Daily FX Market Commentary

Andy Harrison

Andy Harrison

Good Morning,

LMAX Close
USDJPY 108.078 | EURUSD 1.09149 | AUDUSD 0.58744 | NZDUSD 0.58644 | USDCAD 1.45187 | USDCHF 0.96826 | GBPUSD 1.16236 |

LMAX highs and Lows 06.00 GMT
Highs | Lows
EURUSD 1.09811 | 1.08791
USDJPY 109.447 | 1.0796
GBPUSD 1.16633 | 1.14741
USDCHF 0.67289 | 0.96456
AUDUSD 0.58150 | 0.55106
USDCAD 1.46670 | 1.44286
NZDUSD 0.57475 | 0.54731
EURCHF 1.05990 | 1.05516
EURGBP 0.94968 | 0.93902
EURJPY 119.306 | 117.88

For Today
• GBP: Gapping lower for the reopening the market pushed off the 1.1540 level and steadily filled the gap on the charts as it made its way through to the 1.1680 level to make the high of the day, settling back a little for the move into the Tokyo opening the market dropped steadily through to the 1.1580 area and dipped quickly from that level through to penetrate the 1.1500 level again only to base along the 1.1480 level through to the grey hours in active trading. You have to back to before I started in the industry to draw conclusion for the downside with 1985 being the last time we reached these levels, downside bids likely to be concentrated around the sentimental levels 00/50’s and we are so deep the chances of sizeable option barriers are likely to be slim however, downside target for those that believe its possible will bee around the 1.05 level from 35 yrs ago. Topside offers light all the way through to the 1.2000 level and a push through could see a short squeeze appearing and the market likely to run into serious offers on a move above the 1.2300-1.2500 level.
• JPY: Opening just below the 108.00 level the market saw steady buying through the session pushing through to the Tokyo session testing the 108.50 level and on the Tokyo fix pushing quickly through to the 109.00 area before pausing, after a couple of hours the market again saw some strong buying and testing the 109.50 level, the market drifted a little through midsession before again attempting to push through the 109.50 level, failing for the second time the market quickly dipped to hold through to the grey hours around the 109.00 level. Topside offers through the 109.60 level and likely to increase on a move through to the 110.00 level with weak stops likely on a push through the 110.20 areas however, congestion likely to continue through the area to the 110.60 area increasing from the 110.80 areas before reaching a weaker 111.00 level and better stops likely just above. Downside bids light through to the 107.50 level with congestion continuing through to the 107.00 areas with weak stops appearing on a move through and congestion then continuing and increasing through to the 106.00 levels.
• AUD: Pushing off the opening around the 0.5780 level the market steadily traded through to the Tokyo session pushing back above the 0.5800 level before moving into the Tokyo session and dropping on the employment numbers and then following through from the 0.5700 level to his the 0.5520 area on the 25bps cut to the cash rate, a quick bounce saw the market back above the 0.5600 level before dropping steadily back to test the lows again through into midsession, the market saw a slow recovery through to the 0.5600 level again but generally held below the level through to the grey hours, downside bids into the 0.5500 level however, likely to be light and then congested around the sentimental levels with downside likely to be open to 54 cents and stronger bids holding around the 2002 ranges, a break through the level is likely to see some congestion however, one assumes buyers will become more scarce.
• EUR: Opening around the 1.0910 level the move through to the Tokyo session saw the Euro rise quickly through to the high of the day around the 1.0980 level before holding 1.0950-80 into the Tokyo session, Tokyo were steady sellers however, the market having tested through to the 1.0880 level could really do little more and moved through to the grey hours holding around the 1.0900 area. Downside bids light through to the 1.0800 level where stronger bids are likely with break out stops likely on a push through last months lows around the 1.0780 areas and opening the market for a test through to the 1.0700 level from the 2017 ranges, with a deeper move opening up over time. Topside offer likely to be weak through to the 1.1150 area with weak stops likely on a test through to the 1.1060 level and quickly opening that move, any push above the 1.1150 level could generate further buying.

Overnight News
NZD:
NZ Economic growth slowed before Coronavirus hit – BBG
NZ Govt: Kiwi’s overseas should consider coming home
NZ Govt: Kiwi’s should not travel overseas
EUR:
ECB announces EUR750B Pandemic purchase program
ECB: Program to cover private, public sector securities
ECB: Program include all asset categories under existing app
ECB: Purchases to be conducted until end of 2020
ECB: Purchases will include Greek debt under waiver
ECB: Expands eligible assets to non-bank commercial paper
ECB: Expands collateral to include additional credit claims
ECB: Determined to act against fragmentation – Villeroy – BBG
France’s Le Maire says ECB should intervene quickly, massively
GBP:
Military prepares to back up UK authorities in war on virus – BBG
USD:
Trump signs second virus relief bill as more stimulus planned
Mnuchin: Have sent Fed Reserve chairman letter approving establishment of the MMLF
Mnuchin: Department of treasury will provide $10b of credit protection from the exchange stabilization fund to the reserve bank
AUD:
RBA: To adopt target on 3yr Govt bond of around 0.25%
RBA: A term funding facility for the banking system with particular support for credit to small and medium sized businesses
RBA: Exchange settlement balance at the RBA will be remunerated at 10bps, rather than zero as would have been the case under the previous arrangements
RBA: To buy Govt bonds in secondary market across yield curve
RBA: Purchases will commence on Friday
RBA: Australia’s financial system is resilient and well placed to deal with the effects of the Coronavirus
RBA: Working closely with the other financial regulators and the Government to help ensure that Australia’s financial markets continue to operate effectively
RBA: The functioning of major government bond markets has been impaired
RBA: some point virus will be contained, and economy will recover
RBA: Will not increase the cash rate target until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2-3% target band
RBA: Three-year funding facility to authorized deposit taking institutions (ADIS) at a fixed rate of 0.25%
RBA: This facility is for at least AUD90b
RBA: Government has also developed a complementary program of support for the non-bank financial sector
RBA: Policy steps complement government fiscal measures
Australia to ban all non-residents from entering the country
Lowe: Expects cash rate to remain at current level for some years
Lowe: Expecting significant job losses
Lowe: Will not be buying bonds directly from Government
Lowe: Expecting a recovery once the virus is contained
Lowe: May take some time for yields to fall from current level
Lowe: May take some time for yields to fall to 25bps
Lowe: Prepared to transact in whatever quantities necessary
Lowe: Expects yield target to be removed before cash rate rise
Lowe: Financial regulators are meeting again tomorrow
Lowe: Prepared to act if necessary if market is one sided
Lowe: Liquidity in FX market thin but have not acted to intervene
Lowe: Prepared to act in FX Market
Lowe: We haven’t judged conditions poor enough to intervene
Lowe: We haven’t needed to intervene in fx, but prepared to
Lowe: RBA hasn’t intervened in FX markets prepared to if needed
Lowe: Inflation might pick up temporarily on AUD fall

Today’s Data
Actual – A | Consensus – C | Previous – P | Revised R | all timings GMT/UTC
NZD GDP YoY (4Q) A 1.8% | C 1.7% | P 2.3%
NZD GDP s.a. QoQ (4Q) A 0.5% | C 0.5% | P 0.7%
JPY National CPI YoY (FEB) A 0.4% | C 0.5% | P 0.7%
JPY National CPI Ex-Fresh Food YoY (FEB) A 0.6% | C 0.6% | P 0.8%
JPY National CPI Ex Fresh Food, Energy YoY (FEB) A 0.6% | C 0.7% | P 0.8%
AUD Employment Change (FEB) A 26.7k | C 8.5k | P 13.5k | R 12.9k
AUD Unemployment Rate (FEB) A 5.1% | C 5.3% | P 5.3%
AUD Full Time Employment Change (FEB) A 6.7k | P 46.2k | R 45.2k
AUD Reserve Bank of Australia Bulletin
AUD RBA Cash Rate Target (MAR 19) A 0.25% | P 0.5%
JPY All Industry Activity Index MoM (JAN) A 0.8% | C 0.5% | P 0.0%
AUD RBA Governor Philip Lowe Speech
0625 CHF SNB Publishes 2019 sustainability report
0625 CHF SNB Publishes annual report
0830 CHF SNB Policy Rate (MAR 19) C -0.75% | P -0.75%
0830 CHF SNB Sight Deposit Interest rate (MAR 19) C -0.75% | P -0.75%
1230 USD Continuing Claims (MAR 7) C 1735k | P 1722k
1230 USD Initial Jobless Claims (MAR 14) C 219k | P 211k
1230 USD Philadelphia Fed Business Outlook (MAR) C 10.0 | P 36.7
1400 USD Leading Index (FEB) C 0.1% | P 0.8%

Harry Hindsight

• GBP: A slow steady rise from the opening 1.2080 area to push through into the Tokyo session holding above the 1.2100 level the market reached the high for the day slowly testing through the 1.2130 level before drifting back to the opening levels for the move through the grey hours, London were steady sellers through to the NYK session setting the base just through the 1.2000 level and the rest will be history, as my old mentor used to say it’s a sick puppy, NYK were quick sellers and the market ran through the 1.2000 level testing quickly to the 1.1900 and although there was a brief pause before running a little slower through to the 1.1800 area bouncing the first time off the level before running through to the 1.1760 level and obviously your amount of stops appearing, cabinet bid options triggered and the market dumped down to the 1.1450 level before bouncing and struggling from the London close to range widely around the 1.1600 level in a very choppy market.
• JPY: A little bit of weakness from the opening with the USDJPY sipping from the 107.70 level through to the 107.20 area, pushing weakly back to the 107.50 level for the opening in Tokyo, the market renewed its drift lower through Tokyo basing around the 107.10 level for several hours through to the grey hours before pushing through the 107.00 level to test the 106.80 areas before bouncing into the pre London session and pushing back to 107.50 for the opening, ranging around the level the market eventually started a steady rise through the session pushing initially into early NYK testing the 108.00 level and then pushing through on a second wind to test the 108.50 level and range around the level deep into NYK before dropping quickly back to just below the 108 level and then narrow down the range for the move into the close.
• AUD: Opening around the 0.6020 level the market drifted back through the 60 cents area for the move through to the Tokyo session and started a slow grind through to just above the opening levels for the move into the grey hours, before starting a long steady drift through the London session to test the 0.5900 level and pausing through into the NYK session before renewing its drift through to the 0.5740 level and a slight spike on an attempt to test the 57 cents levels before bouncing and ranging in the 0.5750-0.5800 area through to the close.
• EUR: Opening around the 1.1000 level rising steadily through to the 1.1020 level for the move into the Tokyo session, dipping a little into the Tokyo fix the market moved off the 1.0985 area to slowly rise through to the London opening testing to the high of the day around the 1.1040 level before dropping steadily through in the morning trading to the 109.50 areas before holding for a short period and rising steadily back to the opening level for the NYK session, steady and continuous selling moved through the session into the London close to test through to the 1.0800 level before reversing the move and slow move back to the 1.0900 level for the close.

Yesterday’s Premiership results
NZD Current Account GDP Ratio YTD (4Q) A -3.0% | C -3.1% | P -3.3%
JPY Trade Balance (FEB) A 1109.8b | C 916.7b | P -1312.6b
EUR Eurozone CPI YoY (FEB F) A 1.2% | C 1.2% | P 1.2%
EUR Eurozone CPI core YoY (FEB F) A 1.2% | C 1.2% | P 1.2%
USD MBA Mortgage Applications (MAR 13) A -8.4% | P 55.4%
CAD CPI YoY (FEB) A 2.2% | P 2.4%
CAD CPI n.s.a. MoM (FEB) A 0.4% | P 0.3%
USD Building Permits MoM (FEB) A -5.5% | C -3.20% | P 9.2%
USD Housing Starts MoM (FEB) A -1.5% | C -4.3% | P -3.6%
USD DOE US Crude Oil Inventories (MAR 13) A 1954k | C 4406k | P 7664k

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