Daily FX Market Commentary

Andy Harrison

Andy Harrison

Good Morning,

LMAX Close
USDJPY 109.995 | EURUSD 1.11276 | AUDUSD 0.69021 | NZDUSD 0.66162 | USDCAD 1.30623 | USDCHF 0.9675 | GBPUSD 1.3019 |

LMAX highs and Lows 06.00 GMT
Highs | Lows
EURUSD 1.11337 | 1.11247
USDJPY 110.009 | 109.819
GBPUSD 1.30310 | 1.3015
USDCHF 0.96761 | 0.9669
AUDUSD 0.69017 | 0.68923
USDCAD 1.30716 | 1.30513
NZDUSD 0.66136 | 0.66045
EURCHF 1.07717 | 1.07632
EURGBP 0.85506 | 0.8543
EURJPY 122.418 | 122.213

For Today
• GBP: Opening around the 1.3020 level the market dipped into the Tokyo session to test lightly to the 1.3015 area before steadily rising through to the 1.3030 level before holding quietly through to the grey hours just below. 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: Dipping sharply from the opening through to test the 109.80 area before recovering after the news that Tariffs remain in place until phase 2 is completed, the market then drifted from the 109.95 areas and remained in a tight range dipping through to hold around the 109.90 areas 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: Another tight day so far with the Oz opening around the 0.6905 area and then dropping through to the 0.6980’s before stabilizing to trade in a narrow 0.6895-0.6900 area 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: As with the other pairs a reasonably quiet range for the Euro, opening just below the 1.1130 level before slowly rising to test into the low 1.1130’s to hold above the level through to the grey hours, 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:
US drafting rule to block more sales to Huawei – RTRs
US seeks biggest change to economic releases in decades – BBG
USD/CNY:
US, China have no agreement for future tariff reductions – Lighthizer, Mnuchin – RTRs
Mnuchin: Tariffs will stay in place until there’s a phase 2 of China trade agreement
Mnuchin: Trump may consider removing tariffs under phase 2
Mnuchin: China has made strong commitments it will not manipulate currency
CNY:
PBoC to inject 100b yuan with 14-day reverse repos
PBoC injects net 400b Yuan via MLF, reverse repos
Funds:
World’s largest fund manager BlackRock cuts thermal coal exposure on climate concerns – AUB

Today’s Data
Actual – A | Consensus – C | Previous – P | Revised R | all timings GMT/UTC
JPY Kuroda Speech at Branch Manager’s Meeting
0600 JPY Machine Tool Orders YoY (DEC P) P -37.9%
0900 EUR German GDP n.s.a. YoY (2019) C 0.6% | P 1.5%
0900 EUR German Public Finances Balance-GDP ratio C 1.2% | P 1.7%
0930 GBP CPI YoY (DEC) C 1.5% | P 1.5%
0930 GBP Core CPI YoY (DEC) C 1.7% | P 1.7%
0930 GBP CPIH YoY (DEC) C 1.6% | P 1.6%
0930 GBP CPI MoM (DEC) C 0.2% | P 0.2%
0930 GBP House Price Index (YoY) (NOV) C 1.0% | P 0.7%
1000 EUR Eurozone Industrial Production w.d.a. YoY (NOV) C -1.0% | P 2.2%
1200 USD MBA Mortgage Applications (JAN 10) P 13.5%
1400 CAD Existing Home Sales MoM (DEC) P 0.6%
1530 USD DOE US Crude Oil Inventories (JAN10) P 1164k
1900 USD Fed Beige Book
2350 JPY Machine Orders YoY (NOV) C -5.4% | P -6.1%

Harry Hindsight

• GBP: A fairly quiet Asian session with the Cable generally stuck below the 1.3000 level and unable to stray to far from the level, opening around the 1.2990 area the early market dipped towards the 1.2985 area before recovering and holding generally around 1.2995 through into the London session before dropping quickly through to the 1.2965 areas and grinding through to the 1.2955 level through the early morning, unable to move through the downside bids the market started a slow recovery to the opening levels and triggered some light stops to push quickly through to the 1.3015 level before returning to the 1.2975 area and starting a more steady move into the NYK session to extend the highs through to the 1.3030 level before drifting a little too the close.
• JPY: Opening quietly the market quickly rose as it made its way into the Tokyo session rising from the opening 109.95 areas and testing lightly through the 110.25 area before dipping back and ranging through to the grey hours holding the 110.00-10 levels, London were quick sellers through to the 109.90 level again and the range for the day never improved with the market holding for the most part around the 110.00 level with a minor sell off when it was noted that USD/CNY tariffs remain in play until Phase 2.
• AUD: Range bound for the day for the most part with early lows into Tokyo seeing the Oz dip through to the 0.6885 level before rising back to the 69 cents level just below the opening, the market saw a minor rise to just short of the 0.6910 level into the London session before spending the rest of the day ranging around the 69 cents level.
• EUR: A very quiet Asian session for the Euro opening around the 1.1135 level and unable to break lower through the 1.1130 level and although it did push higher from the opening it Tokyo it barely scraped through the 1.1140 level before dipping back and holding around the opening level to the grey hours, light buying from East Europeans saw the market extending the highs just beyond the 1.1140 level but unable to find any traction and slipping back to hold the 1.1130 level to hold too the NYK session, numbers just below expectations saw USD buying and the Euro dipping through to the 1.1105 level for the low of the day before recovering and running quietly through to the close of London around the 1.1130 level and quiet run to the close.

Yesterday’s Premiership results
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) A 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
USD CPI YoY (DEC) A 2.3% | C 2.4% | P 2.1%
USD CPI Ex-Food and Energy YoY (DEC) A 2.3% | C 2.3% | P 2.3%
USD CPI MoM A 0.2% | C 0.3% | P 0.3%
USD CPI Ex-Food and Energy MoM (DEC) A 0.1% | C 0.2% | P 0.2%
USD Real Average Hourly Earnings YoY (DEC) A 0.6% | P 1.1%
USD Real Average Weekly Earnings YoY (DEC) A 0.0% | P 1.1%

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