leader rejects unification under heightened pressure from China’s Xi

AUD:

Aussie traders getting serious about an RBA cut – BBG

USD/CNY:

Apple commentary on China’s economy relating to their slashing Q1 revenue guidance

EUR:

ECB steps in at Italian bank as country teeters on recession – Telegraph

 

Today’s Data

Actual – A | Consensus – C | Previous – P | Revised R | all timings GMT/UTC

08:30     CHF        PMI Manufacturing Dec C 56.9 | P 57.7

09:00     EUR        Eurozone M3 Money Supply Y/Y Nov C 3.80% | P 3.90%

09:30     GBP       UK Construction PMI Dec C 52.9 | P 53.4

12:30     USD       Challenger Job Cuts Y/Y Dec P 51.50%

13:15     USD       ADP Employment Change Dec C 175K | P 179K

13:30     USD       Initial Jobless Claims (DEC 29) C 215K | P 216K

15:00     USD       Construction Spending M/M Nov C 0.40% | P -0.10%

15:00     USD       ISM Manufacturing Dec C 58.4 | P 59.3

15:00     USD       ISM Prices Paid Dec C 58 | P 60.7

15:00     USD       ISM Employment Dec P 58.4

 

Harry Hindsight

 

  • GBP: Opening around the 1.2750 level early trading in a illiquid first day into the New year saw the high on the opening above the 1.2770 level and then trading around the 1.2750 level into the Tokyo session, a slow drift through the session saw the market slipping through to trade around the 1.2730 areas before starting a slow climb back to the 1.2750 areas for the move into the grey hours and a limited test towards the opening level highs, move from there into the London session saw the market again holding the 1.2750 level and dropping quickly down to the 1.2700 level trading quietly around the level for several hours before again starting a slow slide lower through to the NYK opening testing the 1.2650 areas, NYK sold it through to the 1.2600 level and although volumes were reasonable the market remained in a tight range around the level to the close.
  • JPY: USDJPY opened almost unchanged from the close on NYE early trading saw the market push lightly above the 109.70 levels before slipping into the Tokyo opening holding around the 109.60 level for a couple of hours before dipping away to hold the 109.35 level through to the move into the grey hour, dipping a little the market pushed through to the 109.20 areas before heading into the London session and dropping back through to the 108.70 levels as concerns for margin accounts ran through the market however, this concern seemed to be limited to Asia and the market started a slow recovery from those lows through the day with the market in London running back to the 109.30 level and then dipping into NYK and again pushing higher to test towards the 109.50 level before early selling into the Asian session finished the day off leaving the market back through the 109.00 level.
  • AUD: The Oz opened on its highs around the 0.7050 areas with talk of the market expecting the RBA’s next move to be a cut and although early trading was slow with the market slipping slowly through to the 0.7040 areas before dropping back quickly on the weaker PMI numbers from China testing to the 70 cents area before holding and eventually starting a steady rise through to the grey hours testing towards the opening levels, the move into the London opening saw selling moving in and the market again holding just above the 0.7000 level through to the NYK session before dropping through quickly to the 0.6980 areas, the bids held and the market slowly moved to the London session close testing through the 70 cents level again and ranging to the close around that level.
  • EUR: A quiet session for the Euro initially with the Asian market happy to sell the Euro through to deep into the session from the opening highs around the 1.1465 level to push lightly through the 1.1450 areas, the move towards the grey hours and news that Italian Banco Carige was suspended from the stock market while discussions about finances by the Italians seemed to spark a rally in the Euro or maybe the rally was just contrary to the market news and fund opening new long positions saw the Euro pushing through to the grey hours testing the 1.1495 area, London opening saw the end of the buying slipping off from those highs and once back through the 1.1480 level returning sharply to the 1.1450 and following through to clear the weak stops into the 1.1425 level before basing on that level through to NYK, NYK were not buyers and strong sellers quickly appeared to initially test the 1.1400 and then continuing through the level at a brief pause and pushing through to the 1.1350 area and ranging in that area through to the London close before dipping through to the 1.1325 level and recovering from there to a close just below the 1.1350 areas.

 

Yesterday’s Premiership results

CNY        Caixin PMI Manufacturing Dec A 49.7 | C 50.3 | P 50.2

EUR        Italy Manufacturing PMI Dec A 49.2 | C 48.4 | P 48.6

EUR        France Manufacturing PMI Dec (F) A 49.7 | C 49.7 | P 49.7

EUR        Germany Manufacturing PMI Dec (F) A 51.5 | C 51.5 | P 51.5

EUR        Eurozone Manufacturing PMI Dec (F) A 51.4 | C 51.4 | P 51.4

GBP       PMI Manufacturing Dec A 54.2 | C 52.6 | P 53.1 | 53.6

CAD       Manufacturing PMI Dec A 53.6 | P 54.9

USD       Manufacturing PMI Dec (F) A 53.8 | C 53.9 | P 53.9

 

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