Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 102.252 | EURUSD 1.28872 | EURJPY 131.777 | AUDUSD 0.98983 | NZDUSD 0.82214 | USDCAD 1.01586 | EURCHF 1.2434 | USDCHF 0.96486 | GBPUSD 1.52379 | EURGBP 0.84575 |

 

Harry Hindsight

• EUR: The market opened rising from a quick selloff into the close in NYK moving from the 1.2925 area back into the mid 1.2930’s before the official Tokyo opening, even so once it made it above the 1.2940 it struggled to make any further impact and was second place to a rather dull session on the whole with most markets contained in a tight range as if Asia has no clue what to do, or even if it wants to do it. As we moved into the grey hours the French for some reason have decided that they’re awake and while the London market may not be they don’t care, of course this is a double edged sword as it makes the market rather unpredictable as we saw on the release of the GDP numbers rallying quickly above 1.2940 to set the high only to be sold to the 1.2900 level even quicker,  German GDP didn’t help although it was lower than expected the market I think was beginning to believe the German machine was at the point of stalling but, in all fairness these are only the preliminary numbers, the market then held the 1.2890-1.2910 into the Eurozone GDP figures and they came out worse than expected and finally tipped the market lower triggering stops below 1.2880 before finally basing below the 1.2850 level in the early part of NYK, US inflationary data came in pretty much as expected however, the Euro received a late reprieve as IP figures came in worse than expected and a drop in utilization helped the Euro to move back above the 1.2880 level briefly, we saw late IMM selling pushing the market lower but was countered into the close with profit taking leaving the market just above the 1.2880 levels into the close.
• GBP: A mixed and choppy day for the Cable with trading in Asia contained in a tight range moving off a low 1.5210 area to top out just short of 1.5240 and ranging between there and 1.5220 into the grey period were we saw the drag of Euro initially pulling it below 1.5200, while employment numbers were less than encouraging the BoE report hinted at stronger numbers for the growth on the horizon and reduced there inflationary predictions in the face of  ex members who deemed it smart to call for rate rises to counter their estimates of 3%, from here Cable pushed higher against both the USD and Euro moving in Cable to touch above 1.5270 for the high on the day where the market ran into some strong offers, on the downside King’s mention of negative deposit rates triggered a sale in the market and we reversed all the work trading down to the 1.5174 level before stabilizing and a mini short squeeze back towards the highs as real money appeared in the market. Cable then suffered further setbacks from the US data as USD moved against most currencies before we moved towards the close to finish off more or less unchanged.
• JPY: USDJPY remained rather mired in Asia with reasonably tight ranges opening above the 102.30 level it moved quietly down to just below 102.10 but traded for the most part around the 102.20 levels, London walked in and bought aggressively as JPY refused to strengthen as the Euro dropped pushing the pair above the 102.60 level and then moved high on a second wave of Euro selling to trade just short of the 102.80 level where we suspect offers were congregated, as the inflation data hit the news the market dropped back for no real reason as we could see as the data wasn’t anything to write home about, although the TIC flows number was likely to be behind with a net outflow appearing against the expected, we traded to below 101.90 before recovering just as quickly from there we drifted lower into the closing area to finish the day only just short of the opening levels, with no particular group showing as I could see in the market.
• AUD: A choppy day for the Oz with smiles on day traders faces one assumes, having opened around the 0.9890 area the market spent most of the day consolidating on the level, moving up quietly in Asia to above the 0.9915 area with China’s slowing economy still doing its damage. Having made the highs reiterated story’s from China chased the market back to the opening levels and once we moved into the London theatre Euro dragged on EURAUD cross pulling the Oz with it, to trade to the lows below 0.9855 from here we moved sideways in a 30 point range into the NYK session making a recovery as the data was released and moving to just short of 0.9920, there we saw range traders and short term specs lined up to sell again with gamma players joining in and we soon ended up towards the lows, the move to the close was upward and we eventually settled around the 0.9900 level for a recovery of sorts.

Yesterday’s premiership results

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

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

EUR        French GDP QoQ Q1 (P) A -0.20% | C -0.10% | P -0.30% | R -0.20%

EUR        German GDP QoQ Q1 (P) A 0.10% | C 0.30% | P -0.60%

CHF        Producer & Import Prices MoM Apr A 0.20% | C -0.20% | P 0.00%

CHF        Producer & Import Prices YoY Apr A -0.10% | C -0.30% | P -0.30%

EUR        Italian GDP QoQ Q1 (P) A -0.50% | C -0.40% | P -0.90%

GBP       Claimant Count Change Apr A -7.3K | C -3.0K | P -7.0K | R -9.9K

GBP       Claimant Count Rate Apr A 4.50% | C 4.60% | P 4.60%

GBP       ILO Unemployment Rate 3M Mar A 7.80% | C 7.90% | P 7.90%

CHF        ZEW (Expectations) May A 2.2 | P 20

EUR        Eurozone GDP QoQ Q1 (A) A -0.20% | C -0.10% | P -0.60%

CAD       Manufacturing Shipments MoM Mar A -0.30% | C 0.50% | P 2.60%

USD       Empire State Manufacturing May A -1.43 | C 4 | P 3.05

USD       PPI MoM Apr A -0.70% | C -0.60% | P -0.60%

USD       PPI YoY Apr A 0.60% | C 0.80% | P 1.10%

USD       PPI Core MoM Apr A 0.10% | C 0.10% | P 0.20%

USD       PPI Core YoY Apr A 1.70% | C 1.70% | P 1.70%

USD       Net Long-term TIC Flows Mar A -13.5B | C 43.4B | P -$17.8B

USD       Industrial Production Apr A -0.50% | C -0.10% | P 0.40%

USD       Capacity Utilization Apr A 77.80% | C 78.30% | P 78.50%

USD       NAHB Housing Market Index May A 44 | C 43 | P 42

USD       Crude Oil Inventories A -0.6M | P 0.2M

For today

USDJPY:
Topside: 102.40-102.70 light buy stops 102.70-103.00 medium offers 103.00-103.30 decent buy stops
Downside: 101.70-102.00 medium mix 101.40-101.70 light bids

EURUSD:
Topside: 1.2910-1.2940 light offers 1.2940-1.2975 light offers 1.2975-1.3005 light mix
Downside: 1.2820-1.2850 light mix 1.2790-1.2820 medium sell stops

EURJPY:
Topside: 132.10-132.50 light buy stops 132.50-132.90 light buy stops
Downside: 130.80-131.20 light sell stops

AUDUSD:
Topside: 0.9910-0.9940 light buy stops 0.9940-0.9970 light mix
Downside: 0.9830-0.9860 light sell stops 0.9800-0.9830 light mixed bag

JPY:

Japan’s Q1 growth beats forecasts as first stimulus effects felt

Asia:

S&P states corporate debt in the region will surpass N. America and Europe by 2017

CNY:

China premier says little room for policy stimulus

NZD:

NZ Govt plans to sell 49% stake in Meridian Energy in H2

Sees budget surplus 2014/15, ups growth, spending

NZ reliance on external funds remains mainly weak Moody’s

NZ economic projections for budget seem reasonable Moody’s

NZ higher 2013 tax receipts positive (well done Sherlock) Moody’s

NZ: budget supportive of AAA rating.

Performance of manufacturing index rose to 54.5 from 53.4 in March

IMF:

Lagarde warns on rising income gap hurting growth

• EUR: I don’t dare say it, the market opened around the 1.2885 area and traded lower into the Tokyo opening, moving into the mid 1.2870’s before EURJPY fixing demand was seen for the day taking it to the highs above the 1.2888 level, from there it’s been a tough day in the office with little of interest impacting the market and trade limited to gyrations in the EURJPY cross for the most part, with the Euro dropping back to below 1.2870 before heading towards London just below the opening levels.
• GBP: Cable was contained within a tight range moving from the mid 1.5230’s to just short of 1.5250 on small fixing demand and an unwillingness in Asia to touch the pair for a great deal of time, we eventually started to drift lower and made a new low below 1.5220 before moving towards London pretty much unchanged on the day.
•  JPY: All eyes focused on the GDP release the first measure of the extreme easing by the new BoJ governor, with the market opening pretty much unchanged from the previous opening in Asia around the 102.25 level once the data was released there was some mixed reactions with JPY strengthening initially and USDJPY moving to just below the 102.00 however, while I was reliably informed that there were stops below 102.00 the market had other ideas and we moved off the level unable to get through resting bids from European and US names to move back to the starting levels as we move towards the London market the market is again trying to rally as Middle eastern interest picks up the ball.
• AUD: The Oz dropped from the opening levels around 0.9900 and initially touched the 0.9880 levels after comments in China however as the JPY strengthened we saw the Oz moving quietly up to above the 0.9910 area before again stalling, the later recovery in USDJPY put pressure on the Oz and the market has been declining into the grey hours holding around the 0.9870 area.

Today’s data

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

JPY         GDP QoQ Q1 (P) A 0.90% | C 0.70% | P 0.00%

JPY         GDP Deflator YoY Q1 (P) A -1.20% | C -0.90% | P -0.70%

JPY         Industrial Production MoM Mar (F) A 0.90% | C 0.20% | P 0.20%

09:00     EUR        Eurozone CPI MoM Apr C -0.10% | P 1.20%

09:00     EUR        Eurozone CPI YoY Apr (F) C 1.20% | P 1.20%

09:00     EUR        Eurozone CPI – Core YoY Apr (F) C 1.00% | P 1.00%

09:00     EUR        Eurozone Trade Balance (EUR) Mar C 12.0B | P 12.0B

12:30     CAD       International Securities Transactions (CAD) Mar C 5.36B | P -6.31B

12:30     USD       CPI MoM Apr C -0.30% | P -0.20%

12:30     USD       CPI YoY Apr C 1.30% | P 1.50%

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

12:30     USD       CPI Core YoY Apr C 1.80% | P 1.90%

12:30     USD       Initial Jobless Claims (MAY 11) C 330K | P 323K

12:30     USD       Housing Starts Apr C 980K | P 1036K

12:30     USD       Building Permits Apr C 940K | P 902K

14:00     USD       Philly Fed Survey May C 2.3 | P 1.3

Interbank Ranges as of 6am London time

Highs    Lows

EUR                        1.2889 | 1.2869

GBP                       1.5248 | 1.5214

JPY                         102.30 | 101.97

CHF                        0.9672 | 0.9644

AUD                       0.9913 | 0.9872

NZD                       0.8273 | 0.8234

CAD                       1.0168 | 1.0152

EURCHF                1.2446 | 1.2422

EURGBP               0.8461 | 0.8450

EURJPY                 131.78 | 1.3130

Good luck

Andy