Daily FX Market Commentary

Andy Harrison

Good morning,

NYK Close

USDJPY 80.28 | EURUSD 1.25408 | EURJPY 100.695 | AUDUSD 1.00359 | NZDUSD 0.78776 | USDCAD 1.0293 | EURCHF 1.20106 | USDCHF 0.95772 | GBPUSD 1.55937 | EURGBP 0.80418 |

 

Harry Hindsight

·         EUR: After the quiet downward trend of Asia moving from the 1.2700 level to touch 1.2660 before finding some support we moved into London expecting the usual round of rumours however, mixed PMI figures set the market lower triggering a minor move down into the mid 1.2640’s once the number sellers had disappeared we spent the next few hours gradually moving back upwards towards the 1.2700 level helped by signals that the ECB is poised to ease collateral conditions, then speculation that Spanish banks need €51-62bln giving Moody’s enough time to tell the world that it intended to downgrade some more European banks the market turned south to close out around the 1.2540 mark after fairly steady selling.

·         GBP: Quiet Asia saw the market moving into London on the back foot only decent retail sales turned the market sending it from the days lows of 1.5660 higher to move up to the 1.5730 area however, it was only briefly ascendant and the drag by the Euro kicked in and we started the steady decline back through 1.5700 until finally finding support just under the 1.5600 level.

·         JPY: With risk off for another day, USDJPY found further reason to rally moving higher, which for the USDDJPY was a very decent rally moving through several layers of exporter offers 79.60, 79.90, 80.10 and finally 80.20, which completes a small reverse head and shoulders formation that began in the middle of May.

·         AUD: Probably the largest mover of the day, with the short term market getting caught long above the 1.0150 level we saw the steady declines in Asia turn into a larger sell off in NYK, significant amounts of AUDCAD went through having traded up through long term resistance at 1.0400 triggering stop losses again leaving the market long in the pairing before the selloff, with a day’s high over 1.0200 we saw the market drop to within a cats whisker of parity into the close, the drop below 1.0140 was particularly nasty with 30tics going in seconds.

·         The 15 Banks:

Yesterday’s premiership results

Actual = A | Consensus = C | Previous = P | Revised = R 

NZD       GDP Q/Q Q1 A 1.10% | C 0.40% | P 0.30% | R 0.40%

CNY        HSBC Flash China Manufacturing PMI Jun A 48.1 | C 48.7 | P 48.4

CHF        Trade Balance (CHF) May A 2.48B | C 1.97B | P 1.33B | R 1.26B

EUR        French PMI Manufacturing Jun (P) |A 45.3 | C 44.5 | P 44.7         

EUR        French PMI Services Jun (P) A 47.3 | C 45.1 | P 45.1         

EUR        German PMI Manufacturing Jun (A) A 44.7 | C 45.2 | P 45.2         

EUR        German PMI Services Jun (A) A 50.3 | C 51.5 | P                51.8       

EUR        Eurozone PMI Manufacturing Jun (A) A 44.8 | C 44.8 | P 45.1      

EUR        Eurozone PMI Services Jun (A) A 46.8 | C 46.4 | P 46.7   

GBP       Retail Sales M/M May A 1.40% | C 0.90% | P -1.00% | R  -2.40%

GBP       Retail Sales Y/Y May A 3.00% | C 2.70% | P -0.30%            

GBP       Retail Sales w/Auto Fuel M/M May A 1.40% | C 1.20% | P -2.30% | R -2.40%

GBP       Retail Sales w/Auto Fuel Y/Y May A 2.40% | C 2.10% | P -1.10%  

GBP       CBI Trends Total Orders Jun A -11 | C -20 | P -17               

CAD       Retail Sales M/M Apr A -0.50% | C 0.30% | P 0.40%          

CAD       Retail Sales Less Autos M/M Apr A -0.30% | C 0.20% | P 0.10%   

USD       Initial Jobless Claims A 387K | C 385K | P 386K    

EUR        Eurozone Consumer Confidence Jun (A) A -20.00% | C -20 | P -19.3         

USD       Philly Fed Survey Jun A -16.60% | C 0 | P -5.8      

USD       Existing Home Sales May A 4.55M | C 4.56M | P 4.62M  

USD       House Price Index M/M Apr A 0.80% | C 0.40% | P 1.80%             

USD       Leading Indicators May A 0.30% | C 0.10% | P -0.10%      

USD       Natural Gas Storage A 62B | C 64B | P 67B            

 

For today

USDJPY:
Topside: 80.30-80.55 light offers 80.55-80.85 medium sized scaled buy stops 80.90-81.20 decent buy stops
Downside: 79.75-80.05 good bids 79.30-79.65 small bids

EURUSD:
Topside: 1.2575-1.2605 small offers  1.2630-1.2665 light offers
Downside: 1.2510-1.2540 mixed 1.2475-1.2510 marginal bids 1.2430-1.2460 decent sell stops

EURJPY:
Topside: 101.65-101.85 light offers
Downside: Nothing of note.

AUDUSD:
Topside: 1.0065-1.0080 small offers  1.0100-1.0100 good 2-way interest 1.0135-1.0165 light offers
Downside: 1.0025-1.0050 marginal bids 0.9980-1.0015 good scaled sell stops 0.9940-0.9965 decent sell stops

 

JPY:

Japan firms doubt value of BOJ debt buying-Reuters Tankan

AUD:

Fortescue launches challenge against Australia mining tax

USD/CNY:

China’s Investment in US Has Significant Potential for Growth – US Official

CNY:

China Securities Regulator: Considering Tax Reduction or Waiver for Pension Funds

BRL/CNY:

Brazil, China to Sign $30 Billion Local Currency Swap Agreement

NZD:

New Zealand posts migration gain in May

New Zealand May Credit Card Billings +0.4% vs. April, +3.9% On Year

 

·         EUR: Having dropped so much during the later parts of yesterday’s session that had to be some give and Euro’s has moved up, well 1.2540/64 on the day what more can you ask for, it’s been fairly quiet and I think the Asian market is looking for some concrete ideas other than up, down, down, up with no particular sense or trend longer than 6hrs. WSJ runs a story about the Spanish aid plan being flawed according to the IMF, which to me sounds like the French ((Lagarde) who says the IMF is independent)) again whinging about Germany keeping a tight grip on its own purse.

·         GBP: Very little movement with the cable moving up from the NYK close, to highs above 1.5615, a bit better than the Euro, but you would be hard put to tell.

·         AUD: A very tight range for the Oz with investors looking less inclined to jump into any positions this side of the weekend, not surprising really the hammering the Johnny come latelys had yesterday on the drop. Moving from the closing levels to hit 1.0065 with very little conviction.

·         JPY: We opened holding the gains from the previous session moving around the 80.25 level, rumours of supply for fixing saw exporters offloading into the market dropping us back to the 80.00 however, as is often the case those selling were in fact the supply rumoured for the fixing so when we reached the fixing all that was left was light demand and very little on the topside to stop it rising and we gradually moved higher over the remainder of the session to top out above 80.40.

·         Overall: A very quiet session with very little reason to be taking a position over the weekend, the fact the 15 banks Moody’s downgraded where global left people again with hands firmly sat on.

 

Today’s data

Consensus = C  Previous = P Timings GMT

07:30     CHF        SNB Quarterly Bulletin                                                  

08:00     EUR        German IFO – Business Climate Jun C 105.6 | P 106.9       

08:00     EUR        German IFO – Current Assessment Jun C               112 | P 113.3     

08:00     EUR        German IFO – Expectations Jun C 99.8 | P 100.9 

12:30     CAD       CPI M/M May C 0.30% | P 0.40%              

12:30     CAD       CPI Y/Y May C 1.50% | P 2.00%  

12:30     CAD       BoC CPI Core M/M May C 0.20% | P 0.40%          

12:30     CAD       BoC CPI Core Y/Y May C 1.90% | P 2.10%              

 

Ranges as of 6am London time

                                Highs   Lows

USD/JPY             80.436 | 80.001

EUR/USD             1.2565 | 1.254

EUR/JPY             100.999 | 100.37

AUD/USD             1.0065 | 1.0037

NZD/USD             0.7887 | 0.7868

USD/CAD             1.0294 | 1.0274

EUR/CHF             1.2012 | 1.201

USD/CHF             0.9576 | 0.95581

GBP/USD            1.5617 | 1.5594

EUR/GBP            0.80475 | 0.80395

 

Good luck

Andy