Daily FX Market Commentary

Andy Harrison

Andy Harrison

Good Morning,

LMAX Close
USDJPY 108.69 | EURUSD 1.10607 | AUDUSD 0.66926 | NZDUSD 0.64607 | USDCAD 1.32861 | USDCHF 0.9661 | GBPUSD 1.29972

LMAX highs and Lows 06.00 GMT
Highs | Lows
EURUSD 1.10640 | 1.10557
USDJPY 108.854 | 108.551
GBPUSD 1.30214 | 1.29816
USDCHF 0.96720 | 0.96569
AUDUSD 0.67245 | 0.66800
USDCAD 1.33014 | 1.32875
NZDUSD 0.64712 | 0.64506
EURCHF 1.06975 | 1.06786
EURGBP 0.85181 | 0.84949
EURJPY 120.368 | 120.068

For Today
• GBP: Opening just above the 1.2990 level the market dipped into the Tokyo session testing through to the 1.2980 area before moving into midsession pushing steadily through to the 1.3000 level to hold briefly and then move on to push towards the 1.3015 level for the move into the grey hours, downside bids into the 1.2950 level with strong congestion through to the level before opening to some weak stops for a test to the 1.2900 level and stronger bids around that level. Topside offers weak back through to the 1.3100 level with weak stops likely on a push through and opening to a run to the 1.3200 level if there were sufficient interest in the current climate.
• JPY: Dipping from the opening around the 108.70 area testing through to the 108.55 area before moving into the Tokyo session and starting a steady grind through to just short of the 108.80 areas for the move into the grey hours, Topside congestion into the 110.00 level but likely to be limited with stronger congestion into the 110.50 level and likely to increase the closer the market moves to the 110.80 area where stronger offers start to appear leading into stronger congestion on any push to the 111.00 level, downside congestion through to the 108.00 levels with weak stops likely to be through the 107.80 areas and opening a deeper move through to the 106.00 level over time however, there will obviously be the normal congestive areas around the 00/20, 40/60, 80,00 to slow any sudden moves for the moment.
• AUD: Drifting from the opening to test weakly through the 0.6680 level in early trading before recovering and holding around the 0.6690 level deep into the Tokyo session and into the RBA release, a quick rise on the no change to push quickly through to the 0.6725 areas before ranging quietly around the 0.6720 level through to the grey hours, downside bids cleared through to the 0.6680 level opening up a deeper move over a long period with bids likely to appear around the sentimental 00/50 areas, topside offers light through to the 0.6780 level with strong offers likely to increase into the 0.6800/20 area with weak stops appearing through the level and 0.6840-60 likely to be stronger.
• EUR: A quiet session for the Euro moving through the session holding around the 1.1060 levels unable to push beyond the 1.1065 level and only managing a brief test to the 1.1055 level before returning to the 1.1060 for the move into the grey hours, Downside bids cleared into the 1.1000 level however, option barriers remain likely and not until the market break through the 1.0980 levels will it likely disappear with stops likely appearing if not option related sellers, opening a dip through to the 1.0950 level before stronger bids start to appear in the market, topside offers light through to the 1.1080 level with stronger offers beginning to build in the area with congestion through the 1.1100 areas and weak stops awaiting beyond the 1.1120 level for a run to the 1.1150 areas.

Overnight News
HKD:
HK death reported as China cases top 20,000 – BBG
GBP:
Johnson defends free trade as coronavirus bites, lack of EU deal looms – SYH
NZD:
Home building approvals jumped in December – BBG
USD:
Princeton isolates 108 students as precaution after China trips – BBG
AUD:
RBA leaves Cash rate target unchanged at 075%
RBA Prepared to ease monetary policy further if needed
RBA GDP set to grow around the 2.75% this year
RBA reasonable to expect an extended period of low rates
RBA Progress toward inflation target to remain gradual
RBA US-China trade dispute remains source of uncertainty
RBA Bushfires, Coronavirus to temporarily weigh on growth
CNY:
Xi warns virus may impact China’s stability at rare meeting – BBG

Today’s Data
Actual – A | Consensus – C | Previous – P | Revised R | all timings GMT/UTC
NZD Building Permits MoM (DEC) A 9.9% | P -8.5%
JPY Monetary Base YoY (JAN) A 2.9% | P 3.2%
JPY Monetary Base End of Period (JAN) A 517.2t | P 518.2t
AUD RBA Cash rate Target (FEB 4) A | C 0.75% | P 0.75%
0930 GBP Markit/CiPS UK Construction PMI (JAN) C 47.1 | P 44.4
1500 USD Durable Goods Orders (DEC F) C 2.4% | P 2.4%
1500 USD Factory Orders (DEC) C 1.1% | P -0.7%
1530 MXN Markit PMI Manufacturing (JAN) P 47.1
2130 AUD AiG Performance of Construction Index P 38.9
2145 NZD Employment Change YoY (4Q) C 1.2% | P 0.9%
2145 NZD Unemployment Rate (4Q) C 4.2% | P 4.2%
2145 NZD Employment Change QoQ (4Q) C 0.3% | P 0.2%

Harry Hindsight

• GBP: Three years later, Brexit completed and the rhetoric continues with the EU still unhappy with the portion of cake they’re receiving and determination to strip as much from the UK as possible or so we are led to believe however, PM Johnson on the face of it is not playing ball, the market opened weaker around the 1.3180 level and slowly drifted through to the 1.3150 level into the London opening before dropping back through to the 1.3100 level for the speeches from Barnier and Johnson, and the market reacted quickly testing to the 1.3050 level and then holding through into the NYK session, descent numbers in the US saw the market testing lower again and the market pushed through to the 1.3000 level to test the 1.2980 levels eventually and held quietly just below the 1.3000 levels in a long run to the close and a large but orderly move for GBP through the day.
• JPY: A limited range for the USDJPY with the market opening a little higher before filling the small gap and testing through to the 108.30 area through into the Tokyo opening before running through to above the 108.50 level testing just short of the 108.60 area before holding around the 108.60 level through to the grey hours, early London were steady buyers of USDJPY more in line with Cable movement and the market pushed to early highs around the 108.70 level before dipping back to hold quietly around the 108.50 areas too late in the NYK session with better numbers helping the market run through to the 108.80 area before just as quickly dipping back and then slowly rising from the 108.50 in a very slow rise through to hold around the 108.70 area close.
• AUD: Opening just below the 67 cents levels making the lows in the early part of the session testing towards the 0.6680 area before rising through into the Tokyo session pushing above the 67 cents for the first time, the pattern was repeated through the day with the market unable to form any meaningful move and contained in the 0.6685-0.6705 area to finish the day around the opening levels.
• EUR: Opening unchanged from Friday the market slipped from the highs around the 1.1095 areas and testing lightly through to the low 1.1080’s before recovering and moving into the Tokyo session, even then though the market could only test to the 1.1080 level and holding quietly through to the London session, the strong selling in GBP tipped over into the Euro for one reason or the other and the Euro tested steadily back to the 1.1060 level in the first few hours holding through into the NYK session and the better numbers leading to USD buying saw the market fall quickly through to test into the mid 1.1030’s to make the lows of the day before running to the London close to hold around the 1.1060 area and a long run to the close.

Yesterday’s Premiership results
AUD AiG Performance of Manufacturing Index (JAN) A 45.4 | P 48.3
AUD TD Securities Inflation YoY (JAN) A 1.8% | P 1.4%
AUD Building Approvals YoY (DEC) A 2.7% | C -1.4% | P -2.8%
CNY Caixin China PMI Manufacturing (JAN) A 51.1 | C 51 | P 51.5
CHF PMI Manufacturing (JAN) A 47.8 | C 50.3 | P 50.2
CAD RBC Manufacturing PMI (JAN) A 50.6 | P 50.4
USD ISM Employment (JAN) A 46.6 | P 45.1
USD ISM Manufacturing (JAN) A 50.9 | C 48.5 | P 47.2
USD Construction Spending MoM (DEC) A -0.2% | C 0.5% | P 0.6%
USD ISM Prices Paid (JAN) A 53.3 | C 51.5 | P 51.7
EUR ECB Pres. Lagarde attends reception in Frankfurt

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