Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY  97.389 | EURUSD 1.31806 | EURJPY 128.369 | AUDUSD 1.02786 | NZDUSD 0.85133 | USDCAD 1.00813 | EURCHF 1.2222 | USDCHF 0.92724 | GBPUSD 1.55566 | EURGBP 0.84732 |

Harry Hindsight

• EUR:  We started the session quietly as the Asian and Pacific rim countries on holiday, we opened just below the 1.3170 level and a small rally higher on EURJPY buying to just below 1.3180 was all she wrote, once that was over with we returned to the mid 1.3160’s and traded quietly until moving into the London session, were we saw buyers moving into the market taking the Euro to above 1.3190 while the market may have been on holiday there was significant amounts exchanging hands between this and 1.3200 which put a lid on the market for some 3hrs before the break through occurred and we triggered a number of weak stops above 1.3200 running the market up to peak above the 1.3240 level which was probably a little exaggerated due to the holidays, once we peaked the market the dropped back just as quickly and paused around the 1.3190 break point and we saw a lot of the macro sellers over the last few weeks taking back positions while some long term longs counterbalanced the macros as positions were lightened if not cut in front of the expected 25 bps cut expected from the ECB on Thursday, from that point we drifted slowly to a 1.3180 area finish on the day, which showed reasonable levels considering how many countries were off.
• GBP: With most of the action being in the Euro, it was surprising to see Cable outperform the Euro in the Asian session moving from below 1.5530 to above the 1.5550 level in the Grey hours with a few buying sprees of GBPJPY cross during a very quiet holiday session, once the London market moved in though we saw the Cable rally quickly to above 1.5590 in an effort to clear the 1.5600 level, needless on the first attempt it failed and although the PMI number was better than expected it still remains on the wrong side of 50, we held above the 1.5570 area  for a goodly portion of the day again attempting the topside and failing then collapsing as the longs were squeezed out in a thin market to touch the 1.5550 level, we then went higher for the third time and this time broke through the 1.5600 very briefly however, this time when the market dropped quickly having failed to trigger anything through the level turfing out the weak longs we traded back to 1.5550 and remained trapped for the session between there and 1.5560.
• JPY: A choppy day for the USDJPY however, contained within a somewhat narrow range, we opened in Asia around the 97.45 area dropping back to 97.05 as USDJPY sellers entered the market squaring before the FOMC meeting, once the lows were made we gradually rose back to the 97.40 area as we ran towards the London session. London was a different kettle of fish and while I stress that the market was fairly thin throughout the day we moved steadily to test above the 97.65 level a couple of times before failing to push on poor US numbers turned the USD lower and we quickly dropped to touch just below the previous lower, while the market finished close to the opening levels it was a struggle with thin liquidity saw medium sized orders driving the market 10-15 points in either direction into the close.
• AUD: The Oz rise would seem more connected to the ADM take over of Australia’s GrainCorp although we opened above the 1.0370 level the market struggled through Asia with barely a 10 point range around that 70 level until we moved towards London were we started to see selling slowly eroding the market, even so the dip was barely through the 1.0350 level and it was the NYK market that did all the work and one surmises that not only have ADM positioned themselves, Commodity prices dropping had a lot to do with the sell off of the Oz dropping initially to the 1.0270 level and ranging into the NYK close. Early Sydney guys walked in and sold to add to the drop and we finished the day just below the previous low.

Yesterday’s premiership results

Actual = A | Consensus = C | Previous = P | Revised = R
CNY   Manufacturing PMI Apr A 50.6 | C 50.7 | P 50.9
JPY   Labour Cash Earnings YoY Mar A -0.60% | C -1.20% | P -0.70%
08:30  GBP  PMI Manufacturing Apr A 49.8 | C 48.5 | P 48.3 
12:15   USD  ADP Employment Change Apr A 119K | 153K | C 158K 
14:00  USD  Construction Spending MoM Mar A -1.70% | C 0.70% | P 1.20% 
14:00  USD  ISM Manufacturing Apr A 50.7 | C 51.1 | P 51.3 
14:00  USD  ISM Prices Paid Apr A 50.0 | C 52.6 | P 54.5 
14:30  USD  Crude Oil Inventories A 6.7m | P 0.9M 
18:00  USD  FOMC Rate Decision A 0.25% | C 0.25% | P 0.25%

For today

USDJPY:
Topside: 97.40-97.70 light buy stops 97.70-98.00 medium buy stops 98.00-98.30 light buy stops
Downside: 96.75-97.05 light mix 96.40-96.75 light bids

EURUSD:
Topside: 1.3230-1.3270 light mix 1.3270-1.3300 medium offers 1.3300-1.3330 medium buy stops
Downside: 1.3140-1.3160 light mix 1.3100-1.3140 light bids

EURJPY:
Topside: 128.90-129.20 light offers
Downside: 127.00-127.40 light sell stops

AUDUSD:
Topside: 1.0300-1.0330 light buy stops 1.0330-1.0360 medium offers
Downside: 1.0230-1.0220 light bids

JPY:
BOJ April 3-4 minutes: some members wary of risks of bold easing
BOJ says monetary base soars to record on new QE scheme
CNY:
PBOC fixes yuan mid-point at record 6.2082/dollar
China May Set 2014 GDP Growth Target at 7%: Market News
China April HSBC Final Manufacturing PMI 50.4 vs. 51.6 in March
China April New-Home Prices Rise, Existing-Home Market Decelerates
China Government Think Tank: 2Q GDP Growth Expected Around 8%; Inflation Around 2.3%
AUD:
Australian Home-Building Approvals Fell 5.5% in March
NZD:
NZ commodity prices surge in April – ANZ survey

• EUR: The Holiday markets continue with less movement in Asia than the previous day even if the market is supposed to be full today, opening just above the 1.3180 we tested higher first failing at the 1.3190 area and then dropped off in what looked like someone buying the market to sell into the rally they caused, in any event it didn’t work and the market was quickly into the mid 1.3170’s, we moved into the Tokyo market and the selling was patchy but steadily dropping the pair with very little in moves to the topside, we’ve dropped to below 1.3170 and currently hold around that level as we head to London and the ECB release.
• GBP: Cable opened around the 1.5560 area and moved quietly into the Tokyo opening to just above the 1.5572 level however, like the Euro it started to wilt at that point and slipped steadily lower in a quiet market to below 1.5542 before holding around the 1.5550 area, EURGBP dropped slightly from the mid 0.8470′ s to 0.8465 as Euro selling as weak as it was, was across the board.
• JPY: A similar pattern to yesterday with early selling being the name of the game before fixing demand attracted the markets attention as they move to another long weekend, opening around the 97.40 area we dropped to below 97.10 into the early part of the Tokyo session moving from the lows to hit back above the open before starting a long drift towards London holding around the 97.30 levels.
• AUD: Having had a rather large move during the previous NYK session the market held its levels around 1.0280 into the Tokyo session, and while commodity prices still seem to be the drag on the pair building approvals was the catalyst for the moves lower we did see dropping to just above the 1.0240 areas with very little in the way of a bounce we currently hold above the lows for the moment. Overall a very quiet session almost as quiet as yesterday.

Today’s data

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

JPY         Monetary Base YoY Apr A 23.10% | P 19.80%
AUD       Building Approvals MoM Mar A -5.50% | C 1.30% | P 3.10% | R 3.00%
AUD       Import Price Index QoQ Q1 A 0.00% | C -0.50% | P 0.30%
CNY        HSBC Manufacturing PMI Apr A 50.4 | C 50.6 | P 51.6
07:30     CHF        SVME-PMI Apr C 49 | P 48.3
08:00     EUR        Eurozone PMI Manufacturing Apr (F) C 46.5 | P 46.5
08:30     GBP         PMI Construction Apr C 48 | P 47.2
11:30     USD          Challenger Job Cuts YoY Apr P 30.00%
11:45     EUR          ECB Rate Decision C 0.50% | P 0.75%
12:30     EUR         ECB Press Conference
12:30     CAD         International Merchandise Trade (CAD) Mar C -0.70B | P -1.02B
12:30     USD         Trade Balance Mar C -$42.0B | P -$43.0B
12:30     USD         Non-Farm Productivity Q1 (P) C 1.80% | P -1.90%
12:30     USD         Unit Labour Costs Q1 (P) C 0.00% | P 4.60%
12:30     USD         Initial Jobless Claims C 345K | P 339K

Interbank Ranges as of 6am London time

                                  Highs    Lows
USD/JPY               97.43 | 97.08
EUR/USD             1.3189 | 1.3166
EUR/JPY               128.38 | 127.945
AUD/USD            1.0284 | 1.023
NZD/USD             0.8512 | 0.8481
USD/CAD             1.0086 | 1.0073
EUR/CHF              1.2226 | 1.22155
USD/CHF             0.92835 | 0.92665
GBP/USD             1.5572 | 1.5542
EUR/GBP             0.8473 | 0.8463

Good luck

Andy