Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 99.916 | EURUSD 1.30105 | EURJPY 129.975 | AUDUSD 0.90878| NZDUSD 0.77703 | USDCAD 1.05046 | EURCHF 1.23132 | USDCHF 0.94655 | GBPUSD 1.52797 | EURGBP 0.85147 |

 

Harry Hindsight

  • EUR: The Asian market had very little appetite and we struggled throughout the session to move in any particular direction, opening around the 1.2980 mark we moved briefly above the level into the Tokyo opening and then drifted down to below the 1.2970 level in quiet trading, we started to see some squaring of positions into midsession  with buying taking the market back to the 1.2980 with a few rounds of EURAUD buying going through from short term buyers however, having moved back up we did nothing for the rest of the session and slowly eased back into the grey hours to the previous lows. Pre London for once didn’t see the usual East European interest however, once London opened and the news that Portugal was in turmoil following the resignation of a senior member of the coalition the Euro dropped quickly to below the 1.2930 area, the common currency was rescued by the Eurozone numbers and although the PMI continues to contract in the services sector a good bounce in the retail sales helped the market move back higher, although most of the movement seemed to come from a move in Cable which gained ground with the GBP gaining against the Euro and USD. By the time we reached the NYK market a worsening trade balance for May in the US caused a small short squeeze and the Euro moved from the opening levels to trade briefly above the 1.3030 level before drifting off to finish the day with a healthy gain and holding above 1.3010 into the close. Macro sellers were seen in the move to the highs although they were the only ones seen apart from the burnt speculators in the short squeeze.
  • GBP: With a quiet start in Asia the Cable more or less duplicated the movements, opening just below the 1.5160 level it managed to touch just below 1.5150 before pushing back to above the opening level and continued this way until just before the London opening when we saw a slight dip to make the low around 1.5135 before solid buying appeared in the market from real money pushing it to the above the opening to 1.5170. Half an hour later the data was released with a much better PMI number in the services sector than expected causing the market to rally strongly clearing out weak stops and moving quickly to above the 1.5240 level before pausing for a breath, EURGBP was no different with Middle eastern names buying the pair in later Asia time to above the 0.8570 only for it to spin round and drop sharply on the release of the numbers trading to below 0.8500 for the first time this weak touching just above 0.8480, before recovering a little into the NYK session. Cable continued the rally moving steadily higher into the NYK session and trading above the 1.5300 level before dipping back to settle around the 1.5280 level into the NYK close. The market seemed to be back to the normal type flows into safety and away from Europe from the outset once the news about Portas of Portugal hit.
  • JPY: USDJPY opened around the 100.60 area and while we drifted a little pre Tokyo the market attempted the topside on 3 different occasions, the first just after the opening saw some Speculator buying from leveraged types in an attempt to push through 101.00 with failed above 100.80 and reversed and fell back to below 100.50 as the AUD fell out of bed after comments from RBA’s Stevens, with AUDJPY dropping the JPY strengthened only slightly before again taking a run to the topside as the Oz stabilized this time we barely nudged the 100.80 level and paused before a third attempt in a classic third strike and you’re out with the market then tumbling quickly triggering weak stops and all of a sudden there was nothing to hold the market in place. With Cable rallying USD was put under pressure with cross GBP being traded through different crosses effecting the whole market which was thin at the best of times this close to a US holiday. USDJPY paused for the first time around the 99.60 level before continuing the move into early NYK and dropping to below 99.30 before the rot stopped and the market started to hold up a bit better, the recovery came in late NYK with shorts beginning to cover their positions and we managed to crawl all the way back up above the 100.00 level. The day ended with a mute drift into the 99.90 area.
  • AUD: The Oz opened around the 0.9145 area and traded very quietly for several hours into the Tokyo session before minor data in China hit better than expected and the Oz reacted instantly, moving quickly to touch the 0.9190 level, having hit the high we drifted a little lower to 0.9160 and then everything changed, the Oz numbers had already been released and counterbalanced each other with poor retail sales and an improving trade balance. RBA’s Stevens made further comments to clarify the previous days dovish commentary which again had the effect of sending the Oz in a tailspin dropping it quickly through the 0.9100 before pausing and then continuing in a more steady movement to below 0.9060, Japanese retail carry trades suffered to some extent and we saw some position cutting during the selloff. Into London and the market held as bottom pickers again came out in numbers during London and the market recovered a little but was unable to move back above the 0.9100 for the most part we started to see EURAUD selling enter the market as the Euro tumbled lower however, most of this was offset by GBPAUD buying leaving the Oz stuck for the day below the figure. NYK was little different and although we saw some weak selling from the opening pushing the Oz back to its lows it held its ground until late into the session as we saw option players hedging Delta and Gamma forcing the market into a decline and touching a new low below 0.9040 from that point the market made slow headway as we saw some profit taking into the close to finish around the 0.9090 level.

Yesterday’s premiership results

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

GBP       BRC Shop Price Index Y/Y Jun A -0.20 | P -0.10%

AUD       Trade Balance (AUD) May A 0.67B | C 0.05B | P 0.03B | R 0.17B

AUD       Retail Sales M/M May A 0.10% | C 0.40% | P 0.20% | R -0.10%

EUR        Eurozone PMI Services Jun (F) A 48.3 | C 48.6 | P 48.6

GBP       PMI Services Jun A 56.9 | C 54.6 | P 54.9

EUR        Eurozone Retail Sales M/M May A 1.00% | C 0.40% | P -0.50% | R -0.20%

USD       Challenger Job Cuts Y/Y Jun A 4.80% | P -41.20%

USD       ADP Employment Change Jun A 188K | C 161K | P 135K | R 134K

CAD       International Merchandise Trade (CAD) May A -0.3B | C -0.7B | P -0.57B

USD       Trade Balance May A -45.0B | C -40.3B | P -40.3B

USD       Initial Jobless Claims (JUN 29) A 343K | C 345K | P 346K

USD       ISM Non-Manufacturing Composite Jun A 52.2 | C 54.3 | P 53.7

USD       Crude Oil Inventories -10.3M | P 0.0M

For today

USDJPY
Topside: 100.20-100.50 light offers  100.50-100.80 light offers 101.00-101.20 medium stops
Downside: 99.30-99.60 light bids  99.00-99.30 medium bids 98.70-98.80 light stops

EURUSD
Topside: 1.3020-1.3050 light mix  1.3050-1.3080 light offers 1.3080-1.3100 medium stops
Downside: 1.2970-1.3000 light bids 1.2930-1.2960 medium bids 1.2880-1.2900 medium bids

EURJPY
Nothing of note

AUDUSD
Topside: 0.9130-0.9160 light buy stops 0.9140-0.9180 light offers
Downside: 0.9030-0.9060 light sell stops 0.9010-0.9030 light stops 0.9000-0.9010 medium bids

 

JPY:

BOJ Kuroda says Japan economy headed for steady recovery

Japan PM Abe urges voters to help him end parliamentary deadlock

Japanese Sold Net 965.9 Billion Yen Overseas Debt Last Week

AUD:

RBA’s Lowe Says Stevens’s Remarks on Meeting Were Light-Hearted

RBA’s Lowe Says Regulators Face Trade-Offs in Bid to Curb Risks

Australian Home-Building Approvals Fell 1.1% in May

CNY:

China finance ministry to auction 100 bln yuan in deposits

China Big Banks June Lending Hit by Cash Crunch -Report

China to grow 7.6% in H2; debt, overcapacity risks up paper

China approves Shanghai new yuan pilot zone – report

 

 

  • EUR: From the opening around 1.3010 we saw some light EURJPY selling enter the market taking it only slightly lower before rallying into the Tokyo session to touch above the 1.3020 with option expiry’s today for the 1.3000. into the Tokyo fix the market saw aggressive leverage selling in EURJPY again this time taking the market back below the 1.3000 level with only a brief pause before the move renewed itself touching below the 1.2990 level and holding around that area as we head to London.
  • GBP: Cable struggled from the opening around 1.5280 moving over the early part of the Tokyo session to just above 1.5250 with some light position squaring before the long weekend for the moment the market is holding just off its lows as we move towards London.
  • JPY: Having opened around the 99.90 level the market briefly moved to around 100.10 in early trading but some aggressive EURJPY selling into the Tokyo fix sent the market to a low of 99.70 before the market seemed to find its legs, we currently hold around the 99.80 level having gyrated a little but overall a very quiet session for the pair.
  • AUD: A choppy day for the Oz with little in the way of decent orders in the market we opened around the 0.9085 area and rallied into the Tokyo session with Retail Japan carry trade buying, this was then tempered by the poor numbers for building approvals and having touched above the 0.9115 level we started to slide back through the figure triggering some weak stops however, the market is very thin exaggerating the moves somewhat. We recovered somewhat on comments from RBA’s Lowe who spoke about the duration of rate meetings, which had caused a little consternation when Steven’s had mentioned them being long and arduous, which led the market believe yesterday that there may have been some dissension during the recent meeting, this led the market higher again pushing to above the 0.9130 level triggering weak stops to the topside this time before settling back to the 0.9110 level.

Today’s data

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

AUD       Building Approvals M/M May A -1.10% | C -0.90% | P 9.10%

09:00     EUR        GDP Q/Q Q1 (F) C -0.20% | P -0.20%

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

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

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

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               100.10 | 99.69

EUR/USD             1.3023 | 1.2988

EUR/JPY               130.14 | 129.62

AUD/USD            0.9133 | 0.9073

NZD/USD             0.7806 | 0.7765

USD/CAD             1.0516 | 1.0497

EUR/CHF              1.2326 | 1.2316

USD/CHF             0.9485 | 0.946

GBP/USD             1.5283 | 1.525

EUR/GBP             0.8521 | 0.8514

 

 

Good luck

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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