Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 101.809 | EURUSD 1.37972 | EURJPY 140.466 | AUDUSD 0.93611 | NZDUSD 0.86669 | USDCAD 1.09233 | EURCHF 1.21865 | USDCHF 0.88328 | GBPUSD 1.67491 | EURGBP 0.82375 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.08 | 101.79

EUR/USD             1.37975 | 1.3785

EUR/JPY               140.775 | 140.46

AUD/USD            0.9387 | 0.9335

NZD/USD             0.8709 | 0.8661

USD/CAD             1.0935 | 1.0912

EUR/CHF              1.2195 | 1.2190

USD/CHF             0.88435 | 0.88335

GBP/USD             1.6752 | 1.6739

EUR/GBP             0.8237 | 0.82335

 

For today

  • EUR: The Euro was unable to make any further headway in the Asian market and having opened around the 1.3795 levels drifted slowly towards the 1.3785 levels before recovering and holding the 1.3790 areas for the best part of the session as the market focused on Oz and USDJPY. Topside remains with some offers to the 1.3820 levels before weak stops appear, the market then seems to be dominated by small offers but around the market until the 1.3860 levels were the majority of stops seem to be hanging round for a break out to the top out of this range. Downside remains the weak side with light bids through the previous range to the 1.3700 area with better bids appearing; no noticeable stops with suspected on a move through the 1.3680 level.
  • GBP: A strong move yesterday has pushed the Cable above the sticking point of 1.6720 and moving the market into a fresh attempt to the 1.6800 levels however, it is not plain sailing from here and offers appear pretty much all the way to that level having been there or thereabouts on a couple of occasions this year. Today’s Asia session held not surprises as the market held above the 1.6740 level and continued the tight range from the NYK session throughout. Topside offers strengthen the closer you get to the 1.6800 level with stops likely to appear on a break through the 1.6810/20 a level, Downside has bids to the 1.6700 level particularly around the 1.6720 break level, with weak stops likely below the 1.6700 areas before light bids are again seen.
  • JPY: The USDJPY continued the steady rise from the lows in late NYK below 101.60, moving into the new session just above the 101.80 levels and steadily rising and pushing slightly through the 102.00 level before running into light offers and drifting back through the 101.90 levels, the market has since stayed in these areas and consistently attempted to push the 102.00 levels to no real avail although several Japanese banks were seen. With light offers around the 102.00 areas and then another set around the 102.30/40 area the market struggles to recover the previous levels and the market would have to make its way to above the 102.80 level to get amongst any meaningful stops for another push through 103.00. The downside has some scaled bids down to the 101.50 level before the market opens up to some stronger stops to the downside through the 101.30 and 101.00 areas however; retail buyers could be in the mix down there looking to re-establish longs and the Japanese retail market is nothing to sniff about. A break through the 101.00 though does open up a new ball park and the 100.00 level would be vulnerable to any break out players.
  • AUD: The Oz was reasonably quiet from the opening dipping to below the 0.9340 levels from an opening 0.9360 as day traders moved in expecting another poor figure as it was the number was on the positive side for the first time in 4 months and we quickly moved off the lows and triggered a minor short squeeze as AUDJPY carry trade buyers moved in on the move, the Oz rushed to 0.9370 and then slowly pushed at the offers on the topside not quiet reaching the 0.9390 levels, as you would expect carry trade buying came from the retail Japan sector and was fairly continuous over the course of an hour or so having topped out though the market struggled to maintain the levels and has slipped back to the 0.9370 levels as we move to the grey hours. Offers from the highs through to the 0.9420 area before we see weak stops mixed in with breakout stops with offers sitting back a little from there. Downside has nothing special until the 0.9320/00 areas where some bids appear and stops kick in below in a fairly wide open market.

Overnight News

JPY:

Japan GPIF plans to expand investments to foreign high yield debt, EM bonds

Japan GPIF Seeking Managers for Foreign Bond Investments

Japan PM Abe: Will further work on corporate tax reform

Toyota Recalls 6.76 Million Vehicles Worldwide Including RAV4

CNY:

China’s NDRC Said to Start Inspection of Corporate Bond Risks

G20:

G-20 to Discuss Ways to Tackle Risks to Global Economy: S. Korea

AUD:

Australia consumer sentiment edges higher in April-survey

Australian Housing Finance Rises In February

GBP:

U.K. March BRC Shop Price Index -1.7% Y/y vs. Feb. -1.4% Y/y

 

Today’s data

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

GBP       BRC Shop Price Index Y/Y Mar A -1.70% | C -1.50% | P -1.40%

AUD       Westpac Consumer Confidence Apr A 0.30% | P -0.70%

AUD       Home Loans M/M Feb A 2.30% | C 1.50% | P 0.00%

06:00     EUR        German Trade Balance (EUR) Feb C 17.5B | P 15.0B

08:30     GBP       Visible Trade Balance (GBP) Feb C -9.3B | P -9.8B

14:00     USD       Wholesale Inventories Feb C 0.50% | P 0.60%

14:00     USD       Wholesale Trade Sales M/M Feb C 1.00% | P -1.90%

14:30     USD       Crude Oil Inventories C 1.3M | P -2.4M

18:00     USD       FOMC Minutes

 

Harry Hindsight

  • EUR: The market in the Euro started the day quietly moving from the opening 1.3745 area in a tight range just through the 1.3750 and dipping to below the 1.3740 into the grey hours, IMF revisions on the UK economy helped Cable higher and in doing so dragged the Euro with it, add to which a general USD move to the downside ensued and Euros steadily moved to the 1.3770 into NYK and then further as USD fell off and Euro’s peaked above the 1.3810 level and into waiting offers. The market continued to struggle around the 1.3800 levels for the balance of the session with the market becoming its usual dull trade once London was closed. The market suggests that the USD drop was more to do with the risk events of last week failing to move the market and a liquidation of those longs filtering through, this on the whole seems plausible however, a more likely scenario is those connected to the two events combined in Cable and USDJPY being of a more distinct reasoning as really there was only a 70 pip move on the day so only coincidental to the Euro.
  • GBP: Cable like the Euro’s traded quietly in the Asian session moving from the opening 1.6605 area to the 1.6620 levels with only a slightly better performance than the Euro, the grey hours were particularly quiet and even though the news that the IMF was to revise the UK growth numbers and by a decent margin it seemed to be already priced into the market. Having sat in a reasonably tight range over the past two weeks the market did look a little jaded and any move either way would possibly produce results. Needless to say the IP figures was enough to set the market rolling with all the numbers coming in stronger than expected and eclipsing the minor revisions on the previous month. The market from the London opening had already begun to rise pushing through the 1.6640 areas and into the numbers, with offers quickly disappearing the market immediately rallied to above the 1.6700 levels stalling for a period as the 1.6720 barrier provided some resistance, only the continuing USDJPY weakness tipped the scales as the USDJPY move became a general USD weakness and Cable pushed through the level to the 1.6750 area. The market then settled into a tight 1.6740/55 channel into the NYK close as the market settled down once London close up. Obviously the USD was not the only loser as GBP outperformed all comers and EURGBP dropped from the 0.8270 levels we’d seen through Asia in a straight plunge to 0.8235 levels before holding in a 0.8235/50 range to the close.
  • JPY: Is the wallet empty, I don’t suppose it is as the BoJ can and often does print what is needed however, with no mention of further measures to boost the economy this has been suggested was the catalyst for today’s events, however, the market has been banging around up above the 103.00 level for several days and most notably against the 104.00 level as we ran into the NFP, and while on the face of it the numbers were not poor, the market was I believe prepared for a better figure and it failed to appear which shows in the instant drop on Friday to 103.20, so what has this to do with today, two things Japanese retail was still long USDJPY having not been awake on Friday, secondly the movement in equities combined with already weakening longs triggered the usual margin run for those traders and a few more, which more explains the steady decline through the day as European and US real money was willing to buy into the dip lower. The market itself opened above the 103.10 level and dipped to below 102.80 to take out some of the weak longs from the European/US sessions before moving steadily higher to just above the 103.00 levels. As with the USDJPY the Nikkei drifted lower also and whether the egg or the chicken came first it makes little difference if you are a retail trader with long position in equity, USDJPY, AUDJPY and Gold or a combination of any, which is all of them when things go wrong. Needless to say one followed the other and by London opening we were down to the 102.60 level, given the move in Cable and the drag effect on Euro’s the whole FX moves started to become a general USD selloff and USDJPY forced down through the 102.60 level triggering stops and then a brief pause every 20 pips until the market spiked down through the 101.80 levels and holding the 101.60 level. The market then managed a meagre 20 pip bounce into the close. The other thing of note was again the worsening situation in the Ukraine, generating safe haven flows and adding to the downward pressure on the USDJPY.
  • AUD: The Oz found the topside open for movement with the decline in USDJPY, with the NAB business numbers surprisingly mixed given the low confidence reading however, the details initially helped the Oz higher moving from the opening areas around the 0.9265 levels to above the 0.9280’s. The market then spent the rest of the session into the grey hours completing a rise of just over 10 pips and poised for the 93 cent level again. The market has pushed against this level on 3 separate occasions prior to this attempt and given the movement in USDJPY and the early willingness of the market to buy into the carry trade as the USDJPY weakened the Oz managed the move to that level. When London opened the market moved swiftly through the 93 cent level and paused only briefly above 0.9320, before moving in steps to above the 0.9360 level for good gains. The AUDJPY held deep into the London session before giving ground from the highs above 95.80 as the USDJPY declines began to steepen to push the carry to just above the 95.00 where sentimental support appeared.

Yesterday’s premiership results

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

JPY         Current Account (JPY) Feb A -0.04T | C -0.04T | P -0.59T

AUD       NAB Business Confidence Mar A 4 | P 7

JPY         Eco Watchers Survey: Current Mar A 57.9 | C 53.3 | P 53

CHF        Unemployment Rate Mar A 3.20% | C 3.20% | P 3.20%

CHF        Retail Sales (Real) Y/Y Feb A 1.00% | C 0.90% | P 0.30% | R -0.10%

GBP       Industrial Production M/M Feb A 0.90% | C 0.30% | P 0.10% | R 0.00%

GBP       Industrial Production Y/Y Feb A 2.70% | C 2.20% | P 2.90% | R 2.80%

GBP       Manufacturing Production M/M Feb A 1.00% | C 0.30% | P 0.40% | R 0.30%

GBP       Manufacturing Production Y/Y Feb A 3.80% | C 3.10% | P 3.30% | R 3.20%

CAD       Housing Starts Mar A 157K | C 192.0K | P 192.1K | R 191K

CAD       Building Permits M/M Feb A -11.60% | C -2.00% | P 8.50% | R 8.10%

GBP       NIESR GDP Estimate Mar A 0.90% | P 0.80% | R 0.90%

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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