Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close SYD open

USDJPY 98.405 97.65-97.655 | EURUSD 1.31102 13125-40 | EURJPY 129.033 128.166-128319 | AUDUSD 1.05067 1.0480-1.0520 | NZDUSD 0.85877 0.8555-69 | USDCAD 1.01341 1.0125-39 | EURCHF 1.21609 1.2155-68 | USDCHF 0.92737 0.9249-89 | GBPUSD 1.53436 1.5340-85 | EURGBP 0.85442 0.8525-60 |


Weekend News


U.S. Urges Japan to Refrain From Competitive Yen Devaluation 
Lawmakers Say U.S.-Japan Auto Deal Is Inadequate for Trade Pact

Japan’s Abe Urges N. Korea to Refrain from Provocations: Kyodo
Magnitude 5.8 Earthquake Hits Western Japan, Leaving 24 Injured

South Korea Trade Ministry Expands FX Insurance as Yen Weakens

Kerry Says No Deal With China on Scaling Back Missile Defence

Levin Calls China ‘Real Disappointment’ for North Korea Stance

China Agrees to Join U.S. in Effort to End N. Korea Weapons Bid

Manila offers US its military bases in case of North Korea war

Fed, BOE Officials Don’t See Signs of Emerging Equity Bubbles

Lockhart Calls Unfounded the View That Fed Monetizes U.S. Debt

EU Set to Clash on Bank Crisis Plan as Germany Sees Treaty Limit
EU Affirms Debt-Cutting Strategy in Face of ‘Fragile’ Outlook
Europe Moves Toward Tax Evasion Clampdown After Six-Nation Push
Cyprus Central Bank Independence Attacked, Demetriades Says 
Cyprus Counting on Gold Sale for Bailout, Finance Minister Says
Spain Says Deficit Reduction Has to Be Compatible With Cycle
Schaeuble Favours ‘Liability Hierarchy’ for European Bank Bailouts
Steinbrueck Says EU Needs Central Bank Rescue Fund, Authority

U.K. Sees German Treaty-Talk Bid as Opening to Repatriate Powers

Australia Caps Tax Breaks to Cut A$2 Billion From Schools Budget

Harry Hindsight

·         EUR: We opened in Asia very quietly moving from around the 1.3110 area to touch above 1.3125 and we really only started to see some movement once we started to creep into the grey hours before the London opening with early Europeans quick sellers, into the London opening the market stabilised around the 1.3040 level again with resurfacing concerns on Cyprus and Portugal although the renegotiation of previous loans for both Portugal and Ireland give them several more years to pay back the debt, helping the market to slowly rise from the lows into the NYK session, the rise continued and we eventually made the opening levels just before the close before settling back slightly to the 1.3100 area.

·         GBP: As with the Euro the Cable was reasonably quiet into the first half of Asia rising from the high 1.5380’s to just below 1.5410 as cross trading dominated the market in particular GBPAUD buying as the Oz moved higher however the market struggled in the second half and as we moved into the grey market was already testing the opening levels, and followed the Euro lower at an increased rate testing into the 1.5340’s by the time London opened, the market settled down and while it remained in a tight 1.5350-80 range for the rest of the session never really looked as if it could test higher and finished the day just off its lows.

·         JPY: Having failed to breach the 100.00 level into the late part of NYK the USDJPY opened in Asia on the weak side with the market slowly declining over the day in a tight channel, there was very little to surprise the market and it was a slow day into the close when we cleared some stops below 98.80 to finish the day around the 98.40 level to make the low. With a suspected option player on the topside which looks to be of considerable size the technical guys have all started to switch their focus to the downside areas.

·         AUD: With the JPY strengthening we started to see some retail Japan selling of the AUDJPY cross in front of the weekend, Asia was particularly quiet with very little news one way or the other for the Oz and it held onto its levels for most of the session moving from the 1.0540 area to trade above the 1.0560 level during the session, only once we moved towards London did we start to see liquidation of the carry trades impacting the market and JPY strengthened against the USD continually, we saw weak stops triggered on the move through 1.0540 opening levels and again into the NYK session we saw strong selling triggering better stops from the 1.0520 level to touch the 1.0480 levels on the move down, we held the level and managed a push back above 1.0510 in lacklustre trading to end the week.


Friday’s premiership results

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

JPY         Tertiary Industry Index M/M Feb A 1.10% | C 0.80% | P -1.10%  

EUR        Eurozone Industrial Production M/M Feb A 0.40% | C 0.30% | P -0.40% | R -0.60%

USD       Advance Retail Sales Mar A -0.40% | C 0.00% | P 1.10% | R 1.00%              

USD       Retail Sales Less Autos Mar A 0.20% | C 0.20% | P 1.00%               

USD       PPI M/M Mar A -0.60% | C 0.00% | P 0.70%         

USD       PPI Y/Y Mar A 1.10% | C 1.90% | P 1.70%              

USD       PPI Core M/M Mar A 0.20% | C 0.20% | P 0.20%

USD       PPI Core Y/Y Mar A 1.70% | C 1.70% | P 1.70%    

USD       U. of Michigan Confidence Apr (P) A 72.3 | C 78.8 | P 78.6            

USD       Business Inventories Feb A 0.10% | C 0.40% | P 1.00%  

For today

Topside: 98.40-98.70 light offers
Downside: 97.50-97.60 light bids 97.20-97.50 light sell stops
Topside: 1.3140-1.3160 light offers 1.3170-1.3200 light mix 1.3200-1.3230 light offers

Downside: 1.3030-1.3060 light bids 1.3000-1.3030 light bids

Nothing significant
Topside: 1.0540-1.0570 light buy stops
Downside: 1.0400-1.0420 medium sized bids


CNY: China Q1 GDP growth stumbles, industrial output weak

China 1Q Slower Growth Due to Global Hurdles, Domestic Curbs – Stats Official

China March property investment slows, sales strong

China Finance Minister: Fiscal Reform Must Focus on Wealth Redistribution

China may raise trading margins as gold, silver prices tank


US Ready to Talk, But North Korea Must Honour Commitments – Kerry


South Korea ‘Regrets’ North’s Rejection of Dialogue

Defiant N. Korea celebrates founder’s anniversary

N. Korea, Yen Depreciation Are Downside Risks to Korean Economy

S. Korea Will Try to Stabilize FX Market against Herd Behaviour


BOJ’s Kuroda: Japan market conditions improving

Japan revised Feb industrial output up 0.6% MoM


Australian Feb Housing Finance +2.0% vs. Consensus +1.5%




·         EUR: Weekend new was more of what we already knew with various governments unwilling to face up to the plight previous governments have created and thinking that if they duck their heads it will all go away however, it’s not and in all likelihood at this rate it will drag the process out for years and the likes of Germany will become more disenchanted with being the bank for Europe. The Euro opened more or less in line with the close in NYK however, it struggled to make any headway as the JPY strengthened throughout the session on comments from the US on uncompetitive devaluation, eventually the pressure of this and the numbers out of China triggered a minor selloff in the market taking the pair from the 1.3100 area to below 1.3070 before stabilising and holding around the 1.3075 level as we move to the London opening.

·         GBP: EURGBP selling from the start of the session helped to take Cable higher initially, moving from above the 0.8540 area to touch the 0.8515 levels, it pushed the Cable to above the 1.5380 level from the opening 1.5345 levels however, the Euro eventually started to deteriorate further after the Chinese numbers and Cable was dragged lower and dropped into weak stops below the opening levels triggering a reversal in the EURGBP crosses and taking Cable to 1.5310 for basically the same movement down from the open as it was up we currently hold above the 1.5325 level with flows slowing to a trickle as we head to London.

·         JPY: From the opening which was below NYK at the 98.40 level the market attempted to move higher but ran into some solid selling in the early Tokyo market, with Gold being aggressively sold on the back of the forth coming supply from Cyprus margined accounts in Japan found themselves with calls for margin triggering retail selling in USDJPY and crosses especially carry trades, add to which the China data effecting the AUD market and we soon saw a general strengthening of the Yen across the board as the first of the warning shots were fired by the US on devaluing the currency at the detriment of other markets I.E. the US we managed to stabilise around the 97.60 area and we currently hold above 97.80 after a reasonably hectic day and a decent IP number goes through for Japan.

·         AUD: The Oz opened in line with the NYK close above the 1.0510 level and struggled to make any impact rising slowly to just above the 1.0520 level before the China Data releases impacted on the market with a GDP rise of only 7.70% against the expected and often talked about 8.00% level the Oz quickly dropped back as it fell we saw selling in AUDJPY hit the market adding to the pairs lows triggering some stops along the way and pushing down into some reasonable sized bids to trade below the 1.0420 level before holding, even so the bounce if you could call it that was barely enough to push it back to the 1.0440 area and we currently hold just below the level as we move to London.


Today’s data

Actual = A Consensus = C  Previous = P Timings GMT

GBP       Rightmove House Prices MoM Apr A 2.10% | P 1.70%

AUD       Home Loans Feb A 2.00% | C 1.50% | P -1.50% | R -0.30%

CNY        Industrial Production YTD YoY Mar A 8.90% | C 10.00% | P 9.90%

CNY        Retail Sales YTD YoY Mar A 12.60% | C 12.50% | P 12.30%

CNY        Real GDP YoY Q1 A 7.70% | C 8.00% | P 7.90%

JPY         Industrial Production MoM Feb (F) A 0.6% | C -0.10% | P -0.10%

9:00        EUR        Eurozone Trade Balance (EUR) Feb C 9.7B | P 9.0B

12:30     USD       Empire State Manufacturing Apr C 7 | P 9.24

13:30     USD       Net Long-Term TIC Flows Feb C $40.0B | P $25.7B

14:00     USD       NAHB Housing Market Index Apr C 45 | P 44



Ranges as of 6am London time including Sydney open

                                Highs    Lows

USD/JPY               98.715 | 97.55
EUR/USD             1.3150 
| 1.3065
EUR/JPY               129.31 
| 127.56
AUD/USD            1.0525 
| 1.0416
NZD/USD             0.8580 
| 0.8479
USD/CAD             1.0197 
| 1.0125
EUR/CHF              1.2168 
| 1.2153
USD/CHF             0.9305 
| 0.9269
GBP/USD             1.5386 
| 1.5309
EUR/GBP             0.8550 
| 0.85155

Stay lucky


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