Daily FX Market Commentary

Andy Harrison

Good Morning,

LMAX Close

USDJPY 110.854 | EURUSD 1.13375 | AUDUSD 0.71634 | NZDUSD 0.6872 | USDCAD 1.31769 | USDCHF 1.00085 | GBPUSD 1.30503 |

LMAX highs and Lows 06.00 GMT

                                Highs | Lows

EURUSD               1.13526 | 1.13327

USDJPY                 110.856 | 110.593

GBPUSD               1.30643 | 1.30271

USDCHF               1.00150 | 0.99932

AUDUSD              0.72070 | 0.70997

USDCAD               1.31989 | 1.31642

NZDUSD               0.68769 | 0.68221

EURCHF                1.13610 | 1.13471

EURGBP               0.87030 | 0.86906

EURJPY                 125.797 | 125.352

For Today

• GBP: A tentative range with the market opening around the 1.3050 level and unable to find any traction on the move above the level and slowly drifted through into the Tokyo session testing through to the 1.3030 areas and holding through to midsession before starting a slow rise back to the opening levels, the AUD falling out of bed saw GBP dragged a little lower for the move into the grey hours just holding the lows. Topside offers through to the 1.3100 level with limited congestion through the figure and some weak stops likely through the level and the market open a little through to the 1.3150-60 areas where the market starts to increase on any move through to the 1.3200-20 areas with likely stronger stops on a break through that level, downside bids light through to the 1.2950 level with limited congestion and weak stops likely to appear on a move through to the 1.2900 congestive areas.
• JPY: A slow drift through the early part of the session and moving a little faster for the opening in Tokyo and suspected fix supply saw the market testing to the 110.60 areas before bouncing and taking the same period of time to recover but struggle with the 110.80 level through to the grey hours drifting just a little through to the mid of the Asian range, topside offers through to the 111.20 areas a strong push through the level could see weak stops joined by breakout moves and the market quickly testing through to the 111.50 areas before congestive offers reappear, however, the market could see a move through those levels and test towards the 111.80 levels and stronger offers appearing. Downside bids light through to the 110.00 areas with stronger bids around the level and likely to remain congestive through the level with weak stops possibly being absorbed, with stronger bids then returning on any move through the 109.60 levels.
• AUD: Oz numbers helped the market to quickly make highs through the 72 cents level falling just short of the 0.7210 area however, the market dipped again as Westpac first hit the news with class action suit and possibly one of many that will hit Oz banks over the coming months and then there downgrading of GDP expectations and the cash rate quickly undermining the market and the Oz dropping quickly through the 0.7150 areas to quickly test the 71 cent area and eventually pushing through on the move to the grey hours as news of coal ban into China’s Dalian port, downside bids into the 0.7080-60 level with some weak stops expected in that area however, any push through the 0.7050 level is likely to find some sellers reappearing in the market and the 70 cents level quickly under pressure, a break below is likely to see a mixture of stops and sentimental bids through to the 0.6950 areas however, those levels are likely to be weak and a lot of room to the downside is likely to open. Topside offers likely to be weak and a test back through the 0.7100-20 area could see a short squeeze appearing in the market and a quick test towards yesterday’s highs with weak stops likely to carry the day.
• EUR: A slight rise from the opening with the Euro pushing towards the 1.1350 level from the 1.1340 opening, Oz movement seemed to dominate the market and the fall back seemed to be in relation to EURAUD longs cutting, the market stabilized around the 1.1335 level and slowly recaptured its losses to push tentatively above the 1.1350 areas however, the Oz movement again hit the Euro and the collapse of the Oz dragged on the market with the Euro quickly dipping into the grey hours holding the 1.1330 level, topside congestion through to the 1.1400 areas with stronger offers likely to appear on any move to the 1.1380-1.1420 areas before weak stops appear, however, even through that level the congestion is likely to continue through to the 1.1450 levels with increasing offers thereafter through to any approach to the 1.1500 level. downside bids light through to the 1.1250 areas and likely to find stronger bids through to the 1.1200 levels, strong stops likely on a move through the level with the market opening slightly to the 1.1150 area.

Overnight News

CNY/USD:

The US and China fear their leaders will cave in on trade battle WSJ

US and China drafting 6 pacts for potential trade deal RTRS

China will not bargain Yuan rate for trade disputes ForMin – Caixin

USD/EUR:

Trump, EU far apart on trade, Kurz says after meeting President BBG

Trump says, he’ll slap auto tariffs on EU if no new deal reached – BBG

AUD:

Westpac hit with class action over irresponsible mortgages MB

Westpac sees RBA cutting cash rate in August and November

AUD/CNY:

Customs at China’s norther Dalian port has banned imports of Australian coal and will cap  overall  imports for 2019 through its harbours at 12M tonnes – RTRS

OIL:

API is said to report US crude stocks rose 1.26M BBL last week BFW

ZEW:

South Africa’s sovereign rating at risk BI

GBP:

PM May could be forced to fire ministers over Brexit rebellion BBG

Fitch places the BoE AA IDR on rating watch negative – DJC

NZD:

FinMin Robertson: will take a measured response to tax working group report

Robertson: Unlikely all recommendations will need to be implemented

Robertson: Tax working group says all members agree more income from capital gains should be taxed from sale of residential property

Tax working group says majority of members support further broadening approach to include all land and buildings, business assets intangible property and shares

CNY:

China benchmark interest rate cut not imminent despite cooling inflation, stronger Yuan

China benchmark rate cut remains last resort if growth slows sharply

PBoC is likely to cut market-based interest rates, make further RRR cuts to spur credit

Fears of resorting to old way of adjusting rates may undermine China reforms

Trade deal with US would also reduce chance of bench market cut

EUR:

EU will say Italy plans fail for long-term growth Repubblica

EU commission to release Italy report next week Repubblica

EU criticizes citizen’s income, lower pension age Repubblica

Repubblica quotes from draft of EU report on Italy

Today’s Data

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

22:00     AUD       CBA PMI Manufacturing Feb (P) A 53.1 | P 53.9

22:00     AUD       CBA PMI Services Feb (P) A 49.3 | P 51

0:30        JPY         PMI Manufacturing Feb (P) A 48.5 | P 50.3

0:30        AUD       Employment Change Jan A 39.1K | C 15.2K | P 21.6K

0:30        AUD       Unemployment Rate Jan A 5.00% | C 5.00% | P 5.00%

4:30        JPY         All Industry Activity Index M/M Dec A -0.40% | C -0.20% | P -0.30%

07:00     EUR        German CPI M/M Jan (F) C -0.80% | P -0.80%

07:00     EUR        German CPI Y/Y Jan (F) C 1.40% | P 1.40%

08:15     EUR        France Manufacturing PMI Feb (P) C 51 | P 51.2

08:15     EUR        France Services PMI Feb (P) C 48.5 | P 47.8

08:30     EUR        Germany Manufacturing PMI Feb (P) C 49.9 | P 49.7

008:30   EUR        Germany Services PMI Feb (P) C 52.9 | P 53

09:00     EUR        Eurozone Manufacturing PMI Feb (P) C 50.3 | P 50.5

09:00     EUR        Eurozone Services PMI Feb (P) C 51.3 | P 51.2

09:30     GBP       Public Sector Net Borrowing Jan C -11.1B | P 2.1B

12:30     EUR        ECB Monetary Policy Meeting Accounts

13:30     CAD       Wholesale Trade Sales M/M Dec C -0.30% | P -1.00%

13:30     USD       Philadelphia Fed Business Outlook Feb C 14.8 | P 17

13:30     USD       Initial Jobless Claims (FEB 16) C 230K | P 239K

13:30     USD       Durable Goods Orders Dec (P) C 1.80% | P 0.70%

13:30     USD       Durables Ex Transportation Dec (P) C 0.30% | P -0.40%

14:45     USD       US Manufacturing PMI Feb (P) C 55 | P 54.9

14:45     USD       US Services PMI Feb (P) C 54.3 | P 54.2

15:00     USD       Leading Index Jan C 0.20% | P -0.10%

15:00     USD       Existing Home Sales Jan C 5.01M | P 4.99M

15:30     USD       Natural Gas Storage P -78B

16:00     USD       Crude Oil Inventories P 3.6M

Harry Hindsight

• GBP: A steady rise in the early part of Tokyo saw the market rising through to the 1.3075 levels before drifting through to the grey hours holding around the 1.3050 lows, London opening saw the market been sold back as news that 3 Conservative MP’s resigned to join the Independent group of 8 Labour MP’s, with both sides calling for the MP’s to resign and start by-elections for the areas however, there is no requirement for this and the 11 MP’s can make no difference to the overall makeup of the house on the whole. The market moved lower through the morning in London edging through to test the 1.3015 before finding some bids and a slow move through into the NYK session recapturing some of its losses, a sharp rise back to the highs as the Eurozone confidence number to push initially through to the previous highs however, the rally did continue into the London close and the market touching through the 1.3100 level to make the 1.3110 area before dropping back just as quickly to settle into the 1.3050 area for the close.
• JPY: A reasonable push from the Tokyo opening having remained fairly static through to that point around the 110.60 area and pushing off the 110.55 level to climb steadily through to the 110.90 levels with little trouble until that point, the market drifted off the highs testing through to the 110.70 level before starting another slow rise to extend the highs to the 110.94 area into the grey hours, London were slow sellers through the morning session, and the market again moved into the 110.70 area and while the NYK session saw a slightly wider range however the same topside result for the close.
• AUD: A very quiet session and range overall for the Oz with the market opening around the 0.7160 area and maintaining that level through to the close, initially sold a little lower into the early Tokyo session the market recovered a little before drifting through into the London session and slipping through to the 0.7150 areas and testing the 0.7140 level for the low of the day before recovering through the NYK session to slowly rise to the 0.7180 area and the Sydney opening sending the market back to the opening areas for the run to the close.
• EUR: A little bid of movement through the day but limited, initially rising from the opening around the 1.1340 level to test towards the 1.1360 area but with very little impetus to really push out above that level and slipping slowly through to the London session testing to the 1.1330 level and the early numbers reversing the minor losses and another run to the highs over the course of a couple of hours, and so it remained through the day, the move into NYK saw the market making the lows around the 1.1325 area, only to see NYK opening and pushing back to the opening levels and awaiting the consumer confidence number and a steady rise on a better than expected number, still in negative territory but better, the market pushed through the 1.1360 level firmly but the offers are stacked on the topside for the moment and although it tested the 1.1370 for a couple of hours the close of the London market saw the market dropping back quickly as Trump told the EU tariffs were going to be implemented if a deal isn’t struck quickly and the Euro was back to the opening levels for the close.

 

Yesterday’s Premiership results

NZD       PPI Output Q/Q Q4 A 0.80% | C 1.10% | P 1.50%

NZD       PPI Input Q/Q Q4 A 1.60% | C 1.00% | P 1.40%

AUD       Westpac Leading Index M/M Jan A 0.00% | P -0.21% | R -0.30%

JPY         Trade Balance (JPY) Jan A -0.37T | C 0.17T | P -0.18T | R -0.22T

AUD       Wage Price Index Q/Q Q4 A 0.50% | C 0.60% | P 0.60%

EUR        German PPI M/M Jan A 0.40% | C -0.10% | P -0.40%

EUR        German PPI Y/Y Jan A 2.60% | C 2.20% | P 2.70%

EUR        Eurozone Consumer Confidence Feb (A) A -7 | C -7.7 | P -7.9

USD       FOMC Minutes

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