Daily FX Market Commentary

Andy Harrison

Good Morning,

LMAX Close

USDJPY 109.386 | EURUSD 1.13602 | AUDUSD 0.71229 | NZDUSD 0.67287 | USDCAD 1.33545 | USDCHF 0.99728 | GBPUSD 1.29386 |

LMAX highs and Lows 06.00 GMT

                                Highs | Lows

EURUSD               1.13688 | 1.13597

USDJPY                 109.800 | 109.325

GBPUSD               1.29683 | 1.29447

USDCHF               0.99766 | 0.99599

AUDUSD              0.71422 | 0.71176

USDCAD               1.33596 | 1.33251

NZDUSD               0.67851 | 0.6743

EURCHF                1.13380 | 1.13247

EURGBP               0.87823 | 0.87686

EURJPY                 124.789 | 124.232

For Today

• GBP: Another session with limited volume saw the Cable drifting from the opening around the 1.2960, dipping slowly to the 1.2950 levels through into the Tokyo session one brief rally saw the highs for the day around the 1.2965 area before slowly testing through the 1.2950 level into the grey hours, Topside congestion through to the 1.3000-20 area before the market is able to run to the possibly stronger 1.3050 level, with offers likely clustered around the level any push through is possibly going to see better stops appearing on a run at the weak 1.3100 level with limited congestion through the level the market does seem to be limited then with 1.3150 likely to see only mild offers but turning stronger on a move through there and increasing into the 1.3180-1.3200 level. downside bids light back through the 1.2900 areas with limited congestion mixed with weak stops opening the market to a quick test into the 1.2850 level before further bids start to appear in any meaningful numbers stronger bids then start to appear on any move towards the 1.2800 level that is barring strange Brexit announcements.
• JPY: USDJPY saw some steady buying once it moved into the Tokyo session, opening around the 109.36 level Sydney sellers could only manage a few ticks lower before the market moved into Tokyo and the buyers quickly appeared and couple of hours of buying saw yesterday’s losses wiped out and the market holding above the 109.65 level, mid-session spike saw the market quickly attempt the 109.80 levels before drifting through the balance of the session and heading into the grey hours pushing back to the 109.60 level. 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: Opening a little stronger the market pushed in early trading towards the 0.7130 level with Tokyo eventually pushing through the level and testing into the 0.7140 area however, after the initial push the market settled a little and took several hours to follow through on the move and gradually push to the 0.7140 level for the move into 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: A very quiet slow push from the opening around the 1.1360 level to test through to the 1.1370 areas in very light trading with very little in it. 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

USD:

US stocks fall on fresh signs of trade tensions BBG

Kudlow rejects FT report on US turning down China prep talks

Kudlow: Fulsome discussion going on now with China on IP matters

McConnell’s Office says Trump stance on shutdown fight unchanged BFW

US set to deliver on threat to set postal rates or quit treaty BGV

Kudlow: China deal hinges on enforcement, structural issues BBG

Mike Pompeo drops an anti-globalist stink bomb in Davos, with a smile Telegraph

GBP:

Minister Fox discuss replicating EU trade agreements with Ministers from around the world in Davos

UK Government says BT to announce this week it has been granted new domestic licences in China following talks between UK and China governments – RTRS

EUR:

German savings banks mull Nordlb capital injection – Handelsbatt

OIL:

OPEC Starting to make sharp reductions in supply Barkindo

Barkindo: Market has begun to positively to OPEC deal

Barkindo: Russia intends to continue to work with OPEC

Barkindo: OPEC no longer a cartel, is free, open, transparent

JPY:

Japan Dec exports to China -7% YoY BFW

NZD:

Auckland house sales slump 20% as the foreign buyers ban bites NZ Herald

AUD:

Retail foot traffic falls again in Jan following worst Dec on record – AFR

CNY:

China’s plan for Tech dominance is advancing, business groups say – WSJ

Taiwan preps China blacklist banning Huawei and ZTE – Nikkei

Today’s Data

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

NZD       CPI Q/Q Q4 A 0.10% | C 0.00% | P 0.90%

NZD       CPI Y/Y Q4 A 1.90% | C 1.80% | P 1.90%

AUD       Westpac Leading Index M/M Dec A -0.21% | P -0.09%

JPY         Trade Balance (JPY) Dec A -0.18T | C -0.29T | P -0.49T | R -0.49T

JPY         BoJ Rate Decision A -0.10% | C -0.10% | P -0.10%

JPY         All Industry Activity Index M/M Nov A -0.30% | C -0.40% | P 1.90%

11:00     GBP       CBI Trends Total Orders Jan C 4 | P 8

13:30     CAD       Retail Sales M/M Nov C -0.70% | P 0.30%

13:30     CAD       Retail Sales Ex Auto M/M Nov C -0.40% | P 0.00%

14:00     USD       House Price Index M/M Nov C 0.20% | P 0.30%

15:00     EUR        Eurozone Consumer Confidence Jan (A) C -6.5 | P -6.2

Harry Hindsight

• GBP: A slow drift from the early highs around the 1.2900 level and slipping back to hold around the 1.2890 level for several hours in quiet trading, the move to the grey hours saw the Cable under pressure and slipping steadily back towards the 1.2870 area before dipping on early London selling to make the lows for the day around the 1.2855 level, employment numbers came in above expectations and a revision to the previous month saw the market start a steady climb through the morning in London to push steadily through the 1.29 level and stall around 1.2920, the first attempt failed and the market slipped back for the move into the NYK session pushing just below the 1.2900 level again before beginning another steady rally pushing this time through the 1.2920 after a brief pause and pushing through the 1.2950 levels to range quietly to the close in a 1.2950-75 range.
• JPY: Opening just off the highs for the day the market slipped back from the 109.70 areas into the Tokyo session, dipping through into the 109.50’s and holding for the first 3 hours around the 109.60 level before dropping in steps through to the 109.40 with commentary on the weak bond buying performance of the BoJ, the market based along the 109.40 level for a very long period with a couple of brief pushes to the 109.30 areas along the way in London on the opening then repeated in early morning in NYK before pushing through once the London session ended and testing quickly through to the 109.15 level, the move to the close and a long one it was, was a slow rise back to above the 109.35 level finishing around the level for the day.
• AUD: With JPY strengthening the Oz weakened holding its opening around the 0.7160 level then dropping back into the Tokyo session to put in a tight channelled move through to the 0.7135 area before slowing and holding for the move into the grey hours, early sellers took the market through to test the 0.7120 levels before moving into the London session and holding in the 0.7125 level in a very quiet range through to early NYK, the market then managed to range around the 0.7130 level before moving to the London close and pushing back to the 0.7140 area however, once out of the way the market was again sold pushing quickly through the 0.7120 level to hover just below for the run to the close.
• EUR: Early highs into the Tokyo session saw the market pushing lightly above the 1.1370 levels for several hours before early IMF comments started to impact the Euro and the market tested quickly through to the 1.1350 areas and pushed below on the move into the grey hours, the rot was stopped as early London moved in and a slow rise through to the 1.1360 areas saw the market holding around the level into the NYK session, this time dipping sharply through into the 1.1330 areas before snapping back from the days lows, the market did set a new higher in a steady rise once London left the scene however it was as short lived as the lows and the market edged lower from there to finish the day trading around the 1.1360 level and just shy of the opening levels.

Yesterday’s Premiership results

GBP       Jobless claims change Dec A 20.8K | C 20.1K | P 21.9K | R 24.8K

GBP       Claimant count rate Dec A 2.80% | P 2.80%

GBP       Average weekly Earnings 3M YoY Nov A 3.40% | C 3.30% | P 3.30%

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

GBP       ILO Unemployment rate 3Mths Nov A 4.00% | C 4.10% | P 4.10%

GBP       Public Sector Net Borrowing (GBP) Dec A 2.18b | C 1.1B | P 6.3B

EUR        German ZEW Economic Sentiment Jan A -15 | C -18.5 | P -17.5

EUR        German Current Situation Jan A 27.6 | C 43.3 | P 45.3

EUR        Eurozone SEW Economic Sentiment Jan A -20.9 | C -20.1 | P -21

CAD       Wholesale Trade Sales MoM Nov A -1.00% | C 0.20% | P 1.00% | R 0.70%

CAD       Manufacturing sales MoM Nov A -1.40% | C -0.50% | P -0.10%

USD       Existing Home Sales Dec A 4.99M | C 5.27M | P 5.32M | R 5.33M

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

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