Daily FX Market Commentary

Andy Harrison

Good Morning,

LMAX Close

USDJPY 109.674 | EURUSD 1.13658 | AUDUSD 0.71588 | NZDUSD 0.6730 | USDCAD 1.3266 | USDCHF 0.99722 | GBPUSD 1.2893 |

LMAX highs and Lows 06.00 GMT

                                Highs | Lows

EURUSD               1.13730 | 1.13558

USDJPY                 109.686 | 109.385

GBPUSD               1.29050 | 1.28713

USDCHF               0.99820 | 0.99714

AUDUSD              0.71602 | 0.7134

USDCAD               1.33184 | 1.32912

NZDUSD               0.67341 | 0.67212

EURCHF                1.13427 | 1.13294

EURGBP               0.88241 | 0.88132

EURJPY                 124.705 | 124.25

For Today

• GBP: A quiet range for the Cable drifting from early attempts at the 1.2900 level and slipping into the Tokyo session just below the 1.2890 area, another brief spike to the figure seemed indicative of a decent size ticket going through the market however, it was quickly dealt with and the market moved into mid-session holding around the 1.2890 level, IMF commentary eventually filtered through add to which the market receiving rather belatedly news that some Brexit MPs are talking about resigning, call me cynical but you really do have to be unhappy in your job to do that with meaning and something tells me the bluster is just that, the market dipped through to the 1.2775 level and then held through to the grey hours, Topside see’s weakened offers through the 1.2900 area with a push through the 1.2920-30 areas likely to see weak stops and the market open then for a run towards the 1.3000 level with stronger offers likely to appear through the 1.2970-80 areas and into the 1.3000 level, likely to see some congestion on any more through to the 1.050 level but that level likely to open up a stronger move and the topside mildly offers through to the 1.3100 level. downside bids light through to the 1.2800 levels with strong congestion likely to be increasing, any push through the level will see the congestion continuing however, only comments on Brexit being strongly negative will see the levels tested for the moment, below and into the 1.2750-00 areas likely to increasingly difficult unless its earth shattering. MPs resigning might do it.
• JPY: Very little movement to the topside with the market running towards the 109.70 level but dipping on the opening in Tokyo to range around the 109.60 level through deep into the session, with concerns that the BoJ is slackening off from bond buying the USDJPY dipped through in the run for the grey hours pausing at the 109.50 level before testing to the 109.40 in the final hour, Limited bids into the 109.20-00 areas will open the downside with weak stops mingled with congestive bids on a move through the 108.80 level with stronger bids not suspected until through the 108.20 areas. Topside offers into the 109.80-110.00 level with a push through the level likely to open a stronger move through to the 110.50 area and lighter congestion then to the 111.00 level.
• AUD: A quiet opening saw the market ranging tightly just below the 0.7160 levels and dipping once the JPY started to strengthen and the IMF comments impacted on the market, the market eventually found support into the 0.7135 area and ran for a couple of hours in a tight range basing on that level to the grey hours, Topside is likely to see strong congestion through the 72 cents level and into the 0.7220 areas where the market has really refused to push through over the past two months, a test to the 0.7240 areas could see strong stops meeting the usual offers around the sentimental 0.7250 area however the market would appear to be weak beyond that level and open to a push to the 73 cents level. downside bids light through to the 0.7120 areas and building through to 0.7080 however, a dip through will likely see stops appearing and very little to stop the market dipping into the 70 cents level.
• EUR: IMF comments put USD in control of the market with the Euro initially holding around the 1.1370 levels having moved off the opening around the 1.1365 area, however, as with the rest of the market it reacted to the IMF news released earlier in the day with the Euro then slipping lower with believe it or not Eurozone growth reduced by 0.3% for 2019 and the exact same for Germany, the market held around the 1.1355 levels through into the grey hours with reduced volume moving through. Congestion remains to the downside and the market seems to really like this 1.1280-1.1480 area having traversed it multiple times over the past 3 months, for the moment any move to the downside is likely to see stronger bids moving in around the 1.1350 level and continuing through to the 1.1280 areas possible strong stops through the level could see the market opening as new lows for the year appear however, the downside still remains bids on any further selling, topside offers seem to be weakly congested until the market moves back above the 1.1400 level with any movement towards the 1.1450 area likely to find increased selling appearing, a push through will not alleviate the situation with the likelihood of stronger offers on any attempt to push for the 1.1480-1.1500 levels.

Overnight News

CNY/USD:

US to proceed in seeking Huawei CFO extradition Globe

US-China trade talks falling short on make or break IP issues – BBG

CNY:

China retail, real estate slows more sharply than overall economy

China’s Xi warns of serious dangers as risks mount

AUD:

Australia faces world economic slowdown AFR

GBP:

No deal Brexit boost: Quitting without deal most popular option for public Express

Amber Rudd tells PM May dozens of ministers are ready to quit over Brexit vote- Times

USD/KRW:

Report identifies another secret N. Korean missile site one of twenty WPT

NZD:

NZ services sector grew at slower pace in Dec – BFW

CHF:

SNB total sight deposits CHF576.3B week ending Jan 18

EUR:

Bundesbank sees muted 4Q growth supported by private consumption

IMF:

IMF maintains 2019 US economic growth forecast at 2.5%

IMF lowers 2019 Euro area forecast to 1.6% from 1.9% Oct est.

IMF leaves unchanged 2019 Forecast for 6.2% China growth

IMF sees downside tilt to global growth risks, cites trade

IMF Cuts German growth forecast to 1.3% from 1.9% Oct est.

IMF Cuts 2019 world growth outlook to 3.5%, slowest in 3yrs

Today’s Data

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

0930       GBP       Jobless claims change Dec C 20.1K | P 21.9K

0930       GBP       Claimant count rate Dec P 2.80%

0930       GBP       Average weekly Earnings 3M YoY Nov C 3.30% | P 3.30%

0930       GBP       Weekly Earnings ex Bonus 3M YoY Nov C 3.30% | P 3.30%

0930       GBP       ILO Unemployment rate 3Mths Nov C 4.10% | P 4.10%

0930       GBP       Public Sector Net Borrowing (GBP) Dec C 1.1B | P 6.3B

1000       EUR        German ZEW Economic Sentiment Jan C -18.5 | P -17.5

1000       EUR        German Current Situation Jan C 43.3 | P 45.3

1000      EUR        Eurozone SEW Economic Sentiment Jan C 20.1 | P -21

1330       CAD       Wholesale Trade Sales MoM Nov

1330      CAD       Manufacturing sales MoM Nov C -0.50% | P -0.10%

1500       USD       Existing Home Sales Dec C 5.27M | P 5.32M

Harry Hindsight

• GBP: For the most part a quiet day with the market taking a breather from Brexit rumours and comments, opening around the 1.2875 levels the market made early 1.2880 area highs before slipping lower into the Tokyo session and testing back to the 1.2850 levels, the market then recovered and spent a lot of time rising from the early bounce to 1.2860 ranging quietly through to the grey hours regaining the opening levels, London opening saw the market again in decline and testing through to the 1.2830 level in weak selling with what looked like the drag of the Euro however, once it hit the lows the market again attracted buyers with several banks talking about a stronger Cable over the coming months, whether this is them talking their own books remains to be seen but the market did recover to the opening levels for the move into the NYK session and some early buying extended the highs through to the 1.2885 areas before drifting for a short period, similar pattern to yesterday saw a quick bounce higher into the NYK option cut and the Cable quickly pushing to the 1.2900and sneaking through to test just above the 1.2910 level before a long drift to the close with the market holding into the close just below the figure area.
• JPY: A very quiet day for the USDJPY with the market opening on its highs for the day and dropping back into the Tokyo opening to push the 109.60 level a minor move up saw the market dropping back as supply for the fix impacted and the lows for the day were set testing just through the 109.50 levels bouncing back to the 109.70 area then setting in for a quiet tight range through to the end of the session holding around the 109.60 levels and eventually holding for half the day above that line and never crossing the 109.70 area.
• AUD: Limping from the opening the Oz dipped into the Tokyo fix testing through to the 0.7150 level bouncing back a little and then snapping higher on the CNY GDP number to push through the 0.7180 levels, the spike was short lived and the market drifted back to hold around the 0.7170 levels through to the London opening where day traders moved in to sell the market back towards the 0.7150 areas and holding in the area through to the NYK session were a slow several hours saw the market drift through to make the 0.7140 level lows, the market quickly pushed back from the level and traded to the 0.7160 before falling asleep holding in a very narrow range to the close just below that 60 level.
• EUR: Quiet opening with Tokyo moving in and quickly taking the market from the 1.1365 level to above the 1.1375 areas, a slow creep to test the 1.1380 level then saw a quiet move through the balance of the session to the Euro early numbers, with a weak number helping the market to spike through to the 1.1390 levels and holding for an hour or so before the sellers showed up with economic woes and the market dropped just into the London session pushing through the first hour to test the 1.1365 areas and the opening levels, returning again to the level after a brief rise and pushing through to make the lows just above the 1.1355 level, the move for a very long run to the close saw the market trading in a narrow 1.1365-70 levels.

Yesterday’s Premiership results

GBP       Rightmove house prices A 0.40% | P -1.50%

CNY        Retail sales YoY Dec A 8.20% | C 8.10% | P 8.10%

CNY        Industrial production YoY Dec A 5.70% | C 5.30% | P 5.40%

CNY:      Fixed assets Ex Rural YTD YoY Dec A 5.90% | C 6.00% | P 5.909%

CNY        GDP YoY Q4 A 6.40% | C 6.40% | P 6.50%

EUR        German PPI MoM Dec A -0.40% | C -0.10% | P 0.10%

EUR        German PPI YoY Dec A 2.70% | C 2.90% | P 3.30%

*US numbers affected by Government shutdown so may not appear when they are supposed to.

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