Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 99.369 | EURUSD 1.30092 | EURJPY 129.268 | AUDUSD 1.04127 | NZDUSD 0.84606 | USDCAD 1.0168 | EURCHF 1.21652 | USDCHF 0.93527 | GBPUSD 1.52545 | EURGBP 0.85282 |

 

Harry Hindsight

·         EUR: With little news over the weekend the Euro held its own on the opening in Asia and traded quietly in the background to the Yen, opening around the 1.2990 area and dropping to a low below 1.2970 towards the end of the session as early Europeans moved into the market, with only an expansion in German industrial production helping to move it higher over the course of the day to above 1.3035 just before  the NYK opening, from there it was a slow slog to the close dropping back from the highs to the 1.3000 area where we are holding as we head to the close. The only news being the change of direction forced upon the Portuguese government by the courts which pushes the onus onto the government to find ways to cut back its spending rather than increasing taxation.

·         GBP: While the media still twitters on about the triple dip recession, the ratings agency’s hang fire on cutting the UK’s ratings, and one has to say while we dither either side of zero growth it has to be better than some are doing and -/+0.1 is probably neither here or there, Cable opened around the 1.5330 area and pushed slightly higher to touch above the 1.5350 level before slowly drifting lower throughout the session only in late London into the NYK session did we see the losses increase and a marked rise in the EURGBP cross moving from below 0.8470 to move to above 0.8530 as Euro’s held onto some of its gains, Cable continued lower dropping to below 1.5240 before holding on weak support towards the close in NYK.

·         JPY: USDJPY gapped higher on the 2200hrs opening having risen to 98.20, from there we continued to see fresh buying of USDJPY into the Tokyo opening touching above 98.80 before finding significant resistance, as exporters lined up in both USDJPY and EURJPY to put a lid on the early buying, and we slipped back to trade around the 98.40 level, early buying was helped by the current account showing a drop to flat for the month of Feb, which in reality can be explained away as being a four week month more than anything else, as we moved through the session into the grey hours we started to see fresh spec buying filtering through from early Europeans and the market moved to touch slightly through the 99.00 level before dropping back to the 98.60 level and we had to wait for the US futures market to enter the fray in full to trigger weak stops above the level in late trading to take us firmly above the level with 100.00 now in full sight.

·         AUD: Overall a better day for the Oz as the JPY weakened the early trading in Oz also weakened as a consequence dropping from the opening levels 1.0375 to below 1.0350, we started to see it rise again as USDJPY dropped back from its highs and so the Oz remained driven by the strength or weakness of the USDJPY into the London opening where we saw a push to the 1.0390 area, as we moved further into the London session the carry trade suddenly became more attractive and we saw a push to the 1.0425 levels, and although NYK took it back down to below 1.0400 we regained a portion of the move and remain above the 1.0410 as we move to the close.

 

Yesterday’s premiership results

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

JPY         Current Account (JPY) Feb A 0.00T | C 0.46T | P 0.36T     

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

EUR        Eurozone Sentix Investor Confidence Apr A -17.3 | C -12.6 | P -10.6        

EUR        German Industrial Production M/M Feb A 0.50% | C 0.40% | P 0.00%

 

For today

USDJPY:
Topside: 99.60-99.90 light offers 99.90-100.20 decent buy stops 100.20-100.50 medium sized mix
Downside: 98.60-98.90 medium bids 98.40-98.20 light sell stops

EURUSD:
Topside: 1.3070-1.3080 medium mix 1.3080-1.3120 light mix 1.3120-1.3150 light offers
Downside: 1.2960-1.2990 light sell stops

EURJPY:
Topside: 130.20-130.50 light offers
Downside: Nothing of significance AUDUSD:
Topside: 1.0460-1.0490 light offers
Downside: 1.0340-1.0370 light mix

 

GBP:

BRC like for like sales showed an expected slowdown due to freezing conditions in March

UK surveyors report a 3yr peak in home sales

EUR:

Two of Greeks biggest banks face state rescue after admitting they are unlikely they are unlikely to meet significant cash levels.

USD:

Bernanke says stress tests make banks more stable (that remains to be seen)

JPY:

Abe: important to pursue sustainable fiscal policy

BoJ combining schemes for JGB buying needed further examination Aso

Excessive Yen gain has been corrected (which should have read is being corrected) – Aso

 

·         EUR: Once we moved out of NYK we saw continual buying in the Euro pre Tokyo while the market was a little thin and once we moved into the opening the market was close enough to take out stops above the 1.3030 level, from here it was a quick rise to above the 1.3060 running into some medium sized profit taking, once we’d made the high we died a death and the market stalled slowly falling back to the 1.3040’s in late trading towards the London market.

·         GBP: The GBP struggled initially pre Tokyo then rose quickly with the Euro however, even though it moved from the 1.5265 area it lagged a little behind the Euro’s rise and we saw the EURGBP cross rising to above the 0.8550 mark from the opening 0.8530 area, cable touched briefly just below 1.5280 but was less convincing in the movements dipping back to the mid 1.5260’s again as we head towards London with a tight 1.5255/78 range.

·         JPY: The USDJPY continued rising after the NYK close trading above 99.65 and looking as if it may move to the 100 barrier that was until Aso spoke and was misinterpreted by one of the media agencies and the market dropped quickly from the Tokyo opening to below 99.10 before the retraction and the correct translation was broadcast however, that killed the market with plenty going long for the break above 100.00 and suddenly caught in a quickly declining market. We currently hold below the opening area around the 99.20/30 levels moving towards London.

·         AUD: The Oz benefitted from both Yen weakness and then the fall off to a lesser degree, as USDJPY rose so did the AUDJPY as the expectations for the push through 100 in early trading had carry trade players jumping on board and the market rose to above the 1.0445 area before the USDJPY fell back, even so the Oz held its own and only pulled back to the 1.0430 area were we currently reside as we head to London, the China data had less of an impact than previous releases with slightly better inflation data than expected overall.

 

A final note on the passing of Baroness Thatcher who changed the face of Britain from the late 70’s onwards, also of note as a snotty nosed fully trained soldier who spent the best part of his first year filling in for the striking Firemen and Dustbin men,  she saw fit to raise my £21 per week to £46 it was worth being called a scab by the hard working unionists. RIP

 

Today’s data

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

GBP       BRC Sales Like-For-Like YoY Mar A 1.90% | P 2.70%          

GBP       RICS House Price Balance Mar A -1% | C -4% | P -6%       

AUD       NAB Business Confidence Mar A 2 | P 1 

CNY        CPI Y/Y Mar A 2.10% | C 2.50% | P 3.20%              

CNY        PPI Y/Y Mar A -1.90% | C -1.80% | P -1.60%         

05:45     CHF        Unemployment Rate Mar C 3.10% | P 3.10%      

06:00     JPY         Machine Tool Orders Y/Y Mar (P) P -21.50%        

06:00     EUR        German Trade Balance (EUR) Feb C 16.2B | P 15.7B         

07:15     CHF        CPI M/M Mar C 0.30% | P 0.30%               

07:15     CHF        CPI Y/Y Mar C -0.50% | P -0.30%               

07:15     CHF        Retail Sales (Real) Y/Y Feb C 2.90% | P 1.90%      

08:30     GBP       Industrial Production M/M Feb C 0.30% | P -1.20%          

08:30     GBP       Industrial Production Y/Y Feb C -2.70% | P -2.90%            

08:30     GBP       Manufacturing Production M/M Feb C 0.40% | P -1.50%               

08:30     GBP       Manufacturing Production Y/Y Feb C -1.40% | P -3.00% 

08:30     GBP       Visible Trade Balance (GBP) Feb C -8.5B | P -8.2B             

12:15     CAD       Housing Starts Mar C 176K | P 180.7K     

12:30     CAD       Building Permits M/M Feb C 5.30% | P 1.70%     

14:00     USD       Wholesale Inventories Feb C 0.40% | P 1.20%    

14:00     GBP       NIESR GDP Estimate Mar P -0.10%           

               

Interbank Ranges as of 6am London time

                                Highs    Lows

EUR                        1.3068 | 1.3009

JPY                         99.67 | 99.08

GBP                       1.5279 | 1.5255

CHF                        0.9353 | 0.9319

AUD                       1.0448 | 1.0405

CAD                       1.0169 | 1.0160

NZD                       0.8497 | 0.8460

EURCHF                1.2182 | 1.2167

EURGBP               0.8560 | 0.8527

EURJPY                 129.935 | 1.2930

 

Good luck

Andy