Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 103.658 | EURUSD 1.37923 | EURJPY 142.972 | AUDUSD 0.92473 | NZDUSD 0.86519 | USDCAD 1.10265 | EURCHF 1.21857 | USDCHF 0.88351 | GBPUSD 1.66294 | EURGBP 0.82939 |

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               103.935 | 103.61

EUR/USD             1.3808 | 1.37905

EUR/JPY               143.46 | 142.94

AUD/USD            0.9250 | 0.9223

NZD/USD             0.8639 | 0.8587

USD/CAD             1.1042 | 1.1023

EUR/CHF              1.2192 | 1.2183

USD/CHF             0.8837 | 0.8827

GBP/USD             1.6636 | 1.6622

EUR/GBP             0.8304 | 0.8293

For today

• EUR: A quiet opening around the 1.3790 levels saw the market start to push higher once the Tokyo market moved in and JPY selling across the board. The Euro slowly moved up to above the 1.3805 area in a quiet market and only the cross JPY seeming to be attractive as it pushed firmly through the 143.00 levels on the back of a new measure of inflationary growth for the market to digest. Topside now sees some reasonable offers from the 1.3810-20 area with weak stops behind before light offers continue to 1.3850 another set of resistance offers for the moment and then all light offers across the market to the 1.3900 level. Downside has light bids to the 1.3790 levels with weak stops below and then mixed to the 1.3770 area, some stronger bids around the level however, there is a mix of stops in there before the market opens up to the downside and 1.3730 to 1.3700 provides the next support bids.
• GBP: Given the activity yesterday by the announcement of a M&A and the quick reaction by the company involved the Cable was chased lower as the real money flow impacted the market. Saying that today saw the market struggle to make any impact and although we managed more than a 10 pip range for a change in Asia the difference is not worth quibbling about, with the market touching just above the 1.6635 levels and forced to below 1.6625 its been very limited in a quiet session for the pair, it’s worth noting for the moment that the EURGBP has seen early Europeans coming in and buying however, the move is limited. Topside resistance now rests at 1.6650 areas where we broke down from and struggled in late attempts yesterday to penetrate, with a possibility of no more real money on the horizon the market may have a chance to bounce on the PMI number later today but I’d not hold your breath. Downside has light bids from the 1.6620 levels and then a mix over the next 50 pips or so and unclear from there with suspected better bids around the 1.6550 levels.
• JPY: USDJPY continues its steady march higher pushing from the 103.70 areas to above the 103.90 on the back of the new survey on inflation, while it should very little of note it was enough to keep the USDJPY bubbling and rising to the 103.90 area grinding through some strong offers however, protection around the 104.00 level seems to be in play and having held in the mid 103.80’s for a good portion of the day has started to give ground as the market moved into the grey hours. The 104.00 level is the one to get through to open up the topside however the protection seems to have won for the moment and only the strong impetus of a London market is likely to get through for the moment, weak stops are now making an appearance above joining that of gamma players before running into another set of offers just above the 104.20 with a mixture of stops in there. For the bottom the market is mixed to the 103.35 levels with light stops dominating below the level and into the 103.00 area with bids showing, through there sees some stronger stops before running into a mixture around the 102.80 levels.
• AUD: The Oz has had a quiet day with the market still digesting yesterday’s RBA announcement and communique, with a tight range moving up in the Tokyo AUDJPY buying only to drop back as the USDJPY pushed ahead leaving the Oz to slip from the 0.9250 level to trade just below 0.9225 to set the range, the market holding into the grey hours mid-range and just adrift from the opening levels. Topside offers appear again around the 0.9300 levels as pre-announcement with a mixture to the topside in play, downside has light bids with scattered stops through the lows to 0.9200 and the picture is less than clear below there.

Overnight News

JPY:

BOJ: Japan Firms Expect 1.5% Price Growth in One Year

BOJ Survey Shows Fewer Consumers Expect Prices to Rise Over Coming Year

JPY/USD:

Obama to Visit Japan April 23-25, Meet Abe: Nikkei

JPY/PHP:

Philippine, Japan Forces to Hold Joint Sea Drills: Ikeda

CNY:

China Yuan Weakening May Trigger Foreign Debt Risk: China Daily

AUD:

Australian Building Approvals Drop

Australia job vacancies rise 2.6% in Feb qtr.

RBA Says Current Regulatory Coordination Is Working Well

NZD:

N.Z.’s Key Says No ‘Lolly Scramble’ in 2014 Budget, Election

NZ commodity prices marginally lower in March – ANZ survey

RUB/USD/EUR:

Russia CB sells $22.3 billion and 2.3 billion euros in March

Today’s data

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

JPY         Monetary Base Y/Y Mar A 54.80% | C 60.20% | P 55.70%

AUD       Building Approvals M/M Feb A -5.00% | C -1.70% | P 6.80%

06:00     GBP       Nationwide House Prices M/M Mar C 0.80% | P 0.60%

08:30     GBP       Construction PMI Mar C 63.2 | P 62.6

09:00     EUR        Eurozone PPI M/M Feb C -0.10% | P -0.30%

09:00     EUR        Eurozone PPI Y/Y Feb C -1.70% | P -1.40%

12:15     USD       ADP Employment Change Mar C 190K | P 139K

14:00     USD       Factory Orders Feb C 0.80% | P -0.70%

14:30     USD       Crude Oil Inventories P 6.6M

Harry Hindsight

• EUR: The Euro traded quietly throughout the Asian session not evening breaching a 10 pip range holding to the opening 1.3775 areas, even in the grey hours the market had not made up its mind where to go. London opened and early buyers moved in before the PMI numbers, the market moved to the 1.3790 levels and now it was only a matter of time before it again breached the 1.3800 level properly. While broadly speaking the data was better than expected the market was already focused it would seem on the topside. The market struggled for several hours before running into the NYK session and fresh USD selling lifting the market to above the 1.3815 level however, again for the second day running the offers on the topside proved to be a tough nut to crack and although the US data was slightly weaker than expected there was little movement allowed and we drifted off the levels in slow trading, the market though while limited to the topside was unable to move back below the 1.3790 levels and held into the close. While the ISM number in the US was weak the actual component number held up to scrutiny for production and new orders.
• GBP: Cable held well in the Asian session drifting slightly from the opening 1.6665 areas and suffering the same narrow ranges seen in the Euro. Only the move into London held any surprises with strong EURGBP buying moving through the market from the opening taking the pair from the low 0.8260’s to 0.8280 quickly and then a second round an hour or so later to take it above the 0.8290 level, while I’m not sure who was behind it, it does look to be a single source behind the buying to take the market into the 0.8290 area and but a heartbeat from 0.8300. Before the market opened in NYK there was another move higher this time pushing through the 0.8300 to peak around the 0.8305 levels before drifting back a little and the end of the session for the pair several hours before finishing the day in the mid 0.8290’s. Cable struggled with the EURGBP flows and was forced lower on moves in the cross dropping to the 1.6650 area and then again to the 1.6620 levels and close to the previous day’s lows. Having pushed through the 1.6650 level the market never quiet recovered with the Euro dead in the water the Cable could only meander quietly through the NYK session to finish around the 1.6630 levels. Relevant M&A talk was about the possible merger of Metso (Finnish) and the Scottish Weir grp €4B
• JPY: Tankan was the news of the day with a set of disappointing numbers released, the market moved slowly from the opening dipping from the 103.25 areas to just below the 103.10 level into the release and then rallying to the 103.35 levels as the numbers hit. From that point Asia marked time moving in a tight area and not until we moved into the London session did the top break and a move slowly to the 103.40 level through some stiff offers. The climb was renewed once the NYK market opened and while the USD was broadly weaker against everything the JPY was the exception and the market ground through the 103.50 and up to the next batch of strong offers at 103.70 area and into a quiet close.
• AUD: With the other set of numbers being the RBA announcement the market moved through the early pre-Tokyo market sideways with the market happy to stay clear of the whippy moves associated with the announcement, only once the market moved into the Tokyo session did we start to see the more speculative moves starting with a quick rise to above the 0.9290 levels before being stopped by good offers and a complete 180 turn around to head to below the 0.9265 level as the market chucked them back out again. The market moved slowly then to the 0.9280/85 area and into the release, with no change as expected, it was as usual the details that mattered with very little different in the communique generally and only a passing mention of business investment however, the fact they didn’t make an issue of it had the market doing the usual with a quick move through the 0.9300 levels before the market collapsed back to hold the 0.9255 level. It then became a little choppy in the run to London with the 0.9255 holding a few times before giving away as the USDJPY rallied into waiting offers in the AUDJPY cross. The market then held the 0.9230 levels into NYK and with USD on the back foot managed to push back to the 0.9255 levels in mid-session before sliding lower for the close.

Yesterday’s premiership results

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%

CHF        SVME-PMI Mar A 54.4 | C 56.7 | P 57.6

EUR        Italian Manufacturing PMI Mar A 52.4 | C 52.2 | P 52.3

EUR        German Unemployment Change Mar A -12K | C -10K | P -14K | R -15K

EUR        German Unemployment Rate Mar A 6.70% | C 6.80% | P 6.80% | R 6.70%

EUR        Eurozone Manufacturing PMI Mar (F) A 53 | C 53 | P 53

EUR        Italian Unemployment Rate Feb (P) A 13.00% | C 12.90% | P 12.90%

GBP       PMI Manufacturing Mar  A 55.3 | C 56.5 | P 56.9 | R 56.2

EUR        Eurozone Unemployment Rate Feb A 11.90% | C 12.00% | P 12.00% | R 11.90%

CAD       Industrial Product Price M/M Feb A 1.00% | C 0.70% | P 1.40%

CAD       Raw Materials Price Index M/M Feb A 5.70% | C 2.30% | P 2.60% | R 2.80%

USD       ISM Manufacturing Mar A 53.7 | C 54 | P 53.2

USD       ISM Prices Paid Mar A 59 | C 59 | P 60

USD       Construction Spending M/M Feb A 0.10% | C 0.10% | P 0.10%

Good Luck,

Andy