Daily FX Market Commentary

Andy Harrison

Andy Harrison

Good Morning,

LMAX Close
USDJPY 107.967 | EURUSD 1.11041 | AUDUSD 0.61856 | NZDUSD 0.60666 | USDCAD 1.38035 | USDCHF 0.96012 | GBPUSD 1.22927 |

LMAX highs and Lows 06.00 GMT
Highs | Lows
EURUSD 1.12009 | 1.10891
USDJPY 107.576 | 105.741
GBPUSD 1.24284 | 1.22899
USDCHF 0.95229 | 0.94463
AUDUSD 0.63014 | 0.60956
USDCAD 1.38785 | 1.37443
NZDUSD 0.61439 | 0.59985
EURCHF 1.05798 | 1.05464
EURGBP 0.90471 | 0.89895
EURJPY 119.841 | 118.094

For Today
• GBP: With both the RBNZ and FED moving on interest rates the market opened choppily with the Cable almost unchanged and pushing quickly through to the 1.2430 level before dropping back to the 1.2330 area and bouncing back again to maintain the 1.2400 area through into the Tokyo session, Tokyo were quick sellers and the market dropped steadily through to the 1.2300 levels again to extend the low through the 1.2290 area before slowly trading through to the grey hours to push the 1.2350, Downside bids light through to the 1.2250 level with possibly stronger bids in the area, and likely to increase through the 1.2200 level, some limited weakness and the market likely to be nervous of a dip through the 1.2000 levels and the 1.1800 level from 2016. Topside offers light and possibly open to a short squeeze, weak offers likely through the sentimental levels with slightly strong congestion possibly appearing on a move through the 1.2500 area and offers likely to be building on any further tests through to the 1.2600 area and here is likely where a short squeeze could occur.
• JPY: Opening nearly 150 pips lower the market saw limited buying and the early Tokyo players sending the market scampering to just below the 106.00 level for the first time bouncing and then testing the level again to extend the low to just below the 105.80 area, the move into Tokyo fully saw a steady rise through the session running almost uninterrupted through to the 107.60 area before starting a slow drift from midsession onwards to hold choppily around the 106.80 areas into the grey hours, Topside offers light through to the 108.50 area with some limited congestion likely through to the 108.70 areas with stronger offers likely to appear through the 109.00 area with weak stops likely on a break through the 109.20 levels, possible weakness through into the 109.80 area where stronger offers are likely to appear,
• AUD: Opening higher around the 0.6250 areas with a quick rise through the 63 cents areas before dropping just a quickly back to test through to the 0.6110 in a very short period of time the bounce saw the market holding around the 0.6180 areas ranging around the level through into the Tokyo session before again running for the lows and this time lightly penetrating the 61 cents area before steadily pushing off the lows to move back to the opening levels to quietly move through to the grey hours, Downside bids likely to be light through to the 0.6100 level with congestion around the 0.6100-0.6080 level with weak stops on a break through the level however, stronger bids are likely to appear on any dip through to the 0.6050 area and continue into the 60 cents level with option barriers likely, a break through the 0.5980 level will likely see strong stops appearing and a chance of the market pushing steadily through the 0.5950 level to target 59 cents before stronger bids reappear, topside offers light through to the 63 cents level and a push above the 0.6330 area is likely to see weak stops and the possibility of a squeeze through to above the 0.6450 levels before stronger offers reappear.
• EUR: Opening stronger the market pushed off the 1.1145 level and quickly challenged the 1.1200 area before ranging through to the Tokyo opening in that range, Tokyo were quick sellers and the market dropping quickly to push lightly through the 1.1100 level testing to the 1.1085 area before steadying for a slow range around the 1.1100 area through to midsession before slowly lifting off the area to push through to the 1.1125 areas for a quiet run through to the grey hours, Topside offers light through to the 1.1200 area with some congestion through to the 1.1220 area, with strong stops likely on a push through the 1.1230 area and the market quickly opening to push at the 1.1280 level and stronger offers through to the 1.1340 areas however, from there its likely to see increasing levels of resistance through to the 1.1400 level , downside bids light through to the 1.1060 level with stronger bids likely to give way to stops on a move through the 1.1040 area and opening a return to last months 1.1000 level and lighter bids through to the 1.0950 area.

Overnight News
NZD:
NZ Cuts key interest rate to 0.25% from 1.0%
RBNZ: Negative economic implications of COVID-19 continue to rise warranting further monetary stimulus
RBNZ: Negative impact on NZ economy from Global COVID-19 outbreak is, and will continue to be significant
RBNZ: NZ Financial system remains sound and major financial institutions are well capitalized and liquid
RBNZ: Ensuring that banking system continues to function normally
RBNZ: Committee agreed unanimously to keep OCR at 0.25% level for at least 12 months
RBNZ’s Ha: Bond purchase program to be ready for May if needed
HA: Would likely set weekly or monthly purchase targets
Ha: Mindful more than 50% of NZ Govt bonds held offshore
Ha: Virus impact will be big shock to NZ economy
Ha: Bond purchases may exert downward pressure on NZD
EUR:
Germany moves to seal off borders to fight COVID-19 Pandemic – FTI
ECB: ECB and other major Central Banks to offer weekly USD operations with 84 day maturii8ty in addition to existing 1 week operations
ECB: Pricing of all USD operations to be lowered to USD OIS rate plus 25 BPS
ECB: New pricing and additional operations effective as of the week of 16 March, to remain in place for as long as appropriate
USD:
Fed cuts main rate to near zero, and to boost assets by $700b – BBG
Fed will hold rates near zero until confident weathered virus
Fed to boost treasury holding by at least $500b, MBS by 200b
FED slashes target range for benchmark rate to zero to 0.25%
Fed acts with other Central banks to enhance dollar swap lines
Fed’s Barrage faces some obstacles to success – BBG
Powell: US economy was on solid footing before virus struck
Powell: Virus having profound effect on people in US
Powell: Policy makers must do what we can to ease hardship
Powell: Inflation will likely be held down this year by virus
Powell: Financial conditions in the US have tightened markedly
AUD:
RBA will announce further policy measures on Thursday
RBA stands ready to purchase Australia Govt bonds
Oz 3yr yield plunges to 16bps as RBA ready to buy bonds
CNY:
CNY: Economy will stabilize in 2h 2020
CNY: Jobless rate will decline as economy recovers
CNY: Outbreak shock will weaken in 2Q
CNY: Will beef up macro policy to counter shocks – Mao
CNY: Food prices are major reason for current inflation
JPY:
MoF Official: Lower US rates do impact Forex
MoF Official: Must look at FX market going ahead

Today’s Data
Actual – A | Consensus – C | Previous – P | Revised R | all timings GMT/UTC
NZD RBNZ Official Cash Rate – inter- meeting Decision (MAR 16) A 0.25% | P 1.00%
USD FOMC Rate Decision – Inter-Meeting Decision (lower bound) (MAR 15) A 0.00% | P 1.00%
USD FOMC Rate Decision – Inter-Meeting Decision (upper bound) (MAR 15) A 0.25% | P 1.25%
USD Interest Rate on Excess Reserves – Inter-Meeting Decision A 0.10% | P 1.10%
NZD Performance Services (FEB) A 52 | P 57.1
JPY Machine Orders YoY (JAN) A 0.3% | C -1.1% | P -3.5%
GBP Rightmove House Prices A 3.5% | P 2.9%
CNY New Home Prices MoM (FEB) A 0.02% | P 0.27%
CNY Fixed Assets Ex Rural YTD YoY (FEB) A -24.5% | C -2.0%
CNY Industrial Production YTD YoY (FEB) A -13.5% | C -3.0% | P 5.7%
CNY Property Investment YTD YoY (FEB) A -16.3% | P 9.9%
CNY Retail Sales YTD YoY (FEB) A -20.5% | C -4.0% | P 8.0%
CNY Surveyed Jobless Rate (FEB) A -6.2% | P 5.2%
1300 CAD Existing Home Sales MoM (FEB) C 0.5% | P -2.9%
2000 NZD Westpac Consumer Confidence (1Q) P 109.9
2000 USD Net Long-Term TIC Flows (JAN) P 85.6b

Harry Hindsight

• GBP: Initially dipping on the move into the Tokyo session to test towards the 1.2510 level before starting a slow but steady move through to the London session pushing through the opening 1.2580 level and peaking lightly through to the 1.2620 area and holding through to the NYK session with one further attempt to break that high, NYK moved into the session drifting lower in a tight channelled decline through to the 1.2450 area before running into some support the market moved back to the 1.2500 level for the move to the London close before again dropping back and this time the break through the 1.2450 level saw some weak stops triggered on a quick drop to the 1.2400 level with a slight pause for the support to be cleared before running to the 1.2350 areas and again pausing in the sentimental level before breaking and running through to the 1.2270 level in a quick stab lower, the run to the close saw the market pushing back to the 1.2350 area however, the close itself saw some quick selling and the market testing towards the 1.2250 before settling for the close.
• JPY: Moving off the early lows the market held around the 104.80 area through into the Tokyo session before rising from the 104.60 levels to push quietly above the 105.00 level, the move to the grey hours, saw the market rising a little quicker and the move into the grey hours saw a minor test of the 106.00 level before dipping back a little to the 105.50 area for the move into the London session, London were slow buyers and the market rose continually through deep into the NYK session pushing to the 107.50 areas before drifting slightly to the 107.00 for the run to the close of London, once London was out of the way the market again started to rise and pushed gradually above the 108.00 level before failing the 108.50 level and dipping back to the figure for the close.
• AUD: Gapping higher on the opening and quickly pushing from the 0.6250 through to just above the 63 cents level, the market narrowed down to trade through into the Tokyo session holding around the 0.6270 level before pushing again through the 63 cents level to test to the high just short of the 0.6330 levels before drifting around the 63 cents areas through to deep into the NYK session, a quick drop just before the London around the NYK option expiry to send the market quickly through to the 0.6150 areas to range around the level through to the last hour with a minor test to the 0.6120 level to make the lows for the day and a weak recovery on light profit taking to spike the market to the 0.6240 areas before finishing just below the 62 cents level for the close.
• EUR: Opening around the 1.1175 area the market pushed quietly into the Tokyo session testing just above the 1.1185 area before quickly dipping towards the 1.1150 level, the market steadily recovered and slowly continued rising to set the high of the day around the 1.1220 areas through to the grey hours, before light selling moved in and slowly took the market back through to the opening area, early London were slow buyers but once the market had pushed through the 1.1200 level it ran out of steam and the market slowly went into a decline falling slowly through into the NYK session pushing the 1.1150 area and triggering weak stops on a dip towards the 1.1100 level, the level held for several hours and only once the market started to move to the London close did the downside move renew trading through to just above the 1.1050 area ranging in a 1.1050-1.1100 range through to late in the session before holding the topside for the close.

Yesterday’s Premiership results
NZD BusinessNZ Manufacturing PMI (FEB) A 53.2 | P 49.6
JPY Tertiary Industry Index MoM (JAN) A 0.8% | C 0.3% | P -0.2%
EUR German CPI YoY (FEB F) A 1.7% | C 1.7% | P 1.7%
EUR German CPI EU Harmonized YoY (FEB F) A 1.7% | C 1.7% | P 1.7%
MXN Industrial Production NSA YoY (JAN) A -1.6% | C -1.5% | P -1.0%
USD Export Price Index YoY (FEB) A-1.3% | P 0.5%
USD Import Price Index ex Petroleum MoM (FEB) A 0.2% | P 0.2%
CAD Existing Home Sales MoM (FEB) A 0.5% | P -2.9%
USD U. of Mich Sentiment (MAR P) A 95.9 | C 95 | P 101
USD Baker Hughes US Rig Count (MAR 13) A 792 | P 793

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