Daily FX Market Commentary

Good Morning,

LMAX Close

USDJPY 108.297 | EURUSD 1.11689 | AUDUSD 0.69366 | NZDUSD 0.65374 | USDCAD 1.35168 | USDCHF 1.00081 | GBPUSD 1.26323 |

LMAX highs and Lows 05.00 GMT

                                Highs | Lows

EURUSD               1.11900 | 1.11695

USDJPY                 108.318 | 108.102           

GBPUSD               1.26556 | 1.26326

USDCHF               1.00041 | 0.99724

AUDUSD              0.69596 | 0.69286

USDCAD               1.35271 | 1.34922

NZDUSD               0.65559 | 0.65322           

EURCHF                1.11768 | 1.11568

EURGBP               0.88442 | 0.8374

EURJPY                 121.106 | 120.852

For Today

  • GBP: A slow steady rise from the opening around the 1.2635 level to push through to the 1.2655 areas and hold through into the grey hour on limited trading, limited congestion through to the 1.2700 areas with weak stops likely to run into further congestion on a break through the level, with stronger offers likely in a move above the 1.2750 areas with the congestion likely to increase into the 1.2800 levels, downside bids light through the 1.2600 level with congestion then through to the 1.2550 areas and possibly stronger bids likely through to the 1.2500 level with strong stops through the level if the market can find the momentum to push through the willing buyers.
  • JPY: The steady drift continued through the Asian session, opening around the 108.30 level the market slowly slipped through to the 108.10 area before finding some support and holding through to the grey hour, downside limited congestion into and through the 108.00 area with some light stops likely on a dip through the 107.80 area before congestion then appearing through to the 107.50 area before limited congestion appears on any dip to the 107.00 level and strong stop loses possible on a move through. Topside offers through to the 109.00 level likely to be light and weak stops on a move through the 109.20 area likely to open up a short squeeze through to the 110.00 and stronger offers in the area.
  • AUD: With USDJPY continuing its slide lower the Oz found some light buying moving into the AUDJPY and helping the Oz to rally despite the poor secondary numbers released, the market pushed steadily through to the 0.6960 areas to make the highs before holding quietly through to the grey hours, Topside congestion on any test through the 0.6980 levels and continuing through to the 0.7000 areas, the congestion is likely to continue with some minor stops in the mix but likely to struggle to the 0.7050 areas, downside bids light through to the 0.6900 area before stronger bids again appear on any dip through the level and increasing on any dip to the 0.6850 areas.
  • EUR: Euro saw a steady climb through the Asian session through to the 1.1190 levels with limited sellers through the session, Trade war commentary out of China doing the damage from Friday and over the weekend change the focus of the argument. Topside offers into the 1.1200 likely to be reasonably strongly offered and congestion likely to continue all the way through to the 1.1260 areas before some weakness appears, possible weak stops on a move through the 1.1220 however, these are likely to be quickly absorbed. Downside bids light through to the 1.1120 level with stronger bids likely to be reforming in the area and possibly continuing into the 1.1080 levels before any weakness appears and it is likely to be limited.

 

Overnight News

USD:

Mike Pence working on hawkish China speech, sources tell – CNBC

Google and Amazon are at the centre of a storm breaking over big tech – NYT

USD/AUD:

Trump administration considered tariffs on Australia – NYT

CNY:

China fears commodity squeeze as US conflict take a more dangerous turn – TEL

China raises tariffs 5-25% on $60B of US goods preparing a blacklist of unreliable foreign companies

JPMorgan cuts China 2Q GDP growth forecast to 6.1% on tariffs – BBG

AUD:

May job advertisements fall 8.4% MoM, ANZ bank says

Inventories rise in 1Q to 0.7% QoQ est. 0.0% – BBG

Company profits rise 1.7% QoQ est. 2.8% – BBG

 

Today’s Data

Actual – A | Consensus – C | Previous – P | Revised R | all timings GMT/UTC

AUD       AiG Performance of Manufacturing Index May A 52.7 | P 54.8     

JPY         Capital Spending Q1 A 6.10% | C 2.60% | P 5.70%             

JPY         PMI Manufacturing May (F) A 49.8 | C 49.7 | P 49.6         

AUD       TD Securities Inflation M/M May A 0.00% | P 0.20%         

AUD       Company Operating Profit Q/Q Q1 A 1.70% | C 2.80% | P 0.80% 

CNY        Caixin PMI Manufacturing May A 50.2 | C 50 | P 50.2      

06:30     CHF        CPI M/M May C 0.30% | P 0.20%              

06:30     CHF        CPI Y/Y May C 0.60% | P 0.70%  

07:30     CHF        PMI Manufacturing May C 48.8 | P 48.5 

07:45     EUR        Italy Manufacturing PMI May C 48.5 | P 49.1       

07:50     EUR        France Manufacturing PMI May (F) C 50.6 | P 50.6            

07:55     EUR        Germany Manufacturing PMI May (F) C 44.3 | P 44.3       

08:00     EUR        Eurozone Manufacturing PMI May (F) C 47.7 | P 47.7      

08:30     GBP       PMI Manufacturing May C 52.2 | P 53.1 

13:30     CAD       Manufacturing PMI May P 49.7  

13:45     USD       Manufacturing PMI May (F) C 50.6 | P 50.6          

14:00     USD       ISM Manufacturing May C 53 | P 52.8     

14:00     USD       ISM Prices Paid May C 51 | P 50

14:00     USD       ISM Employment May P 52.4      

14:00     USD       Construction Spending M/M Apr C 0.40% | P -0.90%       

 

Weekend News

 

CNY/USD:

China demands respect as it blames US for breakdown in talks – BBG

China: Trade deficit has nothing to do with being ripped off – BBG

China: Govt doesn’t tell Chinese company what to buy – BBG

China: Chinese Co’s decisions of what to buy are their own – BBG

China: Govt not involved in Chinese Co’s acquisition of IP

China: China pays high attention to IP protection – BBG

China: US should bear full responsibility for breakdown – BBG

China: US max pressure, escalation can’t force concessions

China: If don’t respect others sovereignty, talks won’t succeed – BBG

MoFCom’s Wang: Both parties must make compromises in any talks – BBG

Wang: US insisted some tariffs remain in place after a deal – BBG

Wang: When you give the US an inch, the want a yard – BBG

Wang: Nothing is agreed until everything is agreed – BBG

China: There was no backtracking in the talks with the US – BBG

China: Has exercised maximum sincerity in talks with the US – BBG

Wang: But cooperation must be based on principles – BBG

Wang: Willing to work with US to find solutions – BBG

Wang: White paper to clarify facts, China’s stance – BBG

China: Firmly against US long arm jurisdiction re Huawei – BBG

China: Hope US can meet halfway, based on equality, respect – BBG

China: Cooperation is the only correct option for US – BBG

China: Don’t want a trade war with US, but not afraid of one – BBG

China: Willing to work with the US to find a solution – BBG

China: US has backtracked on its commitments – BBG

China releases white paper on trade talks with the US – BBG

China to open probe of FedEx over possible infringements of Huawei’s legal rights over misrouted packages – Xinhua

China threatens sweeping blacklist of firms after Huawei ban – BBG

USD/MXN:

Trump official says tariffs on Mexico will not derail trade deal – RTRS

White House: Trump deadly serious about Mexico tariffs – APW

USD/CNY:

US ships pass through Taiwan strait as China tensions climb – BBG

Trump’s Huawei problem: Asia doesn’t want US to kneecap China – BBG

EUR:

Leader of Social Democrats, Merkel’s coalition partner, announces resignation – NYT

Italy’s Tria says leaked letter to EU hurts negotiations – BBG

AUD:

RBA shadow boards first rate cut in five years – AFR

GBP:

John Bolton (US Security advisor) interview, Brexit is a triumph of democracy that will boost UK on world stage – TEL

 

Harry Hindsight

 

  • GBP: A quiet Asian session with the market holding around the 1.2610 level moving through into the grey hour, dipping to test the 1.2600 level for the first time and rising from the London opening to slowly test towards the 1.2630 levels before starting a slow steady drift through the figure level and although there was a pause but only for a brief period before pushing through the lows to test to the 1.2560 level and the move into the NYK session and starting a slow steady recovery as the trade war continues to build in intensity with the release of a Chinese white paper on the subject, and Cable pushing through to the previous high and eventually pushing through top test into the mid 1.2645 area a drift back to the 1.2630 for the close.
  • JPY: USDJPY saw a slow steady drift through the day opening around the 109.60 areas and dropping off on the move into the Tokyo session to hold around the 109.25 for a few hours before starting the slide again, the moving through to the grey hour saw the market holding around the 109.00 areas into London before slowly drifting again to the 108.75 level and holding in a tight range through to NYK before slowly slipping further lower and running to the close around the 108.35 area.
  • AUD: A very limited day for the Oz with the market ranging around the 0.6910 level for the run into the London session making early lows towards the 69 cents level before rising through to the grey hour and the 0.6920 level, the move through early London saw the market pushing lightly towards the 0.6930 area before mid-morning sellers moved in to test the lows again on a slow move through to the NYK session, NYK were steady buyers as the USD dropped back against most pairs and the AUD pushed through the 0.6940 areas and then held through to the close in the 0.6930-40 areas.
  • EUR: A slow state to the day with a rise through to the 1.1140 level from the opening around the 1.1130 area, the move through to the grey hour saw the market drifting a little through the opening level before recovering and seeing light buying into the London session rising through to hold through to the NYK session in a tight range around the 1.1150 level, the move through the NYK session saw more movement in the first 3 hours than the rest of the day with a slow rise through to test the 1.1180 level before dropping quickly back having more or less ignored most of the data to the 1.1135 area and then starting a long steady rally through to the close pushing again towards those highs and finishing the day around the 1.1170 area.

 

Yesterday’s Premiership results

GBP       GfK Consumer Confidence May A -10 | C -12 | P -13        

JPY         Unemployment Rate Apr A 2.40% | C 2.40% | P 2.50%    

JPY         Tokyo CPI Core Y/Y May A 1.1% | C 1.20% | P 1.30%        

JPY         Industrial Production M/M Apr (P) A 0.60% | C 0.20% | P -0.60%

JPY         Retail Trade Y/Y Apr A 0.50% | C 1.00% | P 1.00%             

CNY        Manufacturing PMI May A 49.4 | C 49.9 | P 50.1

CNY        Non-manufacturing PMI May A 54.3 | C 54.3 | P 54.3      

AUD       Private Sector Credit M/M Apr A 0.20% | C 0.30% | P 0.30%         

JPY         Consumer Confidence Index May A 39.4 | C 40.6 | P 40.4              

JPY         Housing Starts Y/Y Apr A -5.70% | C -0.80% | P 10.00%   

EUR        German Retail Sales M/M Apr A -2.00% | C 0.40% | P -0.20%       

CHF        Retail Sales Real Y/Y Apr A -0.70% | C -0.80% | P -0.70%

GBP       Mortgage Approvals Apr A 66K | C 64K | P 62K   

GBP       Money Supply M4 M/M Apr A 0.90% | C 0.40% | P -0.50%            

EUR        German CPI M/M May (P) A 0.20% | C 0.30% | P 1.00%  

EUR        German CPI Y/Y May (P) A 1.40% | C 1.60% | P 2.00%      

CAD       GDP M/M Mar A 0.50% | C 0.30% | P -0.10% | R -0.20%

CAD       GDP Annualized Q/Q Q1 A 0.40% | C 0.70% | P 0.30%     

CAD       Industrial Product Price M/M Apr A 0.80% | C 0.30% | P 1.30%   

CAD       Raw Materials Price Index M/M Apr A 5.60% | C 2.40% | P 2.80%              

USD       Personal Income Apr A 0.50% | C 0.30% | P 0.10%            

USD       Personal Spending Apr A 0.30% | C 0.20% | P 0.90% | R 1.10%

USD       PCE Deflator M/M Apr A 0.30% | C 0.30% | P 0.20%         

USD       PCE Deflator Y/Y Apr A 1.50% | C 1.50% | P 1.50% | R 1.40%

USD       PCE Core M/M Apr A 0.20% | C 0.20% | P 0.00% | R 0.10%

USD       PCE Core Y/Y Apr A 1.60% | C 1.60% | P 1.60% | R 1.50%

USD       Chicago PMI May A 54.2 | C 54 | P 52.6 

USD       U. of Mich. Sentiment May (F) A 100 | C 101 | P 102.4    

 

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