Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 99.054 | EURUSD 1.30929 | EURJPY 129.702 | AUDUSD 0.95427 | NZDUSD 0.79336 | USDCAD 1.03432 | EURCHF 1.23348 | USDCHF 0.94215 | GBPUSD 1.54056 | EURGBP 0.84988|

Harry Hindsight

• EUR: A mixed day for the Euro’s with Asia starting by selling the pair lower into the mid-session from the opening 1.3080 area to just above 1.3060, we then moved slowly back to where we started with some reasonable exchanges of volume, the break out attempt came just before the London opening as we pushed through the 1.3105 area only for some serious selling to appear in the market and into the opening the Euro was trading back around the 1.3065 area. The numbers out of Europe were next up with no surprises in the GDP however a worse than expected PMI print sent the market lower again trading to the 1.3055 level before holding in any fashion. With the opening of NYK came another raft of disappointing numbers and the market needed little excuse to sell the USD and we saw a large spike higher, at this point we hit above 1.3115 and the selling was just as quick once we hit the level and we returned towards the lows again. The remainder of the session was Euro being steadily bought back to the previous levels and again the sticking level throughout the session seems to be around this 1.3100 level, one has to suspect a large option play. Overall not an exciting day with the range confined for the most part below 1.3100 while both the Eurozone and the US continue to release data that only seems to affect the USD to the negative side.
• GBP: Probably a better view of the market as we saw good numbers from the UK as opposed by those in Europe and the US, Cable opened around the 1.5315 area and apart from a slow drift in early Asia to briefly test towards 1.5290 it was all one way traffic, moving up to above 1.5340 before flip a coin types sold into the opening in front of the numbers needless to say they got it wrong and we never really looked back as it rose initially to above the 1.5370 level and then moved higher again on the back of the US data releases, we moved above the 1.5400 level and for the rest of a dull session remained above the area into the close in NYK. The Euro fared no better than the USD against the GBP as the solitary PMI figure was enough to move the EURGBP cross lower from the highs above 85.45 to touch below 0.8495 into the late stages of NYK, there was a brief flurry around the US figures as the Euro went bid however, the early weakening tone remained for the session.
• JPY: USDJPY remains weak as the US data counters the BoJ easing for the moment, we opened around the 100.00 level and early buyers were seen with talk of some demand for the USD however the market struggled to really move that much and we pushed to just short of the 100.40 level before sagging into the latter part of the session, comments from PM Abe about slaying the deflation monster caused a flurry moving the market from its then lows to above 100.40 and just shy of 50 however, some of his comments were a little fanciful and the market dropped quickly from its highs triggering stops in the USDJPY and some of the crosses, AUDJPY again came under pressure with the GDP number out of Oz, but was contained within the AUD leg for the most part, retail Japan having been fairly quiet in recent days was more active through the selling to the 99.50 level and into early London but with poor numbers in Europe and then the US the Yen was always going to strengthen as the GBP did and we found the market dropping 10-20 pips and pausing for long gaps before making another move lower as bids were exhausted until the market finally touched below the 99.00 levels and held into the close.
• AUD; The Oz was the poor man of the currency world even though there was no good news for both Euro and US through data releases the Oz couldn’t stop that sliding feeling trading from the opening areas around 0.9650 to touch below 0.9520 during the NYK session. On the bright side the problems the Ozzies have been facing is a raging currency which is never good for a commodity Country where raw materials are measured predominately in USD, so dare I say happy days however, the data will have to improve if the benefits of a weaker currency are to bare out no long term effects from the highs. We finished the day off the lows and holding around the 0.9540 area into the NYK close.

Yesterday’s premiership results

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

GBP       BRC Shop Price Index May A -0.10% | P 0.40%

AUD       GDP Q/Q Q1 A 0.60% | C 0.80% | P 0.60%

EUR        Eurozone PMI Services May (F) A 47.2 | C 47.5 | P 47.5

GBP       PMI Services May A 54.9 | C 53.2 | P 52.9

EUR        Eurozone GDP Q/Q Q1 (P) A -0.20% | C -0.20% | P -0.20%

EUR        Eurozone Retail Sales M/M Apr A -0.50% | C -0.20% | P -0.10%

USD       ADP Employment Change May A 135K | C 170K | P 119K

CAD       Building Permits M/M Apr A 10.50% | C -2.30% | P 8.60%

USD       Non-Farm Productivity Q1 (F) A 0.50% | C 0.70% | P 0.70%

USD       Unit Labour Costs Q1 (F) A -4.30% | C 0.50% | P 0.50%

USD       Factory Orders Apr A 1.00% | C 1.40% | P -4.00%

USD       ISM Non-Manufacturing Composite May A 53.7 | C 53.5 | P 53.1

USD       Crude Oil Inventories A -6.3M | P 3.0M

For today

USDJPY
Topside: 99.40-99.60 light offers  99.70-100.00 light buy stops 100.00-100.30 light offers
Downside: 98.70-98.90 medium bids 98.30-98.60 medium sell stops 98.00-98.30 medium bids

EURUSD
Topside: 1.3100-1.3130 medium buy stops  1.3130-1.3160 light offers
Downside: 1.3030-1.3060 light sell stops 1.3000-1.3030 light bids

EURJPY
Topside: Nothing of note
Downside: 129.20-129.50 light bids

AUDUSD
Topside: 0.9550-0.9580 light buy stops
Downside: 0.9430-0.9450 light bids 0.9400-0.9430 decent bids

JPY:

Japan Govt Suga: Yen Depreciation Generally Good For Econ

Foreign investors net sellers of Japan shares for last week

CNY/EUR:

China has more cards to play in EU trade dispute – People’s Daily

AUD:

Australia Apr Trade Surplus A$28M Vs. A$180M Consensus

EUR:

IMF Says Greece May Need Faster Debt Relief, Cites Own Mistakes

• EUR: The market as it seems its been the whole week is mired in this 1.3100 area with an inability to break higher and unwilling to move lower as weaker than expected numbers keep appearing out of the US, even though the Eurozone numbers are no better one suspects the market expects better from the US. For the most part we’ve dallied with the 1.3090 area making a brief move down into the mid 1.3070’s on the Oz trade balance release before recovering to the same levels and trading in a tight 1.3090-95 range in which we remain as we approach the grey hours.
• GBP: While the markets have been becalmed by this struggle in the 1.3100 area for the Euro, we watched quietly as the Cable has been sold consistently from the Tokyo opening, having opened around the 1.5405 level it moved a little higher in the pre Tokyo market before dropping quickly to below 1.5385 with talk of system selling in the market, I would have imagined a larger and quicker move and I’m more inclined to believe real money selling behind it, the fact that having pushed 20 pips steadily then abruptly stopped before spending the rest of the session slowly moving up to the opening levels is a clear indication of one seller effecting the market, for the moment we have pushed back above the 1.5400 level and holding.
• JPY: USDJPY opened just above the 99.00 level and traded quietly pre Tokyo before dropping to below the 98.90 level were the market has some bids which held into the Tokyo fix, good demand was seen and the market rallied to above the 99.40 however, it again ran into resting orders and could not push through and apart from the fix volumes have been light throughout the session, since then we’ve drifted lower with no real impetus and currently hold just above the opening levels.
• AUD: It would seem that the economic climate the world over is in a worse state than everyone would expect or so it seems from the numbers released this week, with Oz out there in front or so it appears, we started the day above the 0.9540 area and have steadily slipped lower, with bids making only brief appearances the market moved towards the numbers looking weak and on the release tumbled to below the 0.9500 quickly holding around 0.9470. The market looked briefly to be recovering but then tumbled again to leave the market around the current 0.9440 levels having triggered some minor stops.

Today’s data

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

AUD       Trade Balance (AUD) Apr A 0.03B | C 0.21B | P 0.31B | R 0.56B

07:15     CHF        CPI M/M May C 0.10% | P 0.00%

07:15     CHF        CPI Y/Y May C -0.60% | P -0.60%

10:00     EUR        German Factory Orders M/M Apr C -1.00% | P 2.20%

11:00     GBP       BoE Rate Decision C 0.50% | P 0.50%

11:00     GBP       BoE Asset Purchase Target C 375B | P 375B

11:30     USD       Challenger Job Cuts Y/Y May P -6.00%

11:45     EUR        ECB Rate Decision C 0.50% | P 0.50%

12:30     USD       Initial Jobless Claims (JUN 1) C 345K | P 354K

14:00     CAD       Ivey PMI May C 55 | P 52.2

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               99.44 | 98.86

EUR/USD             1.3107 | 1.3075

EUR/JPY               130.06 | 129.42

AUD/USD            0.9538 | 0.9435

NZD/USD             0.7972 | 0.7902

USD/CAD             1.0367 | 1.0338

EUR/CHF              1.2349 | 1.2320

USD/CHF             0.9440 | 0.9401

GBP/USD             1.5416 | 1.5384

EUR/GBP             0.85065 | 0.8497

Good luck

Andy