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Andy Harrison

Good morning,

For Today

• GBP: A quiet opening saw the market move through into the Tokyo session holding the opening level around the 1.2195 area, early Tokyo saw a quick spike through to the 1.2220 area before steadily drifting through until late in the session to test the 1.2185 level before returning to the opening levels, light congestion to the topside through to the 1.2240 area before giving way to weaker offers through to the 1.2300 level, stronger congestion likely around the next sentimental level and likely increasing from the 1.2350 level through to 1.2400. Downside bids light through the 1.2100 level and continuing lightly through to the 1.2000 before the market thickens a little and stronger support likely through to the level.
• JPY: A quiet range through the Asian session with the market opening around the 107.30 area and holding quietly through to the Tokyo session before rallying through to the 107.45 level and then ranging around the 107.40 level through to the grey hour, Downside bids through to the 106.80 level with limited weak stops on a move through the level to open a test of the 106.50 area again, a push through leads to stronger bids appearing from the 106.30 area and likely to continue through to the 105.90-80 area with stops appearing and the market vulnerable to a larger fall through to the 105.00 area before stronger bids appear. Topside offers through to the 107.70-108.00 level and some limited congestive offers appearing, a push through to the 108.20 area has limited effect with some weak stops likely to be absorbed through to the 108.40 level and stronger offers thereafter through to the 108.80-109.00 area.
• AUD: A quiet move through into the Tokyo session holding around the opening 0.6525 area and popping through to the 0.6555 level just after the RBA minutes, the rest of the session saw light selling and the market drifting back to the 0.8510 level before regaining the opening levels for the move into the grey hour, downside bids likely to appear on any test of the 64 cents level and through to the 0.6380 level where limited weak stops are likely to appear and quickly be absorbed by the congestive bids around the 0.6350 area and through to stronger bids into 63 cents. Topside offers likely to increase above the highs of the day and through to the 66 cents level with possibly strong stops on a move through the 0.6620 area to open up the topside to a stronger long-term push.
• EUR: A similar pattern if somewhat muted, opening around the 1.0915 level the market held through to the Tokyo session to rise to just below the 1.0925 area before slowly drifting through to late in the session to test towards the 1.0900 area before recovering a little and hold around the 1.0910 level through to the grey hour, Topside offers light through to the 1.0940-60 level with some light weakness behind that level increasing on any attempt to push the 1.0980 level through to 1.1020 area and possible option related stops appearing to see a quick move through to the 1.1050 area. Downside bids likely to be light through the 1.0900 level with weak stops quickly appearing and opening the market to a quick test of the 1.0850 level and limited congestion until closer to the 1.0800-1.0780 level and further stops.

Overnight News

NZD:
RBNZ: No need to adjust stimulus in wake of Govt. Budget – BBG
Hawkesby: Fiscal stimulus in same ballpark as RBNZ assumption – BBG
Hawkesby: RBNZ may not need to raise size of QE Program
Hawkesby: We need to be nimble and open minded on stimulus – BBG
Hawkesby: Open to using all tools, including buying foreign bonds – BBG
Hawkesby: RBNZ projections assume NZD will depreciate – BBG
Bascand: Could extend and expand asset purchase programme further – BBG
Bascand: Will see how data plays and provide more stimulus if needed – BBG
Bascand: Expects more certainty on Covid-19 situation in 3 months, will then re-evaluate whether to do more or take foot off the pedal – BBG
Bascand: Made no decision to buy foreign assets, launch negative interest rates at this time, they are one of many options available in committee – BBG
Bascand: Asked banks to be ready to transact, deploy negative rates in wholesale markets by years end – BBG
Bascand: Don’t expect negative rates to be deployed in retail markets for individual households and depositors – BBG
Bascand: Exchange rate at a level that’s supporting exports – BBG
Bascand: Exchange rates are fickle things not seeking to control it – BBG
Bascand: Pleased with the way monetary stimulus operating so far, yields have come off across the curve – BBG
USD:
Nasdaq to tighten listing rules, restricting Chinese IPOs – RTRs
Trump: Posts WHO letter threatening permanent funding freeze – TWT
Trump: Escalates threats against WHO, demands significant changes
GBP:
Tenreyro: BoE hasn’t ruled out any policy tool – BBG
Tenreyro: My view is negative rates have had positive effects – BBG
Tenreyro: There are considerations for negative rates in UK – BBG
Tenreyro: For now, all options are on the table – BBG
AUD:
RBA Minutes show ongoing focus on risks to financial stability and strategy – BBG
RBA: As package had been introduced only recently, members assessed that the best course of action was to maintain the current policy settings and monitor economic and financial outcomes closely
RBA: The labour market was expected to have ongoing spare capacity, and inflation was expected to be below 2 % over the following few years
RBA: Board would maintain its efforts to support the economy by keeping funding costs low and credit available to households and businesses
RBA: Plan to accept corporate debt in repos would not have a material impact on the banks risk profile
RBA: Members agreed that the banks policy package was working broadly as expected
RBA: Prepared to scale up Govt. Bond purchases again, if necessary, to achieve yield target
RBA: Global recovery could be expected to start later in 2020, supported by both the large fiscal packages and the monetary policy response

Harry Hindsight

• GBP: Opening lower the market struggled in the first 20 minutes for traction and eventually moved away from the 1.2075 level to test back to the 1.2100 area for the move into the Tokyo session before fresh selling pushed back towards the lows however, that was the last breech of the 1.2080 level for the day and the market then moved through to the midsession pushing through to the 1.2115 level to then slowly drift through to the grey hour and ultimately the London opening holding quietly around the 1.2100 area, midmorning onwards started to see USD sellers moving into the market and the Cable rising in a tight channelled move to test above the 1.2200 level into the NYK opening, NYK struggled with the level and although the market did test through to the 1.2225 level it slipped back into the London close and then held just below the 1.2200 level through to the close in a long drawn out day in NYK.
• JPY: Opening slightly lower there was a brief pause with the market hanging around the 107.10 level and lows just below the level before moving through to the Tokyo opening pushing through the 107.25 level, USD selling saw the market dipping back to the lows however, from Tokyo midmorning it was all JPY selling and the USDJPY rising as a consequence of cross buying against the Yen moved through the market to move into the London session holding the 107.20 level and quietly moving into the NYK session barely scraping the 107.30 level, NYK like the rest were more interested in risk and while USDJPY tested to its highs in early trading pushing through the 107.50 level it was the only USD pair that ran contrary to USD sentiment. Dipping for the run to London close the market recovered from the 107.20 level to run through to a close around the 107.30 area.
• AUD: A steady rise from the opening lows pushing off the 0.6415 area to move through into the Tokyo session pushing through to the 0.6435 quietly, midsession saw a steady rise through to the 0.6450 level and then a slow drift through to the London opening testing back to the 0.6425 area and then ranging through to midmorning in London before making another steady run higher, this time there was no stopping the move and it continued to the 65 cents level before pausing however, continued after the pause to push to and hold the 0.6525 area through to the close.
• EUR: A very quiet Asian session with the market opening on wide trades testing the 1.0810 level and then moving back to the 1.0820 level for a slow trade through to the 1.0835 level before slipping a little on the move through to the grey hour, London opening saw the market sold back through to test the 1.0800 area before USD selling started to materialize and the Euro started rising through into the NYK session pushing the 1.0835 level and NYK open seeing the level break and continue through to the 1.0870 level pausing and then pushing firmly through to the 1.0920 area testing the 1.0925 for the high of the day before running in a quiet range to the close.

Yesterday’s Premiership Results
NZD Services NZ PSI A 25.9 | P 37.3
JPY GDP Growth Annualized (P) A -3.4% | C -4.6% | P -7.1% | R -7.3%
JPY GDP Growth Rate QoQ (P) A -0.9% | C -1.2% | P -1.8% | R -1.9%
CNY House Price Index YoY A 5.1% | P 5.3%
JPY Tertiary Industry Index MoM A -4.2% | P -0.5% | R -0.7%
USD NAHB Housing Market Index A 37 | C 33 | P 30

Best Regards
Andy

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