Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close Wellington open

USDJPY 100.455 100.50-60 | EURUSD 1.29965 1.2985-95 | EURJPY 130.558 130.60-70 | AUDUSD 0.95742 0.9621-31 | NZDUSD 0.79461 0.7973-83 | USDCAD 1.03704 1.0378-88 | EURCHF 1.24187 1.2425-35 | USDCHF 0.95565 0.9557-67 | GBPUSD 1.51981 1.5215-25 | EURGBP 0.85508 0.8540-50 |

 

Weekend News

CNY:

China Manufacturing Tops Estimates in Sign Growth Is Stabilizing
USD/JPY:

SoftBank’s Sprint Bid Backed by ISS; No Dish Opinion Given
JPY:

Abe Says He Expects Japan Stock Prices to Calm Gradually: Kyodo
Abe Offers $32 Billion to Africa as Japan Seeks Resources
Japan’s Aso Says Market Volatility Natural Under Easing: NHK
Japan’s Ishiba Says Stock Decline Is Adjustment After Sharp Rise
Japan Opposition Leader Warns of Risks From Monetary Easing
USD/JPY/CNY:

U.S. Joins Japan in Asserting Strength to Seek China Seas Talks
CHF:

SNB’s Jordan Says Franc Still Highly Valued, Sonntag Reports
USD:

Fed’s Kocherlakota Sees Greater Concern About Risk in Market
SGD/CNY:

Singapore, China Explore Ways to Widen Yuan Investments: Report
GBP/IDR:

HSBC Mulls Selling 98.94% Stake in Indonesia’s Bank Ekonomi
CNY/KRW:

China Sees a ‘Relaxation Window’ in North Korea, Qi Says
EUR:

EU Sees Portugal Covering Financing Needs Until End of Aid Plan
IMF Approves Greek Disbursement and Seeks Better Tax Collection
France May Apply 75% Tax on 2013 Pay Over EU 1Mln, Figaro Says

 

Harry Hindsight

  • EUR: Euro’s traded steadily lower during the Asian session opening around the 1.3050 area and drifting steadily down into the 1.3035 area in a very tight range for the pair, once we moved into the grey hours we saw Early East European selling creeping in before Italian unemployment numbers hit to disappoint the market rising to a 36yr high of 12% while the Eurozone hedged higher again, the Euro moved into the London session properly on the back foot and continued to drop touching 1.2970 initially before recovering slightly into the NYK session before seeing another round of sellers appear in the market this time fund types and real money selling the market over the next few hours to below 1.2950 before we started to see some profit taking appearing in the market from early Macros running the market back to the 1.3000 area into the close, volumes were off and the whole day had a sluggish feel to it.
  • GBP: Cable began the day around the 1.5230 area and drifted along with the Euro with very little going through GBPUSD as a straight pair and limited in the EURGBP cross, we scraped through the Asian session with very little change and only once London officially opened did we see any type of action and the market moved down sharply as if playing catch up, touching the 1.5190 level, then the session went through a choppy period moving down below 1.5190 and up above 1.5240 before dropping quickly with the Euro selloff to trade below 1.5140 before starting a long recovery back to just above the 1.5200 into the close, Posen an ex BoE MPC made comments that the BoE was unlikely to talk the GBP down adding that the BoE does not have the tools, which is a little silly because all they have to do is print the stuff for it to weaken and I can understand why he’s an ex.
  • JPY: The USDJPY was very subdued during Asia rising from the opening 100.75 area to touch just short of 101.30 with some demand going into the fix but very little actually going through the market once the highs were made we moved back to the 101.00 area and held into the Grey hours before London where we saw some weak selling of EURJPY cross as the Euro dropped lower, once we moved into the London session the JPY began to strengthen as both EUR and GBP weakened and the USDJPY tumbled to hold around the 100.30 touching the level several times throughout the session and only dipping once briefly through it which was the start of a short squeeze taking the market back above the 101.10 level, comments from the IMF about expected growth helped the market however, comments about JGB’s facing uncertainty counteracted the movement, late rumours of changes in FX margin trading to protect investors and limit scope for speculation, whether they are likely to do anything significant remains to be seen and one suspects given the size of the retail market in Japan it may be a tough nut to crack. The USDJPY declined into the close, moving back towards the lows and holding around the 100.50 into the end of day.
  • AUD: The Oz opened around the 0.9665 area and moved higher in pre Tokyo well nearly 20 pips to make the highs and limped along for several hours above the 0.9670 level before finding itself out of favour after the CNY MNI business sentiment number came in weaker than expected we dropped quickly to the 0.9625 with what appeared to be a tired market with liquidity patchy at best, some minor Macro buyers appeared off the lows however, once we moved into the London session we saw a concerted batch of selling hitting the market and we soon found ourselves not too far from this years lows again pushing down into the 0.9550 area into the NYK session the market tried to bounce but met resistance at the 0.9600 level and drifted off into the close as players squared there positions settling around the 0.9570 area.

Friday’s premiership results

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

NZD       Terms of Trade Index Q/Q Q1 A 4.10% | C 1.20% | P -1.30%

GBP       GfK Consumer Sentiment May A -22 | C -25 | P -27

JPY         Nomura/JMMA Manufacturing PMI May A 51.5 | P 51.1

JPY         Household Spending Y/Y Apr A 1.50% | C 3.10% | P 5.20%

JPY         Unemployment Rate Apr A 4.10% | C 4.10% | P 4.10%

JPY         National CPI Core Y/Y Apr A -0.40% | C -0.40% | P -0.90%

JPY         Tokyo CPI Core Y/Y May  A 0.10% | C -0.20% | P -0.70%

JPY         Industrial Production M/M Apr (P) A 1.70% | C 0.80% | P 0.20%

JPY         Housing Starts Y/Y Apr A 5.80% | C 5.10% | P 7.30%

CHF        KOF Leading Indicator May A 1.1 | C 1.08 | P 1.02 | R 1.04

GBP       Mortgage Approvals Apr A 54K | C 55K | P 53.5K

GBP       M4 Money Supply M/M Apr A 0.30% | C 0.10% | P -0.90%

EUR        Eurozone CPI Estimate Y/Y May A 1.40% | C 1.40% | P 1.20%

EUR        Eurozone Unemployment Rate Apr A 12.20% | C 12.20% | P 12.10%

CAD       GDP M/M Mar A 0.20% | C 0.10% | P 0.30%

USD       Personal Income Apr A 0.00% | C 0.10% | P 0.20%

USD       Personal Spending Apr A -0.30% | C 0.00% | P 0.20%

USD       PCE Deflator Y/Y Apr A 0.70% | P 1.00%

USD       PCE Core M/M Apr A 0.00% | C 0.10% | P 0.00%

USD       PCE Core Y/Y Apr A 1.10% | C 1.00% | P 1.10%

USD       Chicago PMI May A 58.7 | C 50 | P 49

USD       U. of Michigan Confidence May (F) A 84.5 | C 84 | P 83.7

 

For today

USDJPY
Topside: 100.80-101.10 light buy stops  101.20-101.50 light offers  101.60-101.90 light offers
Downside: 99.80-100.10 decent sell stops 99.50-99.80 medium bids

EURUSD
Topside: 1.3010-1.3030 light mix 1.3040-1.3070 medium buy stops
Downside: 1.2920-1.2950 light bids 1.2880-1.2910 light bids

EURJPY
Topside: Nothing of note
Downside: 130.20-130.50 light bids 129.50-129.80 light bids

AUDUSD
Topside: 0.9630-0.9660 light offers  0.9670-0.9700 light offers
Downside: 0.9530-0.9560 light sell stops 0.9500-0.9530 medium bids

 

JPY:

Japan PM Abe: Watching market closely, won’t comment on moves

In Japan, Abe’s Popularity Survives Stock-Market Swoon

Japan MOF: Corp Jan-March Capex Down 3.9% on Year

EUR/JPY:

ECB’s Coeure Says BOJ Policy Not Yet Negative for Global Economy

CNY:

China Reforms to Spur Private Sector Are Positive, Moody’s Says

China May official services PMI at 54.3 vs. April 54.5

CNY/TWD:

China Banks, Insurers Cleared to Buy Taiwan Stocks

AUD: Australian April Retail Sales +0.2% vs. +0.3 Consensuses

Australia Manufacturing Continues to Contract

Australia inflation gauge subdued again in May – survey

Australia home prices drop for second month in May-RPData

Australia job advertisements fall for third month in May-survey

EUR:

Draghi Sees Signs of Stabilization in ‘Challenging’ Economy

ECB’s Draghi Says Very Important to Avoid Creation of Bubbles

 

  • EUR: The Euro opened about where it closed in NYK on Friday and while the pair was busier than most it moved slowly higher with very little going on and apart from the Queen’s birthday you’d be hard pressed not to think there was a public holiday everywhere in the world it’s been that quiet. The market slowly pushed to the 1.3016 level before stalling, with the lows made just after the opening in the 1.2985 area with very little for me to say. We currently hover around the highs.
  • GBP: Cable tagged along for the ride with very little in between the Euro movement and Cable rising from the lows of 1.5193 areas through the opening 1.5200 to touch above the 1.5220 area in a very slow day with no players showing. The market is holding for the moment in the mid-teens as we move to London.
  • JPY: USDJPY opened around the 100.50 area and dropped in the first half of the session to just below 100.40 before fixing demand helped the market to move to the 100.70 level, once the highs were hit the market died back and we drifted to the opening levels were we hold for the moment.
  • AUD: The only mover of the day well sort of, we started with a gap higher from Fridays close the market opening just above 0.9600 and from there we have struggled in a move to above 0.9635 before slipping back in to the mid 0.9620 area as we head to London on what has to be the quietest day this year.

Today’s data

Actual = A Consensus = C  Previous = P Timings GMT

JPY         Capital Spending Q1 A -3.90% | C -5.50% | P -8.70%

AUD       TD Securities Inflation M/M May A 0.20% | P 0.30%

CNY        Non-manufacturing PMI May A 54.3 | P 54.5

AUD       Retail Sales M/M Apr A 0.20% | C 0.30% | P -0.40%

CNY        HSBC Manufacturing PMI May (F) A 49.2 | C 49.6 | P 50.4

7:30        CHF        SVME-PMI May C 50.9 | P 50.2

8:00        EUR        Eurozone PMI Manufacturing May (F) C 47.8 | P 47.8

8:30        GBP       PMI Manufacturing May C 50.1 | P 49.8

14:00     USD       Construction Spending M/M Apr C 1.00% | P -1.70%

14:00     USD       ISM Manufacturing May C 50.5 | P 50.7

14:00     USD       ISM Prices Paid May C 49.5 | P 50

 

Ranges as of 6am London time including Sydney open

Highs    Lows

USD/JPY               100.73 | 100.35

EUR/USD             1.3016 | 1.29835

EUR/JPY               130.99 | 130.455

AUD/USD            0.9640 | 0.9592

NZD/USD             0.7988 | 0.7942

USD/CAD             1.0389 | 1.0358

EUR/CHF              1.2472 | 1.243

USD/CHF             0.9581 | 0.9557

GBP/USD             1.5224 | 1.5193

EUR/GBP             0.8551 | 0.85455

 

Stay lucky

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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