Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 106.766 | EURUSD 1.23209 | AUDUSD 0.77006 | NZDUSD 0.73179 | USDCAD 1.26969 | USDCHF 0.95621 | GBPUSD 1.41316 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.23290 | 1.23066

USDJPY                 107.245 | 106.62

GBPUSD               1.41415 | 1.4121

USDCHF               0.95780 | 0.9556

AUDUSD              0.77383 | 0.76938

USDCAD               1.27082 | 1.26749

NZDUSD               0.73329 | 0.73045

EURCHF                1.17903 | 1.17806

EURGBP               0.87219 | 0.87108

EURJPY                 132.029 | 131.425

For today

• EUR: A quiet range through too deep into the Tokyo session holding just above the 1.2320 levels but unable to push that 1.2330 areas and half way through the Tokyo session started a slow slide lower with more optimistic comments from XI and a slightly resurgent USD allowing the Euro to dip through 1.2310 level and basing along the level through into the grey hour, for the moment topside offers into the 1.2340-60 areas fairly strong with limited stops through the areas and stronger offers then reappearing above the 1.2380 level and around the 1.2400 level, likely to be mixed above into the 1.2450 level with some weak stops mixed in with better offers and likely to limit the topside however, a push through will leave the 1.2500 level vulnerable to a test. Downside bids light through the 1.2300 level with stronger bids likely to start appearing on any move through the 1.2250 level and towards the months lows increasing in size to the 1.2220-00 level, a dip through to the 1.2180 level will possibly see weak stops appearing and the market then pushing to the 1.2160 level with possibly stronger stops making an appearance.
• GBP: A very similar pattern for the Cable however, having pushed to the 1.4140 level the markets decline back through to the 1.4120 areas saw the market again pushing through the opening to hold into the grey hour around the 1.4135 areas, Topside offers into the 1.4150 level with possibly plenty of congestion on any move towards the 1.4200 levels with light congestive offers through to the 1.4250 level likely to see some weak stops balancing the congestion, better offers from then to the 1.4300 levels with deeper offers likely to dominate on a push through the 1.4250 levels. Downside bids light through the 1.4100 level however, there is likely to be some however, given the UK has still not solved the Irish border question pressure could possibly increase in the market with rhetoric from the EU, some congestion through the 1.4100 level with light stops opens up a test into the congestive 1.4050 areas and the market becoming vulnerable then through to the figure levels.
• JPY: Opening quietly the market dipped through into the Tokyo session setting the low around the 106.62 level before driving higher on the XI comments initially slowly and triggering some weak stops on a push through and testing quickly to above the 107.20 level to make the highs for the day, the market drifted off after the strong push and held quietly around the 107.10 levels through to the grey hour, Topside offers into the 107.40-50 levels with weak stops through the level and not particularly strong if this type of buying continues to push through the market, with stronger offers likely to be clustered around the 108.00 area, a break above the 108.20 level will likely see stronger stops appearing and the market making a run into the congestion into the 108.80-109.20 areas with stronger offers then waiting above that level. downside bids on the face of it are reasonably weak however, there has been plenty bought over the past few weeks from those 104.60-80 levels from the end of last month and the question remains is the buying sustainable any weakness showing in the market will likely see a quick reversal through to the 106.20-105.80 levels with very little above the level if the buying we’ve seen disappears.
• AUD: Quiet through into the Tokyo session before the Oz started to rise with the USDJPY as cross carry trade came onto the scene, the market moved off the slow trading 77 cent level and pushed through to the 0.7738 areas before finding the topside heavy going and drifted to hold around the 0.7730 into the grey hour, Mostly AUDJPY cross buying now pushing the market off the 0.7660 supportive areas and driving the market eventually through to the 0.7740 areas with light offers into the level and then strengthening the closer the market moves towards the 78 cent level with those offers likely to be deep and pushing through to the 0.7840 levels seeing some congestion with limited stops in the mix. Downside bids light through to the 0.7660 level again, and those bids likely to extend to the 0.7640 areas before weak stops and the 76 cent level exposed and the downside grind opens up to further tests.

Overnight News

CNY:

China is said to study Yuan devaluation amid US trade spat

China seeks to build Pacific military base in Vanuatu

Xi speech eases trade tension, buoys currencies inside Asia

China’s Xi says should push for free trade

XI: calls for upholding multilateral trading system

Xi: says globalisation should be more inclusive

Xi: won’t be a threat to the world or the existing global system

Chinese investment into the US fell sharply in 2017 – WSJ

JPY:

Japan ministry told school operator to lie about land

Admitted cover-up on school scandal energizes Abe’s opponents – Nikkei

USD/RUB:

Media report of US ship off Syrian coast being harassed by low flying Russian warplanes

USD:

FBI raids office of Trump lawyer Cohen on a Mueller referral

Cohen under probe for bank fraud, election law violations – WAPO

Fed San Francisco supporting strong, steady and sustainable growth

Ex-Commerce Sec Guitierrez. sees US, China heading into trade war

Kaplan: Too early to judge effect tariff talk is having

Kaplan: Don’t think trade issues will be resolved quickly

Kaplan: Are in early innings of trade talks

Kaplan: If rhetoric continues to be elevated, could be damaging

Kaplan: My base case is three rate hikes this year

Kaplan: 2018 Will be relatively solid year for GDP growth

Kaplan: Ought to raise rates because are near full employment

Kaplan: Hopeful that US-China trade issues get resolved

Kaplan: Have labour shortages, especially for skilled labour

Kaplan: We’ll see some firming in inflation pressures this year

Kaplan: See some firming in inflation pressures this year

Kaplan: Flatter yield curve means GDP growth outlook sluggish

Kaplan: Watching US yield curve very carefully

Kaplan: Watching level of debt in US very carefully

Kaplan: Concerned about high Govt. Debt to GDP levels

Kaplan: High debt levels mean US more interest rate sensitive

EUR:

ECB says don’t worry as Euro area hits economic soft spot

Coeure: sasy ECB to do what it must to raise inflation towards 2%

Coeure: ECB to discuss soon on asset buyback timing

Coeure: Not worried about Eurozone growth

Praet: Monetary policy will be data dependent

Praet: Phillips curve relationship will reassert itself

Praet: ECB must remain prudent, patient, and persistent

Praet: Trade environment may have added to downside risks

Praet: Inflation continues to be lacklustre

Praet: Considerable uncertainty in degree of economic slack

Constancio, QE adjustment won’t be negative for growth

Constancio, Wage growth is still very subdued

Constancio: Early restrictive policies could derail inflation

Dutch market consumer prices rose 1.0% on year

TRY:

TRY falls to record lows before new stimulus announced

NZD:

New Zealand businesses remained pessimistic in 1Q

NZIER Survey show hiring intentions fall to five year low

GBP/EUR:

No Irish border Brexit alternative from UK says officials

Today’s data

Actual = A | Consensus = C | Previous = P | Revised = R All timings GMT

GBP       BRC Retail Sales Monitor Y/Y Mar A 1.40% | P 0.60%

AUD       NAB Business Conditions Mar A 14 | C 17 | P 21

AUD       NAB Business Confidence Mar A 7 | C 12 | P 9

06:00     JPY         Machine Tool Orders Y/Y Mar (P) P 39.50%

12:30     CAD       Building Permits M/M Feb P 5.60%

12:30     USD       PPI M/M Mar C 0.10% | P 0.20%

12:30     USD       PPI Y/Y Mar C 2.90% | P 2.80%

12:30     USD       PPI Core M/M Mar C 0.20% | P 0.20%

12:30     USD       PPI Core Y/Y Mar C 2.60% | P 2.50%

14:00     USD       Wholesale Inventories M/M Feb (F) C 0.60% | P 1.10%

               

 

Harry Hindsight

• EUR: A rather quiet day through to NYK with the market slipping back from the opening levels around the 1.2280 areas and slipping slowly through the Tokyo session to the 1.2265 areas and holding through to the grey hour slowly recovering , London tested through the 1.2280 levels a little but continued to struggle with the level and although the range increased with the market testing through to the 1.2260 areas a couple of times that range remained through to the NYK session, trade tariffs impacted the NYK session as soon as it opened and the USD dipped across the board with the Euro rising quickly through to the 1.2300 levels before slowing and gradually easing through to the 1.2330 area and a quiet range through to the close.
• GBP: Cable if possible was even quieter, ranging quietly around the opening levels deep into the Tokyo session and then steadily rising to the 1.4100 level pushing lightly through before drifting back to hold above the 1.4090 level through to the London session, quick buyers saw the market tested to the 1.4115 areas before failing and spooking the market with a test to the lows just below the 1.4080 areas before again running slowly back to the highs, the market repeated the act 3 times during London, the move into the NYK session saw a steady climb but direct pushing through to the 1.4165 areas before slipping through with weak stops forcing the market through some of the congestion and then slowly slipping back to range quietly in the 1.4125-45 areas to the close.
• JPY: Opening unchanged the market struggled in a tight range around the 10695 level through deep in the session before starting a slow steady rise through the 107.00 levels, eventually struggling around the 107.10 levels and topping around the 107.20 areas before slipping off into the NYK session to hold the 106.90 areas, some movement kept the market buoyed for a while and although the rest of the market saw a USD dip the USDJPY was a little more resilient and pushed slowly to the 107.10 areas again before the buying ran its course and the market dipped quickly to the opening levels and held for a short period before starting the USD correction testing through to the 106.60 level before stabilizing and rising only slightly into the close.
• AUD: Trading slowly higher from the opening to push towards the 77 cent areas into the grey hours, with nothing remotely interesting, the move into the London session saw the quick sellers appearing and the market dipped through the opening levels to stall around the 0.7670 area, after a couple hours saw the market dipping again to test into the 0.7650 area and the lows for the day, the move through into the NYK session saw the same USD selling moving in however, the Oz was a slow reaction with the market slowly taking around 5hrs to push through to the 0.7710 levels before drifting to the close.

Yesterday’s premiership results

AUD       AiG Performance of Construction Index Mar A 57.2 | P 56

JPY         Current Account (JPY) Feb A 1.02T | C 1.39T | P 2.02T

JPY         Consumer Confidence Mar A 44.3 | C 44.5 | P 44.3

CHF        Unemployment Rate Mar A 2.90% | C 2.90% | P 2.90%

EUR        German Trade Balance Feb A 19.2B | C 23.1B | P 21.3B

EUR        Eurozone Sentix Investor Confidence Apr A 19.6 | C 20.8 | P 24

CAD       BoC Overall Business Outlook Survey Q1

 

 

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