Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 101.136 | EURUSD 1.29404 | EURJPY 130.905 | AUDUSD 0.96344 | NZDUSD 0.81271 | USDCAD 1.03505 | EURCHF 1.24449 | USDCHF 0.96178 | GBPUSD 1.51306 | EURGBP 0.85528 |

Harry Hindsight

• EUR: The Euro traded almost flat through the Asian session opening around the 1.2855 area and touching below 1.2840 during the grey hours and just above 1.2860 just prior to the lows with the Oz doing all the work during the session, we saw early buyers of the EURAUD cross throughout the session, and EURJPY buying just after the Tokyo opening otherwise it was a quiet session for the common currency until we moved into the London session, we saw some decent sized buying appear from the low print and we gradually rose with early numbers not too far from the market and once the inflation numbers were released for Germany a quick rise from the 1.2890 level to above 1.2970 a rise in inflation staving off thoughts for the moment of stagflation, having hit the highs the market then drifted into the NYK session and we saw very little to excite with only the CAD rate decision of any note, which was unchanged and the pretty speech in line with what was said by the outgoing Carney the last time. The Euro finished the day some 30 pips off the highs and comfortable for the day.
• GBP: Cable performed poorly during the Asian session, moving from the opening 1.5040 area to trade lower to touch below 1.5010 before catching some movement in the Euro to move higher into the London session and pushing to above 1.5070, the release of the CBI sales numbers was well below expectations and the market reacted on the number with Cable dropping below 1.5030 quickly only to catch the German numbers and rise quickly as the rally became a USD selloff, Cable remained bid from that point on rising to above the 1.5140 level and holding around the 1.5120 into the close in NYK, on the initial rally in the Euro, EURGBP cross moved quickly from the 0.8555 area to 0.8595 however, once the Cable started to rally in earnest the cross began to drift back to the previous levels and Cable held its highs better into the close leaving the cross mostly unchanged for the day.
• JPY: USDJPY was full of eastern promise as the market opened in Sydney rising slowly above 102.50 and looking to push into stops in both USDJPY and EURJPY however, the market stalled and could never really get going again dropping back to just above the 102.00 as AUDJPY sellers appeared in the market in there droves, it held the 102.00 level though and did attempt another move to the topside meeting the same resistance which was hinted as being exporter related only to move into the grey market holding the lows again, with further warnings of a slowdown in China one would be surprised to hear they bought Yen however, this is what the market was talking about for me I think AUDJPY was more likely to be the root cause of the USDJPY dropping as there was continual liquidation from retail Japan and once the AUD had stabilized around the 0.8550 area each dip was seen expressed in the AUDJPY. As we approached London the market seemed to have stabilized in the 101.60 areas only for the rise in the Euro to turn into a  USD move and the USDJPY again started to move lower this time pushing briefly through the 101.00 level before holding, NYK completed the selling with early Macro sellers appearing to push the market to 100.80 where we saw similar Macro names buying the lows for a bounce that really didn’t appear, the market drifted into the close from this point finishing the day around the 101.20.
• AUD: The Oz was moving lower from the start of the session from 0.9615 we moved into the Tokyo opening and the market dropped quickly on the Leading index number to hit below the 0.9660 level which we have to go back to the same time last year we held the level for the best part of the session with it only managing to break lower as we moved into the grey hours before the London opening touching into the mid 0.8530’s before moving steadily back as London bargain hunters began to appear to play the longer term bottom, as the market changed to a USD sell so the AUD rallied and we caught a bit of a short squeeze as the breakout traders were dumped out of the market on a spike back through 0.9660 we dropped back from the higher to the 0.9620 level before seeing another spike around the NYK option cut off as gamma players liquidated their shorts after expiry, we then drifted into the close over the course of a few hours holding the 0.9640 area for the most part.

Yesterday’s premiership results

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

JPY         Retail Trade YoY Apr A -0.10% | C -0.40% | P -0.30%

AUD       Westpac Leading Index MoM Mar A 0.20% | P 0.60%

CHF        UBS Consumption Indicator Apr A 1.46 | C 1.25 | P 1.24

EUR        German Unemployment Change May A 21K | C 4K | P 4K | R 6K

EUR        German Unemployment Rate May A 6.90% | C 6.90% | P 6.90%

EUR        Eurozone M3 YoY Apr A 3.20% | C 2.90% | P 2.60%

GBP       CBI Reported Sales May  A -11 | C 4 | P -1

EUR        German CPI MoM May (P) A 0.50% | C 0.20% | P -0.50%

EUR        German CPI YoY May (P) A 1.50% | C 1.30% | P 1.10%

CAD       BoC Rate Decision A 1.00% | C 1.00% | P 1.00%

For today

USDJPY:
Topside: 101.60-101.90 medium offers 101.90-102.20 light offers
Downside: 100.40-100.70 light sell stops 100.10-100.40 medium sell stops

EURUSD:
Topside: 1.2970-1.3000 light buy stops 1.3000-1.3035 light buy stops 1.3040-1.3070 light mix
Downside: 1.2820-1.2860 light bids

EURJPY:
Topside: 132.00-132.40 light buy stops
Downside: Nothing of note

AUDUSD:
Topside: 0.9690-0.9700 medium buy stops
Downside: 0.9570-0.9580 light sell stops 0.9540-0.9570 light sell stops

JPY:

BOJ’s Kuroda: will reduce JGB volatility to lower L/T yields

BOJ’s Kuroda Says Impact of Easing Will Lower Risk Premium

Japan’s Aso Says Rise in Yields May Be Negative for Lenders

Japan’s Suga Says Calm Response Needed on Stock Price Movements

Japan investors keep repatriating foreign assets

Japan aims to cut joblessness by 20 pct over five years – Nikkei

BOJ’s Kuroda to Attend Group of Thirty Plenary Meeting in China

NZD:

Wheeler Says RBNZ Ready to Step Up Sales of Strong Currency

NZ’s central bank sold NZ$256 million in April

New Zealand new housing consents jump in April

• EUR: A mixed start to the day with early sellers seen from the retail side, only to be countered into the Tokyo session by USD sellers once that was out of the way EURJPY fix supply saw the Euro move through the opening levels around 1.2940 to trade down to the low 1.2930’s which was then quickly reversed as the AUD moved higher and EURAUD followed, Euro’s touched above the 1.2960 area but was capped by some reasonable selling and we remain close to the level as we move towards London.
• GBP: Cable was kept in a tight range falling back in early trading into the Tokyo opening from the opening around 1.5130 to below 1.5115 only to push back higher as the Euro moved up, trading above the 1.5140 level in slow trading in GBP.
• JPY: USDJPY opened quietly in Sydney only to move quickly lower on the opening in Tokyo pushing through the opening 101.10 level to hit 100.60 on a spike lower as cross selling seemed to be the name of the game, having moved so quickly lower when the market turned we caught the shorts by surprise and triggered weak stops in a mini short squeeze higher to make the high above 101.50 since the gyrations finished the market has steadily drifted lower to trade down to the 100.90 area where we hold as we move to the London session. Retail Japan started the early selling however; the market was very mixed on the bounce higher with no one type showing.
• AUD: Movement in the JPY dominated the Oz market today in the early part with sellers appearing from the opening taking the market slowly down to the 0.9620 level from 0.9640, a good building approvals number seemed to confuse the news traders as usual and the market spiked lower on a good number before reversing and causing a little bit of a squeeze through 0.9660 which was pretty much the highs yesterday, we stalled for a short while before again pushing up and this time taking weak stops from yesterday’s top pickers and we saw some minor AUDJPY buying appearing through the levels with the Oz just short of the 0.9700 level as we head to London. Probably the funds that hinted they were sellers a few weeks ago.

Today’s data

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

NZD       Building Permits MoM Apr A 18.50% | P -9.10% | R -8.30%

AUD       Building Approvals MoM Apr A 9.10% | C 4.10% | P -5.50%

05:45     CHF        GDP QoQ Q1 C 0.20% | P 0.20%

09:00     EUR        Eurozone Economic Confidence May C 89 | P 88.6

09:00     EUR        Eurozone Industrial Confidence May C -13.1 | P -13.8

09:00     EUR        Eurozone Consumer Confidence (MAY (F)) C -21.9 | P -22.30%

09:00     EUR        Eurozone Services Confidence May P -11.1

12:30     USD       GDP (Annualized) Q1 (S) C 2.50% | P 2.50%

12:30     USD       GDP Price Index Q1 (S) C 1.20% | P 1.20%

12:30     CAD       Industrial Product Price MoM Apr C -0.20% | P 0.10%

12:30     CAD       Raw Materials Price Index MoM Apr C -0.90% | P -1.70%

12:30     USD       Initial Jobless Claims (MAY 24) C 342K | P 340K

14:00     USD       Pending Home Sales MoM Apr C 1.70% | P 1.50%

15:00     USD       Crude Oil Inventories P -0.3M

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               101.545 | 100.585

EUR/USD             1.2966 | 1.2934

EUR/JPY               131.475 | 130.32

AUD/USD            0.9692 | 0.9581

NZD/USD             0.8126 | 0.8084

USD/CAD             1.0367 | 1.0343

EUR/CHF              1.2479 | 1.244

USD/CHF             0.9640 | 0.9595

GBP/USD             1.5151 | 1.5115

EUR/GBP             0.8568 | 0.8555

Good luck

Andy