Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 99.458 | EURUSD 1.30011 | EURJPY 129.297 | AUDUSD 1.02634 | NZDUSD 0.84012 | USDCAD 1.02585 | EURCHF 1.22925 | USDCHF 0.94551 | GBPUSD 1.52393 | EURGBP 0.85315 |

 

Harry Hindsight

·         EUR: Another quiet day in Asia with the market opening just above the 1.3060 level before drift lower to test down to the mid 1.3035 on reasonably quiet trading across the board with the JPY dominating the market somewhat, early sellers appeared after the Chinese PMI but as can be seen 30 points was not an overly large range for the day, once we moved into the London theatre and the release of the PMI data things changed, first we had good numbers from the French exceeding expectations and the market rallied to above the 1.3080 level for a 40 point move only to see the German numbers some 30mins later going the other way and showing a fall below the PMI 50 level indicating contraction, we dropped from above the 1.3080 highs to below 1.2980 and remained mired there for several hours until we moved into the NYK session, with flat numbers for US housing allowing the market to again creep higher to above the 1.3030 areas before slipping back slightly into the close just above the 1.3000 level.

·         GBP: Cable held the previous day’s gains for several hours opening around the 1.5290 area however, it was unable to extend the gains with a break through the 1.5300 level and dipped in Asia to 1.5260 with weak demand for GBP, cross JPY selling was seen generally in the market but it was reasonably quiet and the move over 30 points was broadly in line with the Euro, once we moved into London the PMI figures out in Europe first sent EURGBP cross higher towards the 0.8570 level from the 0.8540 we’d been trading around for several hours before the German numbers reversed the move and pushed the EURGBP to 0.8520 area however the drag effect of the Euro selloff sent Cable dipping to below the 1.5200 level once the numbers were all out in the open, before the GBP managed to break away and start to rise against the USD again, while not recapturing the losses it did make headway into the early NYK session as flows moved away from the Euro but having peaked just below the 1.5290 area it began to drift back again in the late session to the 1.5240 area in a tight channel.

·         JPY: USDJPY again struggled throughout the day moving from the opening levels in Asia of 99.30 area to peak just below 99.40 and fall back as different issues arose in the region with the yearly spat over war grave visitations and disputed islands giving precedence to the actual economics of Japan, the market dropped to below 98.60, we moved into the London market and the Euro dominated much of the day leaving the USDJPY languishing between the 98.50/70 levels until the NYK session opened, with Euro suffering the USD began to strengthen and USDJPY in particular started to rise helped by a few strong names publishing good results helping equities in the US higher. USDJPY moved in the first few hours to make new highs on the day above the 99.50 level before running into the first set major day trading offers and one suspects the market would have remained comfortable in the 99.30-50 range however, Associated press’s twitter account reported a bomb attack on the White House with 2 explosions, injuring the President, this had the USDJPY moving quickly towards the low of the day, AP quickly pulled the offending release saying that the site had been hacked, needless to say USDJPY immediately moved back to its previous levels just as fast as it dropped and one has to wonder why really none of the other pairs paid that much attention to it. Was Orson Welles a hacker in the making? The market remained fairly well bid into the close and we again look at the topside barrier being close in the sights as the market closed around the 99.45 area.

·         AUD: The Oz seemed to be comfortable from the opening as we headed into the Tokyo session dropping back slightly to the 1.0270 into Tokyo, however once into the session carry trade selling was seen in the market as the JPY began to strengthen and then we hit the China PMI which came in lower than expected while still in expansion it does indicate a slowing from the previous month, we dropped quickly to just above the 1.0220 level where we remained for the session showing briefly above 1.0235 but staying pretty much in a tight level down there, a weakening of the Euro saw several rounds of EURAUD selling going through and this helped the Oz to eventually move slowly higher peaking just below the 1.0270 area before settling back to trade around the 1.0255 areas, we saw a little flurry around the AP twitter hacking but less significant than in the USDJPY and was probably more JPY related action than Oz, we went out just short of the 1.0265 area in slow trading in the last hours.

Yesterday’s premiership results

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

AUD       Conference Board Leading Index Feb A 0.30% | P 0.20%               

CNY        HSBC Flash Manufacturing PMI Apr A 50.5 | C 51.4 | P 51.6          

CHF        Trade Balance (CHF) Mar A 1.90B | C 1.73B | P 2.10B | R 2.00B

EUR        French PMI Manufacturing Apr (P) A 44.4 | C 44.2 | P 44               

EUR        French PMI Services Apr (P) A 44.1 | A 42.3 | P 41.3        

EUR        German PMI Manufacturing Apr (A) A 47.9 | C 49 | P 49

EUR        German PMI Services Apr (A) A 49.2 | C 51.1 | P 50.9      

EUR        Eurozone PMI Manufacturing Apr (A) A 46.5 | C 46.8 | P 46.8      

EUR        Eurozone PMI Services Apr (A) A 46.6 | C 46.7 | P 46.4   

GBP       Public Sector Net Borrowing (GBP) Mar A 16.7B | C 13.9B | P 4.4B | R 7.2B

GBP       CBI Trends Total Orders Apr A -25 | C -14 | P -15               

CAD       Retail Sales M/M Feb A 0.80% | C 0.30% | P 1.00%           

CAD       Retail Sales Less Autos M/M Feb A 0.70% | C 0.50% | P 0.50%    

USD       House Price Index M/M Feb A 0.70% | C 0.70% | P 0.60%             

USD       New Home Sales Mar A 417K | C 419K | P 411K 

For today

USDJPY:
Topside: 99.70-100.00 large offers 100.00-100.30 medium offers
Downside: 98.70-99.00 medium sell stops 98.40-98.70 light sell stops

EURUSD:
Topside: 1.3040-1.3070 light offers 1.3070-1.3100 light mix 1.3100-1.3140 medium sized buy stops
Downside: 1.2960-1.2990 light mix 1.2920-1.2950 light sell stops

Nothing showing in EURJPY AUDUSD:
Topside: 1.0275-1.0300 light buy stops 1.0300-1.0330 light offers
Downside: 1.0200-1.0230 light sell stops 1.0170-1.0200 light sell stops

 

CNY:

Australia’s RBA to Hold 5% of Foreign Currency Assets in China Bonds

JPY:

Fin Min Aso: Intl Community Understands Yen Manipulation Not BOJ’s Goal

Asahi Life to be more cautious on JGB buying, eyes foreign bonds

JPY/CNY:

Japan, China Mull Talks by Senior Defence Officials – Kyodo

AUD:

Australian Inflation Rises Less Than Expected

AUD:

Swan Says Rating Agencies Strongly Endorse Fiscal Strategy

GBP:

U.K. Extends Flagship Lending Program in Attempt to Kick-Start Economy

SGD/AUD:

Singapore Airlines lifts stake in Virgin Australia to 19.9%

USD/KRW:

South Korea, U.S. Extend Nuclear Deal by 2 Years – U.S. Officials

CNY:

China to strengthen regulations on wealth management products

NZD:

New Zealand CB holds rates as expected

 

·         EUR: The Euro remained reasonably static throughout the session opening around the 1.3000 area we moved to below 1.2990 briefly and as high as 1.3005 in a very quiet session, one would could say that the market was on hold awaiting USDJPY moves which again failed to the topside however, the answer maybe a little simplistic and Asia is struggling for ideas the market as we head to London remains just off its lows if you could say that given the range so far.

·         GBP: Cable had a better range that the Euro for a change, and we saw some selling of the cross in the middle of the session from Middle Eastern funds, having started the day around the 1.5235 area we drifted lower initially with the Euro trading down briefly to below 1.5230 before rising quickly to just short of the 1.5250 area in a quiet session, we currently hold just above 1.5240 as we move towards London.

·         JPY: USDJPY opened around the 99.45 area and held for the first couple of hours in a tight range before US and European banks were seen buying to take the market quickly above the 99.75 level however, the market was thick with retail/day trade offers in front of the suspected barrier and we didn’t stay too long on the highs before the market started to drop away again, trading slowly down through the 99.50 area and triggering some minor stops as we passed through the opening area, we eventually touched the 99.20 area before some profit taking was seen and the market held and moved back to the opening areas where we remain as we move towards London.

·         AUD: The Oz opened around the 1.0265 area with several inflationary numbers due, we traded slightly lower as we moved into the Tokyo session as some squaring of positions occurred but then moved slowly higher before the numbers to make a high above the 1.0275 level once the data was released we had a sharp move lower on what looks to be conflicting information for the most part however, headline number is weaker than expected and the market perceived that any likelihood of a rise in rates is receding, we traded down to below the 1.0235 and held in the region for a couple of hours before steadily rising back above the 1.0250 area.

 

Today’s data

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

NZD       RBNZ Rate Decision A 2.50% | C 2.50% | P 2.50%               

JPY         Corporate Service Price Y/Y Mar  A -0.20% | C -0.40% | P 0.10% 

AUD       CPI Q/Q Q1 A 0.40% | C 0.70% | P 0.20%               

AUD       CPI Y/Y Q1 A 2.50% | C 2.80% | P 2.20% 

AUD       CPI RBA Trimmed Mean Q/Q Q1 A 0.30% | C 0.50% | P 0.60%     

AUD       CPI RBA Trimmed Mean Y/Y Q1 A 2.20% | C 2.40% | P     2.30%   

AUD       CPI RBA Weighted Median Q/Q Q1 A 0.30% | C 0.50% | P 0.50%

AUD       CPI RBA Weighted Median Y/Y Q1 A 2.60% | C 2.40% | P 2.30%  

06:00     CHF        UBS Consumption Indicator Mar P 1.26 

08:00     EUR        German IFO – Business Climate Apr C 106.5 | P 106.7      

08:00     EUR        German IFO – Current Assessment Apr C 109.4 | P 109.9               

08:00     EUR        German IFO – Expectations Apr C 103.2 | P 103.6              

08:30     GBP       BBA Mortgage Approvals Mar C 31.2K | P 30.5K

10:00     GBP       CBI Reported Sales Apr C 7 | P 0               

12:30     USD       Durable Goods Orders M/M Mar C -2.80% | P 5.70%      

12:30     USD       Durables Ex Transportation M/M Mar C 0.50% | P -0.50%             

14:30     USD       Crude Oil Inventories P -1.2M   

Interbank Ranges as of 6am London time

                                Highs    Lows

USD/JPY               99.77 | 99.17

EUR/USD             1.3006 | 1.29885

EUR/JPY               129.705 | 128.84

AUD/USD            1.0276 | 1.0232

NZD/USD             0.8447 | 0.8414

USD/CAD             1.0272 | 1.0264

EUR/CHF              1.2298 | 1.2287

USD/CHF             0.9467 | 0.9449

GBP/USD             1.5249 | 1.5227

EUR/GBP             0.8533 | 0.8525

 

Good luck

Andy