Daily FX Market Commentary

Andy Harrison

Good morning,

NYK Close

USDJPY 79.453 | EURUSD 1.24436 | EURJPY 98.869 | AUDUSD 1.00441 | NZDUSD 0.78488 | USDCAD 1.03322 | EURCHF 1.20104 | USDCHF 0.96517 | GBPUSD 1.55181 | EURGBP 0.8019 |

 

Harry Hindsight

·         EUR: A combination of quiet markets and stop loss hunting took Euro’s higher during Asia, moving from the 1.2470 area up to just above 1.2520 as we moved into the London session comments from a German government official on the EU summit saw the market drop quickly from those highs to 1.2408 from that point it was all sideways and dull trading again, moving between 1.2420-60 on the wide but not really extending to far above 40 for most of the day. Auctions in Spain and Italy again saw headline rates pressing against the 7% level, and Merkel is still denying the rest of the Eurozone there buskers fees, but then they not that good.

·         GBP:  Although the Barclay’s debacle was released the day before it undermined the cable to some extent and in thin markets any sentiment running contrary to its one bright light of being a safe haven is bad news, Euro’s collapsed and in the downturn too GBP with it, Asia had moved steadily higher same as the Euro only to collapse to 1.5536 area, while Euro managed to recover 20-40 tics from its low Cable stabilised and moved higher as with the Euro but sentiment turned  against it and with the GDP final figure being worse than previously thought the  market moved further extending losses below 1.5500 only to recover in the last hour of NYK.

·         JPY: Asia set the highs above 79.70 but was offered from the fixing onwards trading slowly down to the 79.30 area, from that point it was broadly speaking 79.25-45 throughout London and NYK as the market died a death one suspects it wanted to move lower but again with EURJPY down below 99.00 and USDJPY below 80.00 we will begin to see verbal intervention from the BoJ sneak into the market.

·         AUD: Oz plateaued early in the session in Asia having triggered stops from the 1.0090 and again 1.0110-20 level the market attempted to get at further stops above the highs however, try as they did they couldn’t quiet push them out before the collapse in the Euro occurred and this dragged on the Oz taking it on a decline over the rest of the day to touch below parity briefly. And finish around the 1.0040 for the day.

 

Yesterday’s premiership results

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

23:50     JPY         Retail Trade Y/Y May A 3.60% | C 3.00% | P 5.80% | R 5.70%

01:00     NZD       NBNZ Business Confidence Jun A 12.6 | P 27.1   

07:55     EUR        German Unemployment Change Jun A 7K | C 3K               | P 0K | R 1K

07:55     EUR        German Unemployment Rate Jun A 6.80% | C 6.70% | P                6.70% | R 6.80%

08:30     GBP       GDP Q/Q Q1 (F) A -0.30% | C -0.30% | P -0.30% 

09:00     EUR        Eurozone Consumer Confidence Jun (F) A -19.8 | C -19.6 | P -19.6            

09:00     EUR        Eurozone Economic Confidence Jun A 89.9 | C 89.6 | P 90.6 | R 90.5

09:00     EUR        Eurozone Industrial Confidence Jun A -12.7 | C -12 | P -11.3 | R -11.4

09:00     EUR        Eurozone Services Confidence Jun A -7.4 | C -6 | P -4.9 | R -5.2

12:30     USD       GDP (Annualized) Q1 (F) A 1.90% | C 1.90% | P 1.90%     

12:30     USD       GDP Price Index Q1 (F) A 2.00% | C 1.70% | P 1.70%        

12:30     USD       Initial Jobless Claims A 386K | C 385K | P 386K    

14:30     USD       Natural Gas Storage A 57B | C 55B | P 62B            

For today

USDJPY:
Topside: 79.50-79.75 small offers 79.95-80.30 light 2 way interest with an offered bias

Downside: 78.80-79.15 mixed bag dominated by sell stops  

EURUSD:
Topside: 1.2625-30 offers

Downside: 1.2400-1.2430 marginal bids 1.2370-1.2400 mixed 1.2325-1.2355 small sell stops

AUDUSD:
Topside: 1.0180 offers 1.0205-10 small buy stops

Downside: 1.0000-1.0025 good bids 0.9940-0.9970 light bids:

22:45     NZD       Building Permits M/M May A -7.10% | C 3.00% | P -7.20% | R -7.60%

23:01     GBP       GfK Consumer Sentiment Jun A -29 | C -29 | P -29           

23:15     JPY         Nomura/JMMA Manufacturing PMI Jun A 49.9 | P 50.7 

23:30     JPY         Unemployment Rate May A 4.40% | C 4.50% | P 4.60% 

23:30     JPY         Household Spending Y/Y May A 4.00% | C 2.50% | P 2.60%          

23:30     JPY         National CPI Core Y/Y May A -0.10% | C 0.00% | P 0.20%               

23:30     JPY         Tokyo CPI Core Y/Y Jun A -0.60% | C -0.70% | P -0.80%   

23:50     JPY         Industrial Production M/M May (P) A -3.10% | C -2.80% | P -0.20%          

5:00        JPY         Housing Starts Y/Y May A 9.3% | C 6.50% | P 10.30%     

 

EUR:

Euro Zone Leaders pledge direct bank recap, easier access to bailout funds

Hollande: withholds endorsement of EU fiscal pact

Hollande: 27 leaders agreed on growth pact worth €120-130bln

Van Rompuy:  Eurozone reaffirms commitment to use EFSF and ESM flexibly and efficiently to stabilise markets EU’s Van Rompuy says mechanism will involve ECB, once in place ESM could recapitalise banks directly.

Van Rompuy: will present first Euro integration report in Oct 2012 (nothing like striking while the irons hot)

Barroso: Mr Civil war himself stated direct bank recapitulation will be possible under very strict conditions: Hope to open ESM, EFSF access for well performing countries by the summer (oxymoron): Over mid-term Spain bank aid can be removed from Spain sovereign debt burden

Merkel: We took good short term decisions on ESM, EFSF

Monti: Steps agreed will be very positive for Eurozone: Decisions taken lay the ground towards mutual euro bonds.

JPY:

Japan jobless rate falls to 4.4% in May

Japan May Core CPI -0.1% on Year; Mkt Expected Flat

Japan May household spending rises 4.0% YoY

Japan May industrial output falls 3.1% MoM

CNY:

China Central Bank Chief: Will Continue Prudent Monetary Policy

China unveils tax, finance incentives for new Shenzhen zone

China to expand banks’ financing channels -regulator

China May industrial profits down 5.3% on yr.

China to Invest CNY175 Bln Over 5 Years in Rural Access to Drinking Water – Xinhua

CNY/EUR:

China Says EU Should Remove Trade, Investment Barriers – Report

USD:

Fed’s Fisher says mega banks get “unfair subsidy”

AUD:

Australia private credit rose 0.5% in May

NZD:

NZ household borrowing higher in May – RBNZ

 

 

·         EUR: With comments coming quick and fast it seemed that we would sit and listen to the normal platitudes of renewed effort, growing concord etc. etc. as you can see from the news items one after the other came out, we initially looked to be strengthening on the back of Hollande comments of a growth pact worth €120-130bln however on retail bought on this comment because when it comes down to it piling up more debt when you’re trying to cut it isn’t a good idea unless your French. After 4hrs of comment the market had risen ohh 15 ticks or so from the opening, then the Van Rompuy made the statement and all week we’ve done nothing and in less than 5mins we’ve doubled the weeks range as the market shot to 1.2628 the key to the comment was directly funding banks, something that had been argued against. Again while this is a break through it still doesn’t explain where the additional funds are likely to come from? So maybe during the day we’ll see it as a rotten carrot.

·         GBP: The market was looking like any other day this week with early trading contained within a 10 tic range from 1.5510-20 for the first 3hrs then we started to move a little as yesterday’s data was taken into context (we knew it was bad) moving to trade to 1.5540 once the Von Rompuy statement came out Cable was caught up in the move and rallied quickly to just short of 1.5630.

·         JPY: The market opened around the 79.45 level and traded steadily lower moving down to below 79.15 briefly triggering one or two weak stops in the market before holding the 79.20 level, when the Euro rally kicked in USDJPY moved high slightly as EURJPY was dragged higher triggering stops there thus weakening JPY slightly, but not getting to the opening levels.

·         AUD: Oz performed as the other peripheral currencies trading in a narrow range until the Van Rompuy statements from the 1.0020 area we rallied quickly above 1.0170 before settling back to range 1.0140-60.

·         Overall: While statements are encouraging the fact that no details have been released

 

Today’s data

Consensus = C  Previous = P Timings GMT

7:00        CHF        KOF Leading Indicator Jun C 0.78 | P 0.81              

8:00        EUR        Eurozone M3 Y/Y May C 2.30% | P 2.50%              

8:30        GBP       Index of Services 3M/3M Apr C                 -0.20% | P 0.10%             

9:00        EUR        Eurozone CPI Estimate Y/Y Jun C 2.40% | P 2.40%             

12:30     CAD       GDP M/M Apr C 0.20% | P 0.10%             

12:30     CAD       Industrial Product Price M/M May C 0.10% | P 0.00%      

12:30     CAD       Raw Materials Price Index M/M May C -1.50% | P -2.00%             

12:30     USD       Personal Income May C                0.20% | P 0.20%               

12:30     USD       Personal Spending May C 0.10% | P 0.30%           

12:30     USD       PCE Deflator Y/Y May C                 1.50% | P 1.80%               

12:30     USD       PCE Core M/M May C 0.20% | P 0.10%  

12:30     USD       PCE Core Y/Y May C 1.80% | P 1.90%      

13:45     USD       Chicago PMI Jun C 53 | P 52.7    

13:55     USD       U. of Michigan Confidence Jun (F) C 74.1 | P 74.1                             

 

Ranges as of 6am London time

                                Highs   Lows

USD/JPY               79.48 | 79.081

EUR/USD             1.26285 | 1.24327

EUR/JPY               100.216 | 98.54

AUD/USD            1.0173 | 1.0018

NZD/USD             0.7962 | 0.7849

USD/CAD             1.0342 | 1.0262

EUR/CHF              1.20158 | 1.201

USD/CHF             0.96578 | 0.9512

GBP/USD             1.5630 | 1.5510

EUR/GBP             0.8089 | 0.80115

 

Good luck

Andy