Daily FX Market Commentary

Good Morning,

 

LMAX Close

USDJPY 107.673 | EURUSD 1.13934 | AUDUSD 0.70055 | NZDUSD 0.66953 | USDCAD 1.34872 | USDCHF 0.98677 | GBPUSD 1.26314 |

LMAX highs and Lows 06.00 GMT

                                Highs | Lows

EURUSD               1.14120 | 1.1388

USDJPY                 108.448 | 107.517

GBPUSD               1.26473 | 1.26159

USDCHF               0.98792 | 0.98542

AUDUSD              0.70300 | 0.69943

USDCAD               1.34961 | 1.34747

NZDUSD               0.67067 | 0.66764

EURCHF                1.12549 | 1.12389

EURGBP               0.90302 | 0.90076

EURJPY                 123.587 | 122.584

For Today

  • GBP: A fairly quiet session for the Cable initially drifting from the opening to move into the Tokyo session testing through the 1.2620 level before finding some support appearing and pushing slowly to the highs above the 1.2645 level only to range in a 30-40 range for the rest of the session and into the grey hours, Downside bids limited through to the 1.2500 level after the complete wipe out yesterday, likely to see some strong congestion in that 1.2500 areas and through to the 1.2450 area and stops likely to be beyond the 1.2400 level if not cleared out for the short term, topside offers congested through to the 1.2700 areas with weak stops on a move through the level but again seeing strong congestion on any challenge of the 1.2750 areas and increasing on any move to the 1.2800 level.
  • JPY: USDJPY saw some movement with FinMin Asakawa venting his ire on the market over yesterdays margin squeeze on the JPY market, Opening around the 107.70 levels the move into the Tokyo session saw the market moving towards the 108.00 level before drifting through in early trading to make the lows just above the 107.50 area, the comments then came quick and fast and the USDJPY saw strong buying moving in and the market moving steadily through towards the 108.50 level before slowing for Tokyo lunch and a quiet move to the grey hours, downside would seem to have very little protecting it technically until the 105.00 area however, with comments from MoF the chances are the market has taken this on board and any dips through to the 107.50 level are likely to be met by strong buying with weak stops likely to quickly appear through the 107.00 level and exposing that weak downside, topside offers light through the 108.50 and then stronger offers likely to start appearing with the bottom pickers yesterday looking for the short term profits, a break above the 109.00 level could see stops appearing and the market open to retest the 109.50 level and negating yesterdays moves entirely thus opening the topside to weak stops and the 110.00 opening.
  • AUD: While volumes were strong the movements were limited with the Oz slipping a little in early Tokyo dropping back from the 0.7015 areas to test through the 70 cents level and holding broadly on the 0.6995 level for a couple of hours before a slow rise as AUDJPY buying started to slowly reappear taking the Oz through to the 0.7030 levels before holding quietly in the 0.7020-30 area to the grey hours. Downside sentimental values limited through to the 67 cents level where stronger bids may be lurking but no guarantees and one assumes the RBA is happy for the clearance of levels that took several months to rise through, strong bids likely into the 67 cents level with stops likely to be building through the level, topside offers congested through the 70 cents levels with the 0.7040-60 area likely to be reasonably strong and increasing from there into the 0.7080-0.7100 level before weak stops start to appear on a move through the 0.7120 levels.
  • EUR: A quiet range around the 1.1400 levels through to the grey hours, with a quiet opening and move through to the Tokyo session pushing through to the 1.1410 levels but unable to test through the areas and slowly drifting after a couple of static hours to make the lows just through the 1.1390 level before a long drawn out sideways movement to the grey hours. Downside bids down through the 1.1300-1.1280 levels likely to be strong any push through the level will see limited congestion into the Nov 1.1220 level and likely strong through to the figure level, topside offers light but congested through to the 1.1480 before stronger offers appear through to into the 1.1500 areas.

 

Overnight News

IMF:

Global debt reaches new highs – IMF

GBP:

Poll shows most Conservatives would choose no deal Brexit – Telegraph

CNY:

Chinese developers hit the panic button – AFR

CNY/USD:

China-US to hold vice minister level trade talks 7-8 Jan

JPY:

BoJ set to trim inflation outlook for next 2 yrs – Nikkei

FinMin Asakawa comments on FX volatility, NOT considering meeting BoJ

Asakawa says will take appropriate steps on forex if needed

Asakawa: FX moves are very volatile, I am worried

Asakawa: G7 and G20 have confirmed cooperation on FX is possible if needed

EUR:

Italian bonds slump as swelling debt sales haunt investors – BBG

Axel Weber (UBS Chairman) doesn’t see ECB raising rates before end of 2019 – BBG

USD:

US house passes spending bills to end partial shutdown

 

Today’s Data

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

GBP       BRC Shop Price Index Y/Y Dec A 0.30% | P 0.10%

JPY         PMI Manufacturing Dec (F) A 52.6 | C 52.4 | P 52.4

CNY        PMI Services Dec A 53.9 | C 53.1 | P 53.8

08:45     EUR        Italy Services PMI Dec C 50.1 | P 50.3

08:50     EUR        France Services PMI Dec (F) C 49.7 | P 49.6

08:55     EUR        German Unemployment Change Dec C -13K | P -16K

08:55     EUR        German Unemployment Claims Rate Dec C 5.00% | P 5.00%

08:55     EUR        Germany Services PMI Dec (F) C 52.5 | P 52.5

09:00     EUR        Eurozone Services PMI Dec (F) C 51.4 | P 51.4

09:30     GBP       Mortgage Approvals Nov C 66K | P 67K

09:30     GBP       Money Supply M4 M/M Nov C 0.60% | P 0.70%

09:30     GBP       Services PMI Dec C 50.8 | P 50.4

10:00     EUR        Eurozone PPI M/M Nov C -0.20% | P 0.80%

10:00     EUR        Eurozone PPI Y/Y Nov C 4.10% | P 4.90%

10:00     EUR        Eurozone CPI Estimate Y/Y Dec C 1.80% | P 2.00%

10:00     EUR        Eurozone CPI Core Y/Y Dec (A) C 1.00% | P 1.00%

13:30     CAD       Net Change in Employment Dec C 5.0K | P 94.1K

13:30     CAD       Unemployment Rate Dec C 5.70% | P 5.60%

13:30     CAD       Raw Materials Price Index M/M Nov P -2.40%

13:30     CAD       Industrial Product Price M/M Nov P 0.20%

13:30     USD       Change in Non-farm Payrolls Dec C 178K | P 155K

13:30     USD       Unemployment Rate Dec C 3.70% | P 3.70%

13:30     USD       Average Hourly Earnings M/M Dec C 0.30% | P 0.20%

14:45     USD       Services PMI Dec (F) C 53.4 | P 53.4

15:30     USD       Natural Gas Storage P -48B

16:00     USD       Crude Oil Inventories P 0.0M

 

Harry Hindsight

  • GBP: Opening nervously in a thin market, strong JPY buying saw the GBP drop quickly from above the 1.2610 area to test below the 1.2450 in a very short period, with strong GBPJPY selling triggering stops in GBP across the board EURGBP squeezing to the 0.9100 level with limited liquidity to hold levels, the market did bounce quickly back above the 1.2500 level once pricing in the market started to firm and pushed into the Tokyo bank holiday testing the 1.2550 level and once there traded in a very narrow range through to the London session, some light buying from that opening saw the market slowly filling the gap on our charts through to the 1.2590 areas before drifting a little on the move to the NYK opening, mixed numbers helped Cable to retest the 1.2600 areas and late into the London session pushing through to make highs of the day just short of the 1.2650 level before holding quietly around the 1.2630 areas through to the close.
  • JPY: The motivator for the movement early in the session with talk of weak liquidity partly to blame however, 1hrs trading saw 20 x the daily volume in TRYJPY I was told so liquidity while an issue was not as thin as some would suggest, the opening was slightly lower and trickled to the 108.80 level before starting its strong move lower dipping quickly through the 108.00 level and liquidity practically disappearing with most US banks calling the lows around the 105.20 areas, several minutes of wide bids and offers eventually saw the pricing firming around the 106.50 areas and starting a steady rise through the Tokyo bank holiday opening pushing through to the 107.70 levels and ranging in a 30 pip range for a couple of hours before dipping again, and while the market was on the back foot through to the grey hours it didn’t break hard to the downside as it did in earlier trading and slipped to below the 107 levels before early London moved in to start a steady climb through to test towards 108 in early trading, the market moved and ranged through into the NYK session holding the 107.50-108.00 levels, US numbers saw USDJPY dip quickly through to the 107.20 levels on mixed data and then slowly recovering and eventually breaking through the 108 level into the London close before returning to range in the 107.50-108.00 and a quiet finish to the day.
  • AUD: Carry JPY trading saw the Oz dropping off quickly taking the market through to the 0.6900 areas before liquidity disappearing the market started to firm up just below the 0.6750 levels before bouncing back above the 68 cents level and gapping through to above 0.6850 and a steady rise through to fill the gap and the 0.6940 and the first two hours of trading over with, the market then slowly pushed through to the 0.6950 ranging in the 30-50 levels through to the London session and although early London bought the Oz the rise through to the 0.6970 was slow and the market then held through to the NYK session holding above the 0.6950 areas. Mixed US numbers saw the Oz extending its rally and making highs for the day around the 0.7020 level and a slow drift through to the close.
  • EUR: The most stable of the currencies with the opening around the 1.1350 level and dropping back to the 1.1315 areas on the initial dip and then running to the to the Tokyo session again testing towards the 1.1300 level before recovering for the second time and pushing ahead as the market firmed up and carried the rally through to the 1.1370 level before slowing for the move into the grey hours, the market then ranged through early London pushing to the 1.1380 levels having dipped a few times to the 1.1355 area however, the move to the NYK session saw the market testing through the 1.1350 opening levels again before early NYK pushed lightly through to the US numbers, a slight gap then quick move through to the 1.1410 areas before ranging through to the close remaining close to the 1.1400 level.

 

Yesterday’s Premiership results

CHF        PMI Manufacturing Dec A 57.8 | C 56.9 | P 57.7

EUR        Eurozone M3 Money Supply Y/Y Nov A 3.70% | C 3.80% | P 3.90%

GBP       UK Construction PMI Dec A 52.8 | C 52.9 | P 53.4

USD       Challenger Job Cuts Y/Y Dec A 35.30% | P 51.50%

USD       ADP Employment Change Dec A 271K | C 175K | P 179K | R 157K

USD       Initial Jobless Claims (DEC 29) A 231K | C 215K | P 216K | R 221K

USD       ISM Manufacturing Dec A 54.1 | C 58.4 | P 59.3

USD       ISM Prices Paid Dec A 54.9 | C 58 | P 60.7

USD       ISM Employment Dec A 56.2 | P 58.4

 

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