Daily FX Market Commentary

Andy Harrison

Andy Harrison

Good Morning,

LMAX Close
USDJPY 109.942 | EURUSD 1.1135 | AUDUSD 0.69034 | NZDUSD 0.66355 | USDCAD 1.30563 | USDCHF 0.97087 | GBPUSD 1.29882 |

LMAX highs and Lows 06.00 GMT
Highs | Lows
EURUSD 1.11421 | 1.11301
USDJPY 110.214 | 109.916
GBPUSD 1.30024 | 1.29863
USDCHF 0.97135 | 0.97011
AUDUSD 0.69081 | 0.68854
USDCAD 1.30614 | 1.30499
NZDUSD 0.66316 | 0.66161
EURCHF 1.08155 | 1.08088
EURGBP 0.85752 | 0.85661
EURJPY 122.742 | 122.371

For Today
• GBP: A quiet session for Cable with the market dipping a little on the move through to the Tokyo session before rising through to the 1.3000 and then holding for the most part between the opening 1.2990 and the highs through to the grey hours, Downside bids congested around the 1.2950 level and requires a forceful push to clear only to run into possibly stronger bids into the 1.2900 areas, weak stops likely to appear on any break through the level with plenty of congestion likely at each sentimental level through to the 1.2765 area where any break out if there is to be one awaits. Topside offers light through the 1.3000 level with possible weak stops on a push through the congested 1.3050 area and opening the market to a run to the 1.3100 before meeting stronger offers with weak stops likely above but limited.
• JPY: Opening quietly around the 109.90 level the move into the Tokyo session saw strong buying appearing with EURJPY doing some work and a push initially above the 110.10 level before pausing and heading to the Tokyo highs just above the 110.20 area, once the Tokyo fix was over the market drifted a little to range quietly just above the 110.00 areas for the long run to the grey hours, Topside congestion through the 110.50 level and likely to increase the closer the market moves to the 111.80 area where stronger offers start to appear leading into stronger congestion on any push to the 112.00 level, downside bids light through to the 109.00 areas with congestion likely to appear once through the 108.80 level and weak stops with the congestion likely to increase on any push through the 108.50 areas through to 108.00.
• AUD: Initially dipping from the opening through to the Tokyo session with some AUDJPY buying pushing through from the opening and the Oz made early highs just short of the 0.6910 level before solid selling moved in as the JPY weakened and dipping through to the 0.6885 areas bouncing and pushing back to hold around the 0.6900 areas through to the grey hours, Topside offers into the 0.6920 area with possible weak stops through the level before congestion appears around the 0.6940-60 areas and increasing offers once the level is cleared through to the 0.6980-0.7000 areas, downside bids light through to the 0.6850 with some congestion around the level and then continuing through to the 0.6800 level with stronger bids start to appear, weak stops through the 0.6780 areas however, the congestion then increases on any dip through to the 0.6750 levels.
• EUR: Limited movement for the Euro with the market opening around the 1.1135 level before pushing off the level in early Tokyo to test lightly above the 1.1140 areas before dropping back to make the low just above the 1.1130 area before settling into a tight range around the 1.1135 areas, 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
NZD:
NZ 4Q Business confidence index -21 vs. -40 in 3Q
NZ adjusted 4Q business confidence index -26 vs. -35 in 3Q
NZ 4Q Domestic trading index – 11 vs. -11 in 3Q
USD:
Treasury: Currency practices of 10 countries require close attention, but no major US trade partner met criteria for currency manipulation – BBG
Treasury: China made enforceable commitments to refrain from competitive devaluation in phase 1 trade deal with US – BBG
Treasury: China should no longer be designated as a currency manipulator in semi-annual currency report – BBG
Treasury: China needs to take necessary steps to avoid a persistently weak currency – BBG
Treasury: China also agreed in trade deal to publish relevant data on exchange rates and external balances – BBG
Treasury: Improved economic fundamentals and structural policy reforms would underpin stronger Chinese Yuan over time – BBG
Treasury: Continuing to monitor currency practices of China, Germany, Ireland, Italy, Japan, S. Korea, Malaysia, Singapore, Vietnam and Switzerland – BBG
Treasury: China must take decisive steps to further rebalance economy allow greater market openness to strengthen long-term growth prospects – BBG
Treasury: Switzerland should use ample fiscal space to more forcefully support domestic activity – BBG
Treasury: Japan should enact bolder structural reforms to strengthen domestic demand – BBG
Treasury: Germany’s current account surplus remains largest in world sees urgent need for German to cut taxes, boost domestic investment – BBG
Treasury: Ireland only meets one of three criteria to be on monitoring list would be removed in next report if that remains the case – BBG
Treasury: Taiwan, Thailand close to triggering thresholds to be added to currency monitoring list – BBG
Treasury: Continued USD strength is concerning given IMF’s judgement that USD is overvalued on real effective basis – BBG
Treasury: Real USD remains above 8% above its 20year average sustained USD strength would likely exacerbate persistent trade, current account imbalances
Pompeo: Soleimani killing part of new strategy to deter US foes – RTRs
Treasury tightens foreign investment review rules – SCMP
Trump trade deal raises issue of trusting China to deliver – BBG
USD/CNY:
Trade deal to be signed this week will include pledges by China to buy $200b of goods over 2yrs – TWT
China pledges to buy nearly $80b more US manufactured goods over 2yr phase 1 trade deal vs. baseline of 2017 – Source
Increased Chinese manufactured goods purchases include autos, auto parts, aircraft, agricultural machinery, and medical devices – source
US-China trade deal includes increased Chinese purchases of $50b in energy $32b in farm products and $35b in services over 2yrs – source

Today’s Data
Actual – A | Consensus – C | Previous – P | Revised R | all timings GMT/UTC
NZD NZIER Business Opinion Survey A 92%
NZD Building Permits MoM (NOV) A -8.5% | P -1.1%
JPY Bank Lending EX-Trusts YoY (DEC) A 1.9% | P 2.3%
JPY Bank Lending Incl. Trusts YoY (DEC) A 1.8% | P 2.1%
JPY Trade Balance – BOP Basis (NOV) A -2.5b | C 103.8b | 254.0b
CNY Trade Balance A $46.79b | C $45.70b | P $38.73b
CNY Trade Balance CNY A 329.27b | C 315.0b | P 274.21b
JPY Bankruptcies YoY (DEC) AS 13.2% | P 1.4%
JPY ECO Watchers Survey Current (DEC) A 39.8 | C 40.9 | P 39.4
JPY ECO Watchers Survey Outlook SA (DEC) A 45.4 | C 46.9 | P 45.7
CNY New Yuan Loans CNY (DEC) C 1200.0b | P 1390.0b
CNY Aggregate Financing CNY (DEC) C 1650.0b | P 1750.0b
CNY Foreign Direct Investment P 1.5%
NZD REINZ House Sales YoY (DEC) P -1.9%
1330 USD CPI YoY (DEC) C 2.4% | P 2.1%
1330 USD CPI Ex-Food and Energy YoY (DEC) C 2.3% | P 2.3%
1330 USD CPI MoM C 0.3% | P 0.3%
1330 USD CPI Ex-Food and Energy MoM (DEC) C 0.2% | P 0.2%
1330 USD Real Average Hourly Earning YoY (DEC) P 1.1%
1330 USD Real Average Weekly Earnings YoY (DEC) P 1.1%

Harry Hindsight

• GBP: A quiet Asian session saw the Cable drifting a little through the session, the market opened down on comments from an MPC member on the likelihood of a rate cut and the market took that onboard opening around the 1.3040 level some 25pips from the close, the move through the Tokyo session selling slowly pushing through to the 1.3030 in a very limited volume across the complex, the move to the grey hours saw the selling increase a little and the market testing through to the 1.3020 level and London didn’t hold back with the first couple of hours seeing the low made just above the 1.2960 level and holding the area through to the NYK session, NYK did very little and the market slowly pushed through to late in the session testing the 1.3000 level before holding quietly around the 1.2990 into the close.
• JPY: A slow rise through to the London session, opening a touch higher and then gradually pushing through the 109.60 level and holding close to the level through to the London session before strongly moving through to test the 109.90 level and again pausing for a long period initially below the level and then running through late NYK holding above the level in a flat range to the close.
• AUD: A limited range over the course of the day with the Oz eventually lifting off the lows around the 0.6895 level and pulled along with AUDJPY buying moving through the early part of the session pushing through to the 0.6920 area before holding quietly around the 0.6915 areas through into the London session before sellers appeared to test the lows again on the move through to just before NYK, NYK were buyers and took the market back to the highs before drifting a little through to the close.
• EUR: Opening around the 1.1120 level the market dipped in early trading to test through the 1.1115 before heading into Tokyo and a steady rally through to the 1.1130 level and a quiet range through to the grey hours before sagging a little for the move into the London session, a little bit of movement around the first hour in London saw the market push to the 1.1135 level before quickly dropping back to make the low just below the early lows of the session, the market then held around the lows into the NYK session with a steady climb through to the highs and the end of London seeing the market spiking to just above the 1.1145 level before drifting to the close.

Yesterday’s Premiership results
AUD TD Securities Inflation YoY (DEC) A 1.4% | P 1.5%
GBP Construction Output YoY (NOV) A 2.0% | C -1.4% | P -2.1% | R -0.3%
GBP Industrial Production YoY (NOV) A -1.6% | C -1.3% | P -1.3% | R -0.6%
GBP Manufacturing Production YoY (NOV) A -2.0% | C -1.6% | P -1.2% | R -0.3%
GBP Monthly GDP (3m/3m) (NOV) A 0.1% | C -0.1% | P 0.0%
GBP Monthly GDP MoM (NOV) A -0.3% | C 0.0% | P 0.0%
GBP Trade Balance (NOV) A -4031m | C -2539m | P -5188m
GBP Trade Balance Non-EU GBP/m (NOV) A 1734m | C -3500m | P -5729m
GBP Visible Trade Balance (NOV) A 5256m | C -11800m | P -14486m
USD Monthly Budget Statement (DEC) A -13.3b | C -15.0b | P -208.8b

Any opinions, news, research, analyses, prices or other information contained on this Blog, whether by LMAX, its employees, partners or contributors, does not constitute investment advice nor has it been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the material contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. Whilst information provided on this Blog may help with your investment research you must consider carefully whether you should make (or refrain from making) investment or other decisions based on what you see without doing further research on the investments you are interested in. Participating in this Blog cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you. LMAX has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

LMAX will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the material produced in this Blog was obtained from sources deemed to be reliable, LMAX does not provide any guarantees about the reliability of such sources.
Consequently, any person acting on it does so entirely at his or her own risk.

If you currently hold an account with LMAX for the purposes of trading FX and CFD’s, you are encouraged to use a different Username and Password to access the Blog or any other online systems. The Blog is a place to learn, discuss and share information and ideas with Blog followers. It is not a place to slander, use unacceptable language or to promote LMAX or any other FX, Spread Betting and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.

Any opinions, news, research, analyses, prices or other information ("information") contained on this Blog, constitutes marketing communication and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the information contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. LMAX Group has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

LMAX Group will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the produced information was obtained from sources deemed to be reliable, LMAX Group does not provide any guarantees about the reliability of such sources. Consequently any person acting on it does so entirely at his or her own risk. It is not a place to slander, use unacceptable language or to promote LMAX Group or any other FX and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.