Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close SYD open

USDJPY 97.548 97.86-88 | EURUSD 1.29959 1.2972-78 | EURJPY 126.778 126.94-127.03 | AUDUSD 1.03876 1.0376-90 | NZDUSD 0.84322 0.8410-38 | USDCAD 1.0176 1.0163-77 | EURCHF 1.2143 1.2134-53 | USDCHF 0.9344 0.9349-54 | GBPUSD 1.53364 1.5289-1.5325 | EURGBP 0.8473 0.8454-80 |

 

Weekend News

EUR:

Portugal constitutional court rules against austerity measures.

JPY:

BoJ to shift the operation target to monetary base from the previous overnight call rate

BoJ to double the monetary base in two years

BoJ to purchase more JGB’s than the amount of the fiscal deficit and 70% of newly issued JGB’s in gross terms

USD/CNY/KRW:

The US is pressuring China’s new President to remedy N.Korea’s regime or face increased US presence in the area.

USD/EUR:

Europe continues to present barriers to growth in the US and global economies US treasury official

GBP:

S&P say Britain’s AAA at risk if growth, deficit disappoint

Harry Hindsight

·         EUR: The Euro as with most currencies played second fiddle to the JPY, we opened around the mid 1.2930’s and traded for the most part 1.2920-38 only breaking lower as we started to move towards the early plays from the Europeans trading down to just above the 1.2900 level in the grey hours before the London open, we regained the opening levels just after the opening in London and a slightly better than expected retail sales number and German factory orders helped the market move to the highs of Asia. NYK entered the market and immediately corrected the lack of movement in the pair and Euro’s moved quickly higher as institutional funds bought both the Euro and EURJPY helping it to quickly break to the 1.3030 area with a slight fall back to the 1.2990 after a weaker than expected payroll number, we remained bullish in the Euro and moved slowly to touch 1.3040 before a steady decline towards the close leaving the market just below the 1.3000 area.

·         GBP: Cable remained quiet generally throughout the Asian session being squeezed lower as the Yen weakened pushing from the highs of 1.5240 to trade on the 1.5200 level before London changed the course and started to buy during the early part of London however, it wasn’t until after the NFP number that we saw the pair starting to gain more strongly moving to above the 1.5360 in a similar pattern to the EUR, with GBP gaining ground against the Euro also with the pair moving from above 0.8500 to the low 0.8470 in late trading. Cable held on to most of the gains finishing the day hovering around the 1.5340 in a quiet close to the day.

·         JPY: The market opened around the 96.40 area and traded quietly pre Tokyo opening before trading quickly higher from the opening to breach the 97.00 for the first time dipping slightly in the face of exporter offers, we then took the market higher again triggering some minor stops as the offers were cleared and touched the 97.20 levels, as the market ran out of steam and the early yields in the JGB 10yrs which opened around the 0.33 mark rose to above 0.55 triggering some scramble and causing the USDJPY to reverse and trade back through the opening levels far quicker than it had risen, moving into the grey hours pre London saw some weak stops being triggered through the 96.00 levels before the market stabilised and started to hold just shy of the opening levels. London kept away and the market held the levels for most of the session and once we saw the NFP number we saw a quick spike lower to below the 95.80 level, at which point Euro’s was starting to move strongly higher and we saw EURJPY buying kicking in and the JPY started to weaken again against everything including the USDJPY which rose steadily over the remaining part of the session to above the 97.80 towards the end of NYK, closing just shy of the highs at 97.60 areas.

·         AUD: With no relevant data out of Australia or China the Oz was at the mercy of the vagaries of the JPY, for the most part during Asia we saw early buyers of the carry trades as the hunt for yield started the day with the JGB 10yr at some 0.33, the Oz having opened at 1.0430, struggled as the JPY leg was the weakest in the buying and USDJPY moved higher allowing the Oz to drift to just above the 1.0400 level however, once the market reversed the Yen move Oz picked up and move back to trade a few times above the opening levels but was always second best to the Yen, when the NFP numbers hit the market the Oz came under pressure to give up its gains as the Yen weakened quickly and the Oz moved quickly to below 1.0360 negating any to some extent the AUDJPY cross movement which touched above the 1.0160 level limiting it to around 120 tics high on the day. Having hit its lows the Oz started to slowly rise moving back to the 1.-0400 level but unable to move through the level finishing the day around the 1.0390. 

Friday’s premiership results

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

JPY         Leading Index Feb (P) A 97.5 | C 97.2 | P 95         

CHF        Foreign Currency Reserves Mar A 438.3B | C 427.0B | P 427.7B | R 430.0B

EUR        Eurozone Retail Sales M/M Feb A -0.30% | C -0.50% | P 1.20%   

EUR        German Factory Orders M/M Feb A 2.30% | C 1.10% | P -1.90% | R -1.60%

CAD       International Merchandise Trade (CAD) Feb A -1.0B | C 0.20B | P -0.24B

CAD       Unemployment Rate Mar A 7.20% | C 7.00% | P 7.00%  

CAD       Net Change in Employment Mar  A -54.5K | C 9.0K | P 50.7K        

USD       Trade Balance Feb A -$43B | C -$44.6B | P -$44.4B            

USD       Change in Non-farm Payrolls Mar A 88K | C 190K | P 236K | R 268K

USD       Unemployment Rate Mar A 7.60% | C 7.70% | P 7.70%  

CAD       Ivey PMI Mar A 61.6 | C 52.2 | P 51.1      

For today

USDJPY:
Topside: 98.85-99.00 light mix 99.00-99.30 decent buy stops 99.30-99.60 light buy stops
Downside: 97.70-98.00 light sell stops

EURUSD:
Topside: 1.3030-1.3060 medium sized buy stops 1.3060-1.3090 light buy stops 1.3090-1.3120 light offers
Downside: 1.2980-1.2960 light bids 1.2950-1.2920 light mix

EURJPY:
Nothing significant showing today AUDUSD:
Topside: 1.0385-1.0410 light offers 1.0410-1.0440 light offers
Downside1.0310-1.0350 light mix

 

GBP/EUR:

Cameron to meet EU leaders to push reform plan

GBP:

UK firms see more jobs but no economic growth survey

 

EUR:

Portugal to cut spending after court ruling

Greek banks to be recapitalised separately CB

France ups ante in EU tax evasion battle after scandal

JPY:

BoJ begins long-term JGB purchases under enhanced easing commitment

BoJ easing only buys time for structural reform Moody’s

CNY:

China warns against troublemaking on Korean peninsula

Off balance sheet lending risks luck in the shadows

 

·         EUR: A choppy start to the session with the market with retail Japan buyers in EURJPY while we saw US names sellers of the Euro, we topped out around the 1.3008 dropping into the 1.2990’s in some heavy buying and selling for the first hour or so before settling down to the 1.2990 area dipping to the mid 1.2980’s as JPY dominated the market again, as we head towards the London session the Euro is not that much changed and holds around the 1.2990 level.

·         GBP: Cable opened around the 1.5330 area with a wide market as the banks stayed clear of the choppy GBPJPY cross, we made the low on the opening around the 1.5320 area before moving higher to touch above the 1.5350 area as Tokyo opened for the day, from there we’ve fell back as the JPY weakened and the low yielding crosses stayed side-lined dipping to the 1.5325 levels as we move to towards London.

·         JPY: Pre Tokyo opened slightly higher than NYK close however, the market moved quickly to the 98.20 level in the intervening 2 hrs and quickly rose to trade above the 98.80 level into the Tokyo opening as the IMF endorsed the easing strategies and we saw a drop in the current account numbers for Feb to flat, the market followed through triggering minor stops and only stumbled once we reached those highs, from there we’ve stayed in a 98.40-60 range for the most part as volumes began to fall off after the mad rush in the illiquid Sydney session.

·         AUD: As you would expect with a weakening Yen the Oz also weakened opening below NYK’s close for ourselves around the 1.0380 level and dropped to a low of 1.0350 dominated by the AUDJPY which pushed above the 10220 area and remained centred around that level. Apart from the cross the market was fairly quiet with no data and nothing from the Chinese for the day, the Oz looks to be moving into the London session off its lows around the 1.0370 level.

 

Today’s data

Actual = A Consensus = C  Previous = P Timings GMT

JPY         Current Account (JPY) Feb A 0.0 | C 0.46T | P 0.36T          

JPY         Eco Watchers Survey: Current Mar A 57.3 | C 56.3 | P 53.2           

08:30     EUR        Eurozone Sentix Investor Confidence Apr C -12.6 | P -10.6           

10:00     EUR        German Industrial Production M/M Feb C 0.40% | P 0.00%          

14:30     CAD       BoC Business Outlook Survey                    

 

Ranges as of 6am London time including Sydney open

                                Highs    Lows

JPY                         98.85 | 97.70

EUR                        1.3006 | 1.2962

GBP                       1.5352 | 1.5301

CHF                        0.93585 | 0.9329

AUD                       1.0382 | 1.0348

NZD                       0.8442 | 0.8405

CAD                       1.0184 | 1.0165

EURCHF                1.2154 | 1.21305

EURGBP               0.8480 | 0.8464

EURJPY                 128.425 | 126.70

Stay lucky

Andy