Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 102.42 | EURUSD 1.29215 | EURJPY 132.332 | AUDUSD 0.98886 | NZDUSD 0.81824 | USDCAD 1.0180 | EURCHF 1.2497 | USDCHF 0.96724 | GBPUSD 1.52102 | EURGBP 0.84947 |

 

Harry Hindsight

• EUR: The Euro opened around the 1.2975 level and moved into the Tokyo session quietly a quick break in early Tokyo saw the pair triggering minor stops above the 1.3000 level and reached above 1.3025 before decent offers soaked up the buying interest, from there the market was fairly subdued and we drifted in a tight range towards London holding around the 1.3010 level. For once we didn’t see any particular movement in the grey hours and once the London market opened we dropped back through the 1.2990 level until the second batch of European data made an appearance in the market with the German CPI being pretty much in line, while the market initially reacted well taking in the IP number with Euro’s peaking just short of the 1.3030 level it then turned lower as the impact of the ZEW numbers was measured, with Macro and real money selling making an appearance to take the EURO down to 1.2950 just before the US walked in. NYK market was initially a little constrained with conflicting data and Fitch’s upgrade of the Greeks to B- with outlook stable we are still a good way from seeing Greek bond buying to add to portfolios. The market rose slowly but struggled to regain the 1.3000 level, and the market saw the futures market lightening the long positions with talk of fund selling, the market moved lower again into the later session with continued selling bottoming out eventually around the 1.2930 level before moving into the close with a quick run at stops on the downside to around the 1.2915 level before closing in the mid 1.2920’s
• GBP: We saw Cable rise into the Tokyo opening from the 1.5297 level to reach above 1.5330 once we made the high’s the market traded sideways quietly in Asia with very little going through until we moved into the grey hours and we saw the market drop back to the opening levels, it did manage to move above 1.5320 again in the Early part of the London session but traded lower over the day as the USD became dominant across the board, we moved in a tight channel not really stopping until the closing rate of 1.5210 area were we found some light bids, with no real data in the UK for the day it seemed to be dominated by Euro weakness and USD strength, the EURGBP cross moved to break through the 0.8515 in early NYK before moving back below 0.8500 level in a lacklustre day for the GBP.
• JPY: USDJPY opened around the 101.80 mark and was struggling from the beginning and when the Tokyo market opened we started to move lower touching below 101.40 in early trading as JGB yields posted gains however, once we moved into the London session the moves lower were contained in the 101.30 area before starting to hedge higher as Macro and importers started some light buying moving it to just below the opening levels, NYK entered the market and the Macro buyers and real money bought steadily through the early part of the session and we soon traded through the 102.00 level to post new highs for the year above the 102.40 level into the close in NYK. While the JPY remains weak and the yields on JGB’s have strengthened considerably over the past month the strength of the USD itself is benefitting the pair, and we seem to be going through a period of rebalancing of the USD in particular as strategies in the US have changed somewhat.
• AUD: The Oz opened around the 0.9950 level and was fairly buoyant in the early part of the session as JPY strengthened the Oz rose to above the parity level, with no numbers out the Oz was buffeted by the movement of the JPY and as we moved into the London session had lost most of its earlier gains, we saw weak stops triggered on the move through the opening levels and the pair held around the 0.9930 level briefly before moving into a slower decline to push through the 0.9900 level in the closing hour of the IMM where we saw option related selling take the market to its lows below 0.9880 before recovering slightly into the close.
• USD: With bond yields improving, and the US budget deficit falling faster than forecast maybe there is a silver lining appearing however, one has to remember that the deficit fall is down to repayment by mortgage companies and banks this year and while Fannie and Freddie are adding to revenues it’s likely to be short lived, an increase in oil production is of greater value as the US is becoming less dependent on buying in its stocks while this is helping the US the rest of the world are starting to benefit as oil surpluses in OPEC countries start to increase, the increase in the US in shale extraction and the benefits of increased and secure Alaskan oil will in all likelihood benefit the US and indirectly Europe, this is of course if supply continues above demand.

Yesterday’s premiership results

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

NZD       Retail Sales Ex Inflation QoQ Q1 A 0.50% | C 0.80% | P 2.10%

GBP       RICS House Price Balance Apr A 1% | C 2% | P -1%

JPY         Domestic CGPI YoY Apr A 0.00% | C -0.20% | P -0.50%

JPY         Loans & Discounts Corp YoY Mar A 1.47% | P 1.40%

EUR        German CPI MoM Apr (F) A -0.50% | C -0.50% | P -0.50%

EUR        German CPI YoY Apr (F) A 1.10% | C 1.20% | P 1.20%

JPY         Machine Tool Orders YoY Apr (P) A -24.10% | P -21.50%

EUR        Eurozone Industrial Production MoM Mar A 1.00% | C 0.50% | P 0.40%

EUR        Italian General Government Debt A 2034.7B | P 2107.6B

EUR        German ZEW (Economic Sentiment) May A 36.4 | C 40 | P 36.3

EUR        German ZEW (Current Situation) May A 8.9 | C 9.8 | P 9.2

EUR        Eurozone ZEW (Economic Sentiment) May A 27.6 | C 27.3 | P 24.9

USD       Import Price Index MoM Apr A -0.50% | C -0.50% | P -0.50%

For today

USDJPY
Topside: 102.40-102.70 mix 102.80-103.10 decent buy stops  103.20-103.50 light offers
Downside: 101.70-102.00 medium sell stops 101.30-101.60 decent bids 101.00-101.30 medium bids

EURUSD
Topside: 1.2940-1.2970 light buy stops  1.2970-1.3000 light buy stops
Downside: 1.2900-1.2920 light sell stops 1.2870-1.2900 light sell stops 1.2850-30 mediums sell stops

EURJPY
Topside: 132.40-132.70 light buy stops  132.80-133.10 medium buy stops
Downside: 131.90-132.00 light bids 131.20-131.50 light bids

AUDUSD
Topside: 0.9900-0.9930 light offers  0.9940-0.9970 light offers
Downside: 0.9850-0.9880 light sell stops

JPY:

Japan PM Abe: Closely watching JGB market movements

Wednesday’s money market op a response to sharp JGB yield rise-BOJ official

AUD/JPY:

Japan to cut import tariffs on some Australian beef Nikkei

JPY/KRW:

Hyun Says Weak Yen Trend to Continue for A Long Time: Yonhap

JPY/PHP:

Philippines Unfazed by Weak Yen as Purisima Supports Japan

CNY:

Premier Li Keqiang Says China Has Limited Room for Stimulus

AUD:

Australia Wages Rise 0.7% in 1Q13 from Q412

Australia Won’t Compromise on Jobs, Growth, Wong Says

Australia’s Swan Says Government Has a Revenue Problem

Gillard Woos Voters with Australia Budget Spending Pledges

EUR:

German metal, electricity sectors agree two-stage wage increase

NZD:

IMF: New Zealand’s Accommodative Monetary Policy Appropriate

• EUR: As with most days in Asia the market struggles to contemplate where the Euro should be going next and we struggle to find any decent movement in the time zone, we opened with some selling into to take us quickly below the 1.2915 area triggering some weak stops and then quickly recovered to the 1.2940 into the early part of the Tokyo session however, this was more the movement in USDJPY trading off from its highs than Euro in itself, we dipped briefly in mid-session to the 1.2920 areas as we saw EURJPY selling entering the market post fix from exporters however, overall a quiet session with the market feeling a little jaded. We currently hold above the 1.2930 level as we move towards the London opening.
• GBP: The market in Cable has been reasonably quiet with late selling in NYK reversed as we moved into the Asian session pushing from the 1.5210 areas to move steadily in the first few hours to just short of 1.5240 before stalling and falling back 10 points and holding around the 1.5225-35 area as we move to the London session, we saw some light EURGBP selling from Asian funds but otherwise a quiet day overall.
• JPY: USDJPY opened on its highs around the 102.40 area with plenty of two traffic going through as Japanese bought as they usually do it being a Gotobi day (divisible or containing a 5) and the rest of the market happy to try and play the range play selling the highs for a move back below 102.00 and a repeat into London of yesterday’s early selling, however, there didn’t really seem to be any winners and we remained in a tight range for the USDJPY and look to be heading into the London session just under the 102.20 level.
• AUD: The Oz was again moved on the JPY ebbs and flows, moving in early trading to above the 0.9915 level before again dropping back to below 0.9885 in a quiet and contained market, we currently hold just above the lows and around the opening levels in a very quiet session for the pair.

Today’s data

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

JPY         Tertiary Industry Index MoM Mar A -0.50% | C -0.70% | P 1.10% | R -1.20%

JPY         Consumer Confidence Apr A 44.5 | C 45.5 | P 44.8

05:30     EUR        French GDP QoQ Q1 (P) C -0.10% | P -0.30%

06:00     EUR        German GDP QoQ Q1 (P) C 0.30% | P -0.60%

07:15     CHF        Producer & Import Prices MoM Apr C -0.20% | P 0.00%

07:15     CHF        Producer & Import Prices YoY Apr C -0.30% | P -0.30%

08:00     EUR        Italian GDP QoQ Q1 (P) C -0.40% | P -0.90%

08:30     GBP       Claimant Count Change Apr C -3.0K | P -7.0K

08:30     GBP       Claimant Count Rate Apr C 4.60% | P 4.60%

08:30     GBP       ILO Unemployment Rate 3M Mar C 7.90% | P 7.90%

09:00     CHF        ZEW (Expectations) May P 20

09:00     EUR        Eurozone GDP QoQ Q1 (A) C -0.10% | P -0.60%

09:30     GBP       BoE Inflation Report

12:30     CAD       Manufacturing Shipments MoM Mar C 0.50% | P 2.60%

12:30     USD       Empire State Manufacturing May C 4 | P 3.05

12:30     USD       PPI MoM Apr C -0.60% | P -0.60%

12:30     USD       PPI YoY Apr C 0.80% | P 1.10%

12:30     USD       PPI Core MoM Apr C 0.10% | P 0.20%

12:30     USD       PPI Core YoY Apr C 1.70% | P 1.70%

13:00     USD       Net Long-term TIC Flows Mar C 43.4B | P -$17.8B

13:15     USD       Industrial Production Apr C-0.10% | P 0.40%

13:15     USD       Capacity Utilization Apr C 78.30% | P 78.50%

14:00     USD       NAHB Housing Market Index May C 43 | P 42

14:30     USD       Crude Oil Inventories P 0.2M

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.37 | 102.045

EUR/USD             1.29415 | 1.29205

EUR/JPY               132.30 | 132.02

AUD/USD            0.9916 | 0.9883

NZD/USD             0.8221 | 0.8197

USD/CAD             1.0196 | 1.0179

EUR/CHF              1.2500 | 1.2477

USD/CHF             0.9673 | 0.9643

GBP/USD             1.5237 | 1.5218

EUR/GBP             0.8498 | 0.8490

Good luck

Andy