Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 101.53 | EURUSD 1.38868 | EURJPY 140.989 | AUDUSD 0.94136 | NZDUSD 0.86972 | USDCAD 1.09344 | EURCHF 1.21701 | USDCHF 0.87638 | GBPUSD 1.67834 | EURGBP 0.82739 |

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               101.71 | 101.32

EUR/USD             1.38975 | 1.3881

EUR/JPY               141.29 | 140.72

AUD/USD            0.9417 | 0.9362

NZD/USD             0.8684 | 0.8624

USD/CAD             1.0940 | 1.0929

EUR/CHF              1.21775 | 1.2165

USD/CHF             0.87655 | 0.8757

GBP/USD             1.6787 | 1.6767

EUR/GBP             0.82845 | 0.82715

For today

• EUR: A fairly tight range for the Euro’s, opening around the 1.3885 levels it held steady during pre-Tokyo, as with the last two days Japanese banks were seen buying into the market from the start with EURJPY in particular rising from its early lows just above the 140.70 levels, this had the net effect of taking the Euro higher to 1.3895 areas. Offers remain sub 1.3900 with stops now building above the levels from weak shorts, as we move through the low 1.3900’s stops start to be mixed with stronger offers until they dominate the market from the 1.3940 areas onwards. A series of stops appear through the 1.3880 levels however, they are light and mixed with lighter bids, a move through the 1.3850 triggers better stops running into supportive bids from the 1.3830 levels down to the figure.
• GBP: While the ranges have not been great the market in Cable continues to slowly slip back falling from the 1.6785 area and dipping down below the 1.6770 and holding in that area. Offers appear stronger above the 1.6820 areas close to the yearly highs and back into the 1.6850 levels however, at that point we are in a new range and those offers are suspect. Downside bids make an appearance below the 1.6730 levels with a mixture with a bias towards bids. Better stops appear below the 1.6700 levels.
• JPY: USDJPY opened around the 101.55 levels and started to trade lower from the opening slipping in to the Tokyo session around the 101.45 and continuing in early Tokyo to post a low of the 101.34 area before the Japanese banks turned up quickly taking EURJPY and USDJPY higher pushing the USDJPY to just above the 101.70 before slipping a little to settle into trading around the 101.60 levels. Offers now appear around the 101.80 level with the offers lightening to above the 102.10 areas; weak stops appear above the 102.20 levels and continue to the 102.50 area in patches, before the offers increase. Downside bids show from the 101.30 level and continue down to the figure before we start to see better stops showing however, the 100.70 level has to be respected and offers the near term support area.
• AUD: China, says it all, the market opened around the 0.9410 areas and held into the early Tokyo peaking in the mid-teens before the CNY releases undermined the Oz and sent it tumbling down through the 0.9400 triggering stops and hitting the 0.9380 level fairly quickly, the market dipped further over the course of the session to below the 0.9370 levels and ranged the 0.9380/65 levels for the session and into the grey hours. Topside is mixed from the 0.9440 to 0.9470 levels with offers building stronger the higher in the levels you go, above that we have 95cent barriers and suitable offers in front. Downside bids have been cleared and all that can be seen are weak stops however, with the China numbers out of the way and Oz off for the weekend it would have to be USD related.

Overnight News

CNY:

China Not Ready Yet for Conventional Monetary Policy: PBOC Chief

PBOC’s Yi Says Yuan Decline Reflects Market Movement

China Growth in Normal Range Only Warrants Minor Policies: Zhou

China March CPI +2.4% YoY, PPI -2.3%

CNY/RUB:

CIC’s Joint Russia Fund to Invest in Mining, Tourism Projects

JPY:

A BOJ Member: Effects of Weaker Yen on Prices May Have Increased

Amari: Demand Fell in Various Retail Sectors after Tax Increase

Japan March wholesale prices rise 1.7% YoY

JPY/USD:

Amari, Froman May Hold Further Talks on TPP Next Week, NHK Says

TRY:

Moody’s Changes Outlook on Turkey to Negative from Stable

EUR:

Fitch Revises Outlook on Portugal to Positive

G7:

G-7 Says They Discussed Ukraine Financing, Intl Response

NZD:

New Zealand House Price Index Gained 3.4% in March, REINZ Says

New Zealand March Food Price Index Down 0.3% vs. February

AUD/MYR:

Abbott Confident of MH370 Black Box Position Within ‘Some’ KMs

Today’s data

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

JPY         Japan Money Stock M2+CD Y/Y Mar A 3.50% | C 4.00% | P 4.00%

JPY         Domestic CGPI Y/Y Mar A 1.70% | C 1.70% | P 1.80%

CNY        CPI Y/Y Mar A -2.30% | C -2.20% | P -2.00%

CNY        PPI Y/Y Mar A 2.40% | C 2.40% | P 2.00%

06:00     EUR        German CPI M/M Mar (F) C 0.30% | P 0.30%

06:00     EUR        German CPI Y/Y Mar (F) C 1.00% | P 1.00%

12:30     USD       PPI M/M Mar C 0.10% | P -0.10%

12:30     USD       PPI Y/Y Mar C 1.20% | P 0.90%

12:30     USD       PPI Core M/M Mar C 0.20% | P -0.20%

12:30     USD       PPI Core Y/Y Mar C 1.10% | P 1.10%

13:55     USD       U. of Michigan Confidence Apr (P) C 81.5 | P 80

Harry Hindsight

• EUR: It would seem that the market is determined to test the mettle of the ECB, with the market continuing to slowly rise through the day, Asia was the exception to the rule with the market moving from the opening areas just above the 1.3850 to touch above the 1.3870 level and fall back quickly into the grey hours below 1.3840, even though the range was better in Asia the volumes certainly still leave a lot to be desired. The initial buying in Tokyo was through the local Japanese banks buying EURJPY and USDJPY in early trading however, once the demand finished the market quickly moved back and through the opening levels. The move into the London session saw  the Euro beginning to rally from the lows, and with only the monthly bulletin to wait for the market moved higher ignoring anything that was likely to be said about QE, even though they changed their wording to “more likely” the market still ignored it, probably on the same grounds as me they not likely to pull their heads out of the sand, and just hope for the best. The market pushed again to above the 1.3870 levels and then limped into the NYK session, and after another disappointing set of numbers and uneventful Monthly budget statement the market again lifted to make its first attempt at the 1.3900 level since February, it failed however, the pullback was insignificant really and the market went out trading in the mid 1.3880’s
• GBP: With the rate decision now a foregone conclusion until early next year the market had really no news to help it along, the Asian session had taken the Cable to near highs for the year stalling a few pips short in early trading where the market saw Japanese banks buying cross JPY however, once the demand was finished with the market began a slow move lower, the opening in London saw a brief rally however, the move generated by the Euro rising was short lived and the EURGBP cross started to move higher from the 0.8245 levels it had been holding around through Asia. Cable dipped into the mid-morning and while again it attempted a rally each move was less than the previous and into the NYK session we traded the lows for the day below 1.6760. General USD weakness then helped to take the Cable back into the 1.6790 areas however, it was a lacklustre move higher and only the strength of the Euro took it there.
• JPY: USDJPY rose into the early part of the Tokyo session as Japanese banks for the second day came in buying strongly, the market moved off the opening lows with early Sydney buying on the chance it would occur and from the 101.98 areas the market lifted into the Tokyo opening to just above 102.05 on that small flow, the banks then added to the move however, they were only able to get it to just above the 102.14 level before their demand ran out. The rest of the session was one way traffic with the market steadily losing ground and falling to the 101.65 levels into the grey hours. Early London took a while to continue the move however; they did eventually start selling and pushed the pair below the 101.50 and into the support areas stretching back to the 100.70 levels. Pre US numbers the market recovered as USD buyers appeared in the market and a steady rally over the next couple of hours pushed the pair towards the 102.00 level again. US data came out and the USD dropped again on poor numbers and we saw the pair push to the lows around the 101.35 levels with no bounce and a quiet finish with the next several hours playing the 101.35/55 level into the close. The US numbers in particular the Initial Jobless claims are now at their lowest since pre financial crisis, this would explain a little in the way the USD is reacting at the moment.
• AUD: The Oz drifted from the opening in front of the employment data numbers as the local market cut longs to await the data, tailing from the opening 0.9390 areas the market pushed into the low 0.9370’s before the first number appeared with an increase in inflation which in this day and age is certainly welcome if not just a relief, Oz moved steadily back to the opening levels and then the employment numbers hit and the Oz went to the races in relation to the past few weeks, we moved quickly to above the 0.9440 level, at this point the banks started to explain the numbers and although the numbers look good they are not as clear cut as the rest of the world’s presentation and are a ratio of different factors. So if I have this right if the population grows and employment does not change in reality, the Unemployment number moves lower as a ratio to population, so not so clear cut. The market drifted steadily from the highs and while it didn’t move back through the 94 cent level it came close. As with the initial reaction in Asia, so to was the grey hours with buyers again moving in and tumbling into the London open and pushing the Oz through the light offers to touch above the 0.9460 level before finding sufficient supply to halt the rise. The move back was a mirror image of the rise and as we moved into the NYK session the market was heading for the 94 cent level again. Even with the US numbers the Oz was never really able to recapture the highs and failed to move more than 30 pips post US data and finished the day only just above the 0.9410 levels.

Yesterday’s premiership results

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

NZD       Business NZ Manufacturing Index Mar A 58.4 | C 56.2 | P 56.5

GBP       RICS House Price Balance Mar A 57% | C 43% | P 45% | R 47%

JPY         Machine Orders M/M Feb A -8.80% | C -2.80% | P 13.40%

AUD       Consumer Inflation Expectation Apr A 2.40% | P 2.10%

AUD       Employment Change Mar A 18.1K | C 2.5K | P 47.3K | R 48.2K

AUD       Unemployment Rate Mar A 5.80% | C 6.10% | P 6.00% | R 6.10%

CNY        Trade Balance Mar A $7.71B | C $1.80B | P -$22.99B | R -$22.98B

JPY         Machine Tool Orders Y/Y Mar (P) A 41.80% | P 26.10%

GBP       BoE Rate Decision A 0.50% | C 0.50% | P 0.50%

GBP       BoE Asset Purchase Target Apr A 375B | C 375B | P 375B

CAD       New Housing Price Index M/M Feb A 0.20% | C 0.20% | P 0.30%

USD       Initial Jobless Claims (APR 5) (APR 5) A 300K | C 320K | P 326K | R 332K

USD       Import Price Index M/M Mar A 0.60% | C 0.20% | P 0.90%

USD       Monthly Budget Statement Mar A -$36.9B | C -$36.0B | P -$106.5B

Good Luck,

Andy