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Andy Harrison

Good Morning,

For Today
• GBP: A nervous start again as Gold rallied strongly as safe haven flows moved into the market, Cable initially opened higher but quickly filled the small gap and held around the 1.3070 level through into early Tokyo before starting a slow rise through to hold the 1.3085 area with a couple of pushes at the 1.3090 level through into the grey hours, Downside bids into congestion to the 1.3050 level and stronger bids into 1.3000 with the market then opening to a deeper move. Topside offers light through to the 1.3200 level with some limited offers through to the 1.3220 area with possible light stops on a move through, with stronger offers likely to increase on a test through to the 1.3300 level with stops above.
• JPY: Opening lower from Fridays close the market made an initial dip to the 107.80 areas before climbing steadily back to the 108.00 level and trading around the area to the grey hours holding just above, Downside stops likely on a move through the 107.80 area and the market then open to the 107.50 level with some congestion and an old trendline suggesting some support and better bids congested below through to the 107.00 level, Topside offers likely to be weak through to the 109.00 level before stronger offers start to appear with strong offers on any push through the 109.50 level.
• AUD: A slight dip from the close on Friday saw the market fun to just above the 0.6930 area before rising steadily in early Tokyo to push above the 0.6955 level and then a quiet session holding around the 0.6940 area through to the grey hours, Topside offers from the 0.7000 area through to 0.7020 where strong offers are likely to appear and while that topside should see weak stops the offers are likely to absorb any buying and continue through to the 0.7060 areas, downside bids light through to the 0.6920 area with stronger bids possible however, a push through the 0.6880 level will see strong stops appearing and the downside open to the stronger 0.6850 areas and congestive bids likely to support the market for the short term.
• EUR: Opening a little higher and holding the 1.1160 level through the session but unable to set a destination trading quietly through to the grey hours holding in a tight range to run to the grey hours just short of the 1.1170 level, Topside offers continue through to the 1.1220 area with weak stops likely in the area however, once the stops are out of the way congestion is likely to continue in strength and increase the closer the market moves towards the 1.1300 level, Downside bids light through to the 1.1100 level and bids are still likely to be building with weak stops limited with congestion likely to move through to the 1.1050 level and increasing on a dip to the 1.1020 areas.

Overnight News
USD:
Experts doubt Fed has all the tools it needs to fight recession – DJ
USD/IRR/IQD:
Trump: He will consider releasing intelligence related to the killing of Iranian official
Trump: There will be major retaliation against Iran if Iran retaliates
Killing of Soleimani follows long push from Pompeo for aggressive action against Iran W)T
US Military closely watching for any further moves by Iran – RTRs
Trump says US will quickly and fully strike back perhaps disproportionately, should Iran strike any US person or target – RTR’s
US is disappointed in vote by Iraq’s parliament calling for foreign troops to be ordered out of country – State Dept – RTR.s
US strongly urgeses Iraqi leaders to take into account the importance of US-Iraq economic and security relationship and presence of US led coalition to defeat Islamic state – RTR’s
Iranian missile forces across the country are at heightened state of alert, US official – RTR’s
Unclear if heightened state of alert in Iran is defensive or so Tehran can be better prepared offensively – Official – RTR’s
US military closely watching for any further moves by Iranian missile forces – US Official – RTR’s
Trump’s declaration of War – Conflict with Iran could be inevitable – Spiegel
Iran puts an $80m bounty on Trumps head, threatens to attack the White House – Daily Mail
Iran will no longer abide by nuclear deal limits – HAA
Iraq votes to expel US troops after killing of Iranian General – BBG
As tensions with Iran escalated, Trump opted for most extreme measures – NYT
Trump ramps up Iran rhetoric as de-escalation vow quickly fades – BBG
JPY:
Yen matches 3month high after Mideast stocks get a mauling – BBG
CNY:
China issues safety warning to its citizens in US – PTI
EUR:
Lane: regrets ECB Policy was not more aggressive earlier
Lane: Very important to get inflation back to where it ought to be – BBG
Draghi sees risk of Japanification in Europe but time to avoid – BBG
AUD:
Australia counts wildfire devastation after calamitous weekend – BBG
CNY/HKD:
China taps strongman for Hong Kong in signal to protesters – Xinhua
China removes Wang Zhimin as HK liaison office director – Xinhua
China names Luo Huining as HK liaison office director – Xinhua
GBP/USD/EUR:
UK’s Johnson calls, Trump, Macron, and Merkel on Iran
Johnson: Soleimani posed threat to all our interests –

Today’s Data
Actual – A | Consensus – C | Previous – P | Revised R | all timings GMT/UTC
AUD AiG Performance of Manufacturing Index (DEC) A 48.3 | P 48.1
CNY Caixin China PMI Composite (DEC) A 52.6 | P 53.2
CNY Caixin China PMI Services (DEC) A 52.5 | C 53.2 | P 53.5
0700 EUR German Retail Sales YoY (NOV) C 1.0% | P 0.8%
2350 JPY Loans and Discounts Corp YoY (NOV) P 2.24%
2350 JPY Monetary Base YoY (DEC) P 3.3%
2350 JPY Monetary Base End of period (DEC) P 517.3t

Harry Hindsight

• GBP: Rising in early trading through into the NYK session to test to the 1.3160 level the market started to drop back as Commodity prices and Equity markets were hit by news that an Iranian General had been targeted by the US in Iraq and that it could be an opener for further action, Cable started a steady drift lower through deep into the London session before finding a base just above the 1.3050 level before rising and holding around the 1.3080 level for a long run through to the close.
• JPY: USDJPY made early highs just above the 108.60 level before the news from Iraq filtered through and the safe haven moved into the market and USDJPY steadily tested through to the 108.00 level and then held through to the London session with minor dips through to the 107.90 levels, a limited recovery through to the NYK session where the market managed to push above the 108.20 level however the die was set and the market returned to the 107.90 levels with a quick stab lower to test through to the 107.85 area to make the lows before limited trading through to the close.
• AUD: Opening on its highs the market steadily slipped lower as JPY buying moved through the market and the Oz suffered with the safe haven flows trading steadily lower through to deep into the London session before finding a base around the 0.6930 areas and the move into the NYK session seeing buyers pushing back steadily through to the 0.6960 level the move to the close saw slow selling moving through with the market finishing just below the 0.6950 areas.
• EUR: The least effected by the US-Iran news saw the market holding between the 1.1170-80 level through to the grey hours before dipping a little and then dropping quickly off on the opening into the London opening pushing through the 1.1160 level and slowly pushing through to the 1.1130 level to make the lows just above the 1.1125 area and bouncing a little to push back above the 1.1140 level, the move into the NYK session saw the market continuing to rise and recover to post the highs into the London close around the 1.1180 level and then a slow drift to the close.

Yesterday’s Premiership results
GBP Nationwide House Price n.s.a. YoY (DEC) A 1.4% | C 1.4% | P 0.8%
CHF PMI Manufacturing (DEC) A 50.2 | C 48.8 | P 48.8
EUR German Unemployment Change (000’s) (DEC) A 8k | C 3.5k | P -16.0k
EUR German Unemployment Claims rate s.a. (DEC) A 5.0% | C 5.0% | P 5.0%
GBP Consumer Credit YoY (NOV) A 5.7% | P 6.1%
GBP Markit/CIPS UK Construction PMI (DEC) A 44.4 | C 45.8 | P 45.3
GBP Mortgage Approvals (NOV) A 64.99k | C 64.4k | P 46.6k
GBP Net Consumer Credit (NOV) A 0.563b | C 1.0b | P 1.3b
GBP Net Lending Sec. on Dwellings (NOV) A 4.0b | C 4.0b | P 4.3b
EUR German CPI YoY (DEC P) A 1.5% | C 1.4% | P 1.1%
EUR German CPI EU Harmonized YoY (DEC P) A 1.5% | C 1.4% | P 1.2%
EUR German CPI MoM (DEC P) A 0.5% | C 0.4% | P -0.8%
EUR German CPI EU Harmonized MoM (DEC P) A 0.6% | C 0.5% | P -0.8%
USD ISM Employment (DEC) A 45.1 | P 46.6
USD ISM Manufacturing (DEC) A 47.2 | C 49.0 | P 48.1
USD Construction Spending MoM (NOV) A 0.6% | C 0.3% | P -0.8% | R 0.1%
USD ISM Prices Paid (DEC) A 51.7 | C 47.5 | P 46.7
USD DOE US Crude Oil Inventories (DEC 27) A -11463k | C -3270k | P -5474k
USD Baker Hughes US Rig Count (JAN 3) A 796 | P 805
USD FOMC Meeting Minutes (DEC 11)

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