Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 103.229 | EURUSD 1.37696 | EURJPY 142.142 | AUDUSD 0.9265 | NZDUSD 0.86683 | USDCAD 1.10485 | EURCHF 1.21813 | USDCHF 0.88459 | GBPUSD 1.66632 | EURGBP 0.82633 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               103.345 | 103.09

EUR/USD             1.3778 | 1.3768

EUR/JPY               142.35 | 142.00

AUD/USD            0.9310 | 0.9255

NZD/USD             0.8688 | 0.8668

USD/CAD             1.1058 | 1.1048

EUR/CHF              1.21865 | 1.2178

USD/CHF             0.8850 | 0.8841

GBP/USD             1.6671 | 1.6657

EUR/GBP             0.82685 | 0.8265

 

For today

  • EUR: There always seems to be some reason why the markets don’t move, and once the event is over with it seems to be too late for it to move. Euro has been stuck in the centre of the 1.3770/80 range for the whole session barely scraping through the 1.3770 level and not managing to move much above 1.3777. With the market so quiet obviously the market has tested neither side with offers above the 1.3780 level and building above the 1.3800 level into the 1.3820 areas in patches however, they seem to be from several areas so likely to be sizable in total. Weak stops through the 1.3840 area and then all light offers on the way to 1.3900. Downside has light bids starting below the 1.3740 area and stretching into 1.3700 levels, a break through the 1.3680 levels will trigger some medium sized stops however, the market is a little mixed through there and only a stray bullet could do much damage on the todays showing so far.
  • GBP: Cable saw a range no better than the Euro holding around the 1.6660/67 levels for the majority of the session dipping into the high 50’s briefly before moving back to the range. I’d like to say the focus is on the 1.6700 level however, everyone sees the level as an area to fade the market and offers are seen through the 1.6700 level back to 1.6720 before there is the first smattering of stops. Those stops are short lived with fresh offers appearing in a scaled supply to the 1.6760/70 area. Downside has nothing really special until the 1.6620 area where some light bids appear and then weak stops below 1.6600 and into a mix all the way to 1.6550 and another patch of stronger bids. For the moment it is dead in the water and a feeling that the topside again has proven a little too strong and likely to cause a rejection.
  • JPY: For the second day running the USDJPY remains quiet, with a range I can still count on my digits, just. The market opened around the 103.20 area and having pushed through the level above I did expect it to be doing more work higher, maybe the fact that the week faces a decent number of data releases across the world has left the market unsure of where to go. I have to say I’m struggling to find any tangible reason for the next move. The market did eventually wake up after the move lower following the Tankan report and everyone doing pieces on the new and improved consumption tax hike, the market seemed to have more movement from the CNY numbers with the early number helping the USDJPY to move back through the opening levels and trade a few times above the 103.30 levels, where the market currently holds. With topside seeing weak stops above the 103.50 levels before offers again make an appearance in size around the 103.80 levels back to 104.00 suspected to be option related, stops behind again look to be gamma related and while reasonable in size are in a tight area before normality starts to appear with supply appearing around the 104.20-40 levels and patchy from then on. To the downside the 102.90/95 level where the market broke out from holds the key with bids into the level and weak stops below and then very little on a move to the mid-levels. Bids around the 102.20 downwards are light for the moment and look insubstantial with stops through 101.80.
  • AUD: The Oz rose slowly higher and was a little nervous into the RBA announcement opening around the 0.9270 levels the market touched above the 0.9290 level and ran into some substantial offers initially, dropping back from the resistance into the mid 0.9260’s before holding in the 0.9280 levels. The release of unchanged initially sent the market scampering higher and the aforementioned resistance disappeared (probably to be placed back in the market) touching the 0.9310 area before dropping quickly back again as the general tone was little changed however, talk of business investment was more muted and led the market to believe that ongoing investment while pencilled in was on a back burner for the moment. The market bottomed just below the 0.9260 levels and while the market absorbs the data those 0.9300 level offers are likely to have moved back into play, with weak stops above the 0.9310 level now and nothing of note until deeper into the handle and towards 0.9400. Downside has light bids from 0.9230 into the 0.9200 levels with light profit taking suspected and then light stops through the levels.

Overnight News

CNY:

China Purchasing Managers Index Edges up in March

China March HSBC Final Manufacturing PMI 48.0 vs. 48.5 in Feb

China Growth Model to Be More Sustainable in Long-Term, ADB Says

China raises minimum wage in Beijing, Shanghai, Tianjin report

China construction firm defaults on private bond – report

JPY:

Japan business mood improves slightly in Q1 -BOJ tankan

Japan’s GPIF Maintains Portfolio in Fiscal 2014 Management Plan

Aso: Next Few Mos. Key in Deciding Whether to Raise Tax to 10%

Second Japan nuclear operator to get government bailout Nikkei

Japan Eases ‘Outdated’ Rules on Sales of Military Equipment

AUD:

Australia CB holds rates, policy to stay accommodative

Australia home prices jump 2.3% in March – RPData

 

Today’s data

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

JPY         Tankan Large Manufacturers Index Q1 A 17 | C 19 | P 16

JPY         Tankan Non-Manufacturing Index Q1 A 24 | C 25 | P 20

CNY        Manufacturing PMI Mar  A 50.3 | C 50.1 | P 50.2

CNY        HSBC/Manufacturing PMI Mar (F) A 48 | C 48.5 | P 48.5

AUD       RBA Rate Decision A 2.50% | C 2.50% | P 2.50%

07:30     CHF        SVME-PMI Mar C 56.7 | P 57.6

07:45     EUR        Italian Manufacturing PMI Mar C 52.2 | P 52.3

07:55     EUR        German Unemployment Change Mar C -10K | P -14K

07:55     EUR        German Unemployment Rate Mar C 6.80% | P 6.80%

08:00     EUR        Eurozone Manufacturing PMI Mar (F) C 53 | P 53

08:00     EUR        Italian Unemployment Rate Feb (P) C 12.90% | P 12.90%

08:30     GBP       PMI Manufacturing Mar C 56.5 | P 56.9

09:00     EUR        Eurozone Unemployment Rate Feb C 12.00% | P 12.00%

12:30     CAD       Industrial Product Price M/M Feb C 0.70% | P 1.40%

12:30     CAD       Raw Materials Price Index M/M Feb C 2.30% | P 2.60%

14:00     USD       ISM Manufacturing Mar C 54 | P 53.2

14:00     USD       ISM Prices Paid Mar C 59 | P 60

14:00     USD       Construction Spending M/M Feb C 0.10% | P 0.10%

 

Harry Hindsight

  • EUR: The Euro opened slightly higher from Friday with lots of patting of backs for the ECB with a job well done through a very unsavoury period, however as can be seen later there are a few holes in the life raft they are clinging too. The market in Asia was limited throughout the session and struggled with a tight range opening just above the 1.3760 level the market drifted into Tokyo below the 1.3750 level and struggled in that range through the session, moving into London on its lows. London were buyers on a hope and a prayer maybe believing that the back patting was an indication of a CPI estimate better than expected, how they wished they’d stayed away as the release was worse than expected and the market dropped sharply towards the 1.3720 level where bids absorbed the move and we saw the market bounce quickly back again. The bounce it would seem was on the fact that last week’s Spain and German CPI’s pushed the number lower however, one has to wonder who dreams up these consensuses if they didn’t take that into account or if they did was the bounce unfounded? With the market moving steadily higher we pushed above the 1.3800 areas triggering some weak stops before drifting back to the 1.3780 levels for a second run higher to just below 1.3710 then a drift into the London close and a quiet afternoon session in the US after seeing a weaker PMI number contributing only smalls in movement.
  • GBP: Cable tagged along with the Euro for the most part with only minor data which generally was only slightly off from consensus, the market opened around the 1.6645 area and held in the area deep into the Tokyo session before making its one move lower to the 1.6630 area. The move into London saw the market move higher slightly as the Euro led the way however, although the Cable mirrored the moves to some extent the dip lower on the CPI estimate for the Eurozone was less marked and the rise was little different, dropping initially to just above the 1.6610 levels and rallying in the space of the hour to above the 1.6680 levels. The move over the market held towards its highs and only drifted off in the final few hours to the 1.6660 levels in quiet trading. EURGBP was probably less volatile than you would expect moving from the opening areas of 0.8265 to trade just short of 0.8300 as the Euro topped out and then back to the starting areas and a little lower to the 0.8255 level as the market settled back with USD slightly weaker against both the Euro and GBP.
  • JPY: After the past week of repatriation offers holding the market the opportunity to move higher was missed during the Asian hours and the offers that did show in front of the 103.00 levels was sufficient to keep a lid on the market until we moved into London, the market opened higher around the 102.95 areas and although we traded around the levels for several hours the market dipped into the latter part of the session to the 102.80 level during the grey hours. Once London opened it was a different story and the impetus was strong enough to drive through the offers around 103.00 and after an hour or so struggling rallied quickly to the next batch around 103.30. The opening of the NYK session saw a fresh round of buying and the market again pushed through the offers to trade above 103.40 before running out of steam and into a weak number for the Chicago PMI. The market moved steadily lower again bouncing slightly off the 102.90 level where it struggled during Asia to finish the day back above the 103.20 levels.
  • AUD: With the USDJPY struggling during the Asian hours to break upwards the market in Oz was initially very subdued opening around the 0.9250 levels in line with Fridays close before moving slightly higher towards the 0.9260 levels before drifting back again and dropping through the opening level to below 0.9240. The market remained like this for a few hours before AUDJPY suppliers gave up the ghost of waiting for the market to come to them and sold quickly to take the Oz lower and probably helping in the process to keep the USDJPY subdued. The market moved towards the grey hours moving to make new lows around the 0.9220 levels before rising a little into the London session. London was flat with very little interest in the Oz pre rate announcement and only once the USDJPY really started to rally did we see fresh AUDJPY buying and AUDUSD buying in line with the other majors against the USD. Rising as Yellen’s statement backed away from her previous 6 month limit on interest rates. The Oz topped out in the NYK session and then stalled and held the 0.9270/80 levels for the best part of the NYK session into the close.

Yesterday’s premiership results

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

NZD       Building Permits M/M Feb A -1.70% | C -8.30% | P -8.60%

JPY         Markit/JMMA Manufacturing PMI Mar A 53.9 | P 55.5

JPY         Industrial Production M/M Feb (P) A -2.30% | C 3.60% | P 3.80%

NZD       NBNZ Business Confidence Mar A 67.3 | P 70.8

JPY         Housing Starts Y/Y Feb A 1.00% | C 6.10% | P 12.30%

CHF        KOF Leading Indicator Mar A 1.99 | C 2.05 | P 2.03

GBP       Mortgage Approvals Feb A 70.3K | C 75.0K | P 76.9K | P 76.8K

GBP       M4 Money Supply M/M Feb A 0.70% | C 0.50% | P 0.30%

EUR        Eurozone CPI Estimate Y/Y Mar A 0.50% | C 0.60% | P 0.70%

CAD       GDP M/M Jan A 0.50% | C 0.40% | P -0.50%

USD       Chicago PMI Mar A 55.9 | C 58.5 | P 59.8

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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