Daily FX Market Commentary

Andy Harrison

Good Morning,

LMAX Close

USDJPY 109.511 | EURUSD 1.14562 | AUDUSD 0.7248 | NZDUSD 0.68918 | USDCAD 1.31001 | USDCHF 0.99551 | GBPUSD 1.30804 |

LMAX highs and Lows 06.00 GMT

                                Highs | Lows

EURUSD               1.14604 | 1.14416

USDJPY                 109.787 | 109.433

GBPUSD               1.30864 | 1.30625

USDCHF               0.99719 | 0.99465

AUDUSD              0.72525 | 0.72232

USDCAD               1.31057 | 1.30865

NZDUSD               0.69044 | 0.6886

EURCHF                1.14112 | 1.13993

EURGBP               0.87727 | 0.87509

EURJPY                 125.625 | 125.366

For Today

• GBP: A quiet start to the day with early buyers into the Tokyo session making the high just beyond the 1.3085 level and then Tokyo selling the market back to the 1.3070 areas and slowly rising through towards the opening levels again into midsession, a slow drift for the rest of the session with very little movement to trade into the grey hours towards the lows. Downside congestion on any dip through the 1.3050 level is likely to continue through to the 1.3020 area and possibly stronger bids appearing in a normal market, a push through sees similar sentimental bids into the 1.3000 area with weak stops on a move through the level and opening the market to a deeper drop to stronger bids into the 1.2900 areas, topside offers light through to the 1.3200 area with offers then appearing on moves above the level and weak stops possibly through the 1.3220 level areas and limited sentimental offers around the 1.3250 area and stronger into 1.3300.
• JPY: A little drift from the opening testing to the 109.45 area and then pushing to the 109.60 on the Tokyo opening the market then struggled for several hours with the level before slowly grinding through and moving through to the 109.80 areas for the grey hours, topside through to the 109.80-110.00 levels, a test through will likely see weak stops through the level and the market quickly pushing into the 110.40-60 levels before finding limited offers protecting the 111.00 levels. Downside bids congested through to the 108.50 levels with stronger bids in the area however, a push through will likely see weak stops appearing and the market likely to quickly test the 108.20-00 areas and possibly stronger bids reappearing, with bids below likely to be sentimental however, don’t forget the possibility of importers likely to find the levels attractive.
• AUD: Poor numbers saw the market dropping from the 0.7250 levels on the release after a quiet start to the session trading quietly around the 0.7245-50 areas testing lightly to the 0.7255 area to make the highs for the numbers, quickly hitting the 0.7230 level the market bounced off the level before drifting from the level to test into the 0.7220’s before holding through to the grey hours, Topside offers into the 73 cents level with congestion through the area and into the 0.7320 areas, a mix of weak stops and congestion continues with any move through to the 0.7340-60 likely to meet stronger offers and those offers then increasing through the 0.7380 areas. Downside may see some light congestion back into the 72 cent levels weak stops likely on a dip through the 0.7180-70 areas and the market again pushing towards the stronger bids through the 0.7140-00 levels.
• EUR: Opening around the 1.1455 area the market held quietly deep into the Tokyo session before starting a slow steady drift through the session to test into the low 1.1440’s before holding quietly through to the grey hours, , Topside offers for the moment around the current levels with weak stops likely on a push through the 1.1520 areas, some light congestion through to the 1.1550 areas and likely to increase the closer the market moves through to the 1.1560 area and strong offers to 1.1600 downside bids light back through the 1.1450 areas with congestion in that area however, a failure to capitalize on the topside break could see stronger stops appearing on any push to or through the 1.1400 levels with further congestion through the 1.1350 level and the bottom side strong bids from then on.

Overnight News

VEH/USD:

Maduro defies Trump on Venezuela with a vow to resist intervention

EUR:

Crisis brewing in Italy will lead to default, exit from the Euro or both Telegraph

Germany could face budget deficits for years to come – Bild

USD:

Fed’s Kashkari says Powell “coming around to wait and see view” BBG

AUD:

Online retail sales weaker in December 1.4 vs. prev. month 2.9% AFR

Australia inquiry into bank misconduct, recommends against structural separation

Inquiry refers 24 misconduct cases to the regulators

Govt. to support all 76 recommendations – Frydenberg

GBP:

UK’s Business Secretary tells May to rule out no deal Brexit after Nissan cancels production of new vehicle FT

Today’s Data

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

CNY        Caixin China PMI Services Jan A 53.6 | C 53.3 | P 53.9

NZD       Building Permits M/M Dec A 5.10% | P -2.00% | R -1.90%

JPY         Monetary Base Y/Y Jan A 4.70% | C 4.60% | P 4.80%

AUD       TD Securities Inflation M/M Jan A -0.10% | P 0.40%

AUD       Building Approvals M/M Dec A -8.40% | C 2.10% | P -9.10% | R -9.80%

09:30     EUR        Eurozone Sentix Investor Confidence Feb C -1.1 | P -1.5

09:30     GBP       Construction PMI Jan C 52.6 | P 52.8

10:00     EUR        Eurozone PPI M/M Dec C -0.60% | P -0.30%

10:00     EUR        Eurozone PPI Y/Y Dec C 3.30% | P 4.00%

15:00     USD       Factory Orders Dec C 0.30% | P -2.10%

Harry Hindsight

• GBP: Opening just below the highs the market tested through into the Tokyo session pushing through the 1.3110 levels in a minor run before dropping back through the figure areas dipping on a sharp move to the 1.3080 areas before spending a quiet Asian session recovering the 1.3100 into the grey hours, grey hours buying saw the market push to make fresh highs a pip or two beyond the early Tokyo sessions, the move into London saw the market falling away sharply as comments from Nissan left the government in no uncertain terms of the cost to car production in the UK for the time being, the market dropped to the 1.3050 areas and held in a 20 pip range then through to the NYK session, holding between the 1.3050-70 areas, NYK were buyers from the opening and the market started a choppy rally through to the 1.3100 areas again and held for a couple of hours but was unable to push through and drifted to the close holding around the 1.3080 levels.
• JPY: Quiet session through the Asian session trading around the opening 108.85 levels with minor pushes above the 108.95 level but unable to break higher and one minor dip to the 108.75 area, the move through the grey hours was just the same and it wasn’t until the NYK session that the market started to lift with the USDJPY pushing steadily through the 109 levels, the market broke through the 109.15 levels and triggered weak stops on a move through to the 109.50 level and then held through on a long quiet period to the close.
• AUD: Limited range through the day, with the Oz trading quietly pre-Tokyo then making a move to the 0.7280 areas before dropping quickly back through the 0.7270 opening to test steadily to the 0.7240 areas, the market ran around the 40 level through to the grey hours, limited rally through into the London session pushing through to the NYK session holding the 0.7260 areas, move into the NYK session saw the market pop to the highs testing through the 0.7280 area before dipping back to the 0.7260 level and following through to test towards the lows, the market eventually pushed to the 0.7260 level again into the London close and a slow drift through to the close and the 0.7250 areas.
• EUR: Quiet range through from the opening around the 1.1450level ranging in the 1.1435-50 level through to the London session before making a steady move through to the 1.1470 levels with unchanged PMI numbers and Italy being the only real change and strangely having little impact on the Eurozone number, the market then traded tightly around the 1.1470 level before moving into a choppy period on the move into the NYK session, US numbers seemed to exaggerate the moves dipping through to the 1.1450 levels and rising quickly to above the 1.1480 areas on a couple of moves and the London close seeing strong moves through to the 1.1490 level to make the highs for the day before drifting through to close just above the opening levels.

Yesterday’s Premiership results

AUD       AiG Performance of Manufacturing Index Jan A 52.5 | P 49.5 | R 50

JPY         Jobless Rate Dec A 2.40% | C 2.50% | P 2.50%

AUD       PPI Q/Q Q4 A 0.50% | C 0.60% | P 0.80%

AUD       PPI Y/Y Q4 A 2.00% | P 2.10%

JPY         PMI Manufacturing Jan (F) A 50.3 | C 50 | P 50

CNY        Caixin PMI Manufacturing Jan A 48.3 | C 49.7 | P 49.7

CHF        SECO Consumer Confidence Jan A -4 | C -5 | P -6

CHF        Retail Sales Real Y/Y Dec A -0.30% | C 0.40% | P -0.50% | R -0.60%

CHF        PMI Manufacturing Jan A 54.3 | C 56.6 | P 57.8

EUR        Italy Manufacturing PMI Jan A 47.8 | C 49 | P 49.2

EUR        France Manufacturing PMI Jan (F) A 51.2 | C 51.2 | P 51.2

EUR        Germany Manufacturing PMI Jan (F) A 49.7 | C 49.9 | P 49.9

EUR        Eurozone Manufacturing PMI Jan (F) A 50.5 | C 50.5 | P 50.5

GBP       PMI Manufacturing Jan A 52.8 | C 53.5 | P 54.2

EUR        Eurozone CPI Core Y/Y Jan (A) A 1.10% | C 1.00% | P 1.00%

EUR        Eurozone CPI Estimate Y/Y Jan A 1.40% | C 1.40% | P 1.60%

USD       Change in Non-farm Payrolls Jan A 304K | C 165K | P 312K | R 222K

USD       Unemployment Rate Jan A 4.00% | C 3.80% | P 3.90%

USD       Average Hourly Earnings M/M Jan A 0.10% | C 0.30% | P 0.40%

CAD       Manufacturing PMI Jan A 53 | P 53.6

USD       Manufacturing PMI Jan (F) A 54.9 | C 54.9 | P 54.9

USD       ISM Manufacturing Jan A 56.6 | C 54.3 | P 54.1

USD       ISM Prices Paid Jan A 49.6 | C 58 | P 54.9

USD       ISM Employment Jan A 55.5 | P 56.0

USD       Construction Spending M/M Dec A 0.80% | C 0.20% | P -0.10%

USD       U. of Mich. Sentiment Jan (F) A 91.2 | C 90.7 | P 90.7

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