Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 101.847 | EURUSD 1.38206 | EURJPY 140.757 | AUDUSD 0.94218 | NZDUSD 0.86757 | USDCAD 1.09621 | EURCHF 1.21583 | USDCHF 0.87974 | GBPUSD 1.67277 | EURGBP 0.82622 |

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               101.99 | 101.815

EUR/USD             1.3823 | 1.3813

EUR/JPY               140.90 | 140.68

AUD/USD            0.9425 | 0.9385

NZD/USD             0.8695 | 0.8651

USD/CAD             1.0978 | 1.0960

EUR/CHF              1.2166 | 1.21565

USD/CHF             0.8807 | 0.87975

GBP/USD             1.6730 | 1.6713

EUR/GBP             0.8266 | 0.8261

For today

• EUR: The ECB continues to talk a good book, but are they likely to disappoint again, probably. Yesterday I was a little more optimistic about a rat being cornered but, on reflection it’s as likely to scuttle away, than it is to attack. So while the market looks slightly short, if nothing concrete appears then the market will turn back on its own, that’s without more of the numbers from the US that we saw yesterday. Today the Asian session was very quiet with a much reduced volume going through the market, having opened around the 1.3820 we’ve managed to drift into the mid-teens and that is about it. Topside now has light offers stretching back to the 1.3900 levels with only a few stops showing through the 1.3880 levels before heavier offers around that top number. The downside still has some bids remaining above the 1.3800 level and momentum would be key to moving through and into some light stops below, then a mixture from 1.3780 onwards with the bids becoming more dominant towards the 1.3760 levels and onwards.
• GBP: Cable has struggled so far, no massive ranges but definitely slipping further on the BRC sales number however, in all fairness this figure is one of the few that should be seasonally adjusted at this time of year as a late Easter is the difference in all likelihood. Pre Tokyo saw the Cable holding above the 1.6720 levels before moving into Tokyo and slipping steadily lower after the figures were released, nothing large of course just to the 1.6715 areas where the market currently holds. Bids remain down and around the 1.6700 area with some weak stops below the 1.6690 areas, a light mixture thereafter to the sentimental levels. With the market technically showing a double top I’m still of the opinion that apart from a rise in inflation there is little to move the market other than Europe, but then I’m a proverbial broken clock only correct twice a day and only briefly. Topside holds really no surprises and I’d be surprised if there was much in the way until the 1.3780 areas and top pickers in front of the 1.6800 levels.
• JPY: USDJPY seems to be trapped; on the one hand safe haven flows can appear instantly while the market actually still wants to go the other way. The market opened around the mid 101.80’s and remains pretty much unchanged having moved to a whisker from 102.00 and generally moving in a 10 pip range round the 101.88 levels. Topside still sees plenty of offers through the 102.00 levels lightening as you move higher and into the 102.50 area, even so there is very little in the way of stops appearing as the market seems to be reluctant to take the move until events in the Ukraine stabilize a little. The downside has light bids scattered from below the 101.80 level to around 101.30 with weak stops appear, even so the 101.30 level has to be respected having spent a few days bouncing off the level before grinding back to here.
• AUD: The market early doors seemed to be looking for a reason to move higher, holding above the 0.9420 from the NYK close and moving into the Tokyo session before the RBA Minutes, light carry trade selling before the number chased the Oz lower moving it down to the 0.9405 areas before the release. Once the market had a good look at the minutes, the wording showed little difference than statements made only two weeks ago however, “high by historical standards” was sufficient to chase the market a little lower and we saw the pair move to test below 94 cent again in limited action. For the time light offers dominate the topside to the 0.9430/40 areas with some breakout stops above the 0.9450 and momentum types likely to jump in. Stronger offers in front of 95 cent level however, reminiscent of the move to 94 cent. Downside has light bids from the 0.9390/80 areas with no real stops showing until through the 0.9345-55 areas.

Overnight News

JPY:

Kuroda: Abe Didn’t Make Any Special Requests for Monetary Policy

Japan Econ Min Amari: Mkt Built Own Expectations of BOJ Easing

Japan Aso: Told G20 that Japan’s economy in good shape

Japan EconMin: Domestic stocks falling on Ukraine, U.S. markets

AUD:

Australia CB sees rates on hold for some time

RBA’s Debelle Says Foreign Demand for Australian Bonds ‘Strong’

EUR:

Deflation Not Base Case Scenario for ECB, Liikanen Says

CNY:

China March new bank loans in line, M2 growth slows

China Considers Policy to Stabilize Exports: Securities Journal

China Financial Crisis Not Imminent, Ex-PBOC Adviser Says: Daily

NZD:

NZ Finance Minister reaffirms budget surplus, spending restraint

English Says N.Z. Wages Increasing Faster Than Inflation

Today’s data

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

GBP       BRC Sales Monitor Y/Y Mar A -1.70% | P -1.00%

07:15     CHF        Producer & Import Prices M/M Mar C -0.10% | P -0.40%

07:15     CHF        Producer & Import Prices Y/Y Mar C -0.90% | P -0.80%

08:30     GBP       CPI M/M Mar C 0.20% | P 0.50%

08:30     GBP       CPI Y/Y Mar C 1.60% | P 1.70%

08:30     GBP       Core CPI Y/Y Mar C 1.60% | P 1.70%

08:30     GBP       RPI M/M Mar C 0.30% | P 0.60%

08:30     GBP       RPI Y/Y Mar C 2.50% | P 2.70%

08:30     GBP       PPI Input M/M Mar C -0.10% | P -0.40%

08:30     GBP       PPI Input Y/Y Mar C -6.10% | P -5.70%

08:30     GBP       PPI Output M/M Mar C 0.10% | P 0.00%

08:30     GBP       PPI Output Y/Y Mar C 0.30% | P 0.50%

08:30     GBP       PPI Output Core M/M Mar C 0.10% | P 0.10%

08:30     GBP       PPI Output Core Y/Y Mar C 0.90% | P 1.10%

08:30     GBP       DCLG UK House Prices Y/Y Feb P 6.80%

09:00     EUR        German ZEW Survey (Economic Sentiment) Apr C 46 | P 46.6

09:00     EUR        German ZEW Survey (Current Situation) Apr C 52 | P 51.3

09:00     EUR        Eurozone ZEW Survey (Economic Sentiment) Apr C 60.7 | P 61.5

09:00     EUR        Eurozone Trade Balance (EUR) Feb C 13.9B | P 13.7B

12:30     CAD       Manufacturing Shipments M/M Feb C 1.10% | P 1.50%

12:30     USD       Empire State Manufacturing Apr C 7.75 | P 5.61

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

12:30     USD       CPI Y/Y Mar C 1.50% | P 1.10%

12:30     USD       CPI Core M/M Mar C 0.10% | P 0.10%

12:30     USD       CPI Core Y/Y Mar C 1.60% | P 1.60%

13:00     USD       Net Long-term TIC Flows Feb C 14.6B | P $7.3B

14:00     USD       NAHB Housing Market Index Apr C 50 | P 47

Harry Hindsight

• EUR: With ECB speakers over the weekend stating fresh plans to combat low inflation and the steady rise in the Euro with “non-standard” measures the Euro was immediately on the defensive, opening some 40 pips below the Friday close the market struggled around the 1.3840 levels for much of the session briefly making its way above the 1.3860 level after pre-opening lows the market held fairly steady with plenty of two way flow going through. As we moved into the grey hours early sellers appeared to take the market to below the 1.3840 level and into limited bids. London rallied slightly on the opening forcing the shorts out briefly and another move to above the 1.3860 level to make the high and the last time we saw the level, as concerns over the Ukraine situation saw further movement into the USD in a broad rally for the currency. The market dropped back as the IP number for the Eurozone saw further contraction and the market traded to the 1.3820 levels before slowly moving through the rest of the day with little action in the NYK session and only a creeping lower to the 1.3810 levels over the course of several hours.
• GBP: Cable saw a gradual grind lower through the 1.6720 levels and the support in that area over the course of the day, having opened broadly in line with Fridays close around the 1.6730/35 areas the market moved steadily lower and into the 1.6720 support area, this was the lows for the Asian session as the market steadily recovered heading into the grey hours above the 1.6735 levels. The grey hours and early London seemed unsure of what to do however, the market started to push lower over the course of early morning to touch through the 1.6700 level before finding sufficient bidders to turn it back again and rally into the NYK session to above the 1.6740 levels and close to the day’s highs.  Overall though, it was a quiet day with only the Euro movement really affecting the GBP with the general movement unattached from the situation in the Ukraine.
• JPY: Initially from the opening we saw safe haven flows into the JPY taking if from a slight gap opening of 101.58. The market remained subdued for several hours into the Tokyo session before beginning to rally, moving in a tight channel into the grey hours and continuing into London, NYK opened and the move was a little more pronounced especially on the release of reasonably good figures. The market gapped slightly moving through the 101.90 levels but, I repeat slightly as weak stops were triggered to peak above the 102.00 level before dropping instantly back down into the 101.70 levels, the market then moved around slowly in the 101.70-90 range for the remainder of the day in slow trading.
• AUD: The Oz had a fairly choppy day with different factors pulling it out of place, in one breath the carry trade was pushed lower as safe haven flows pushed through while general Oz buying continued to make its presence felt with the market more focused to the topside targets with the past few comments being dovish. We opened only slightly out of line with Friday around the 0.9390 areas and traded to a low just above 0.9375 before the buyers appeared, from local players to Japanese retail snapping up the AUDJPY as the USDJPY tried to push higher. For the most part the Asian session traded around the 0.9395 areas peaking just below the 0.9410 levels and 0.9385 into London. London initially didn’t do much different until a few hours into the session when the market started to move higher pushing firmly above the 0.9400 levels and touching above the 0.9420, with the market talking about the resistance levels to 0.9500 to be tested in the future tense the market once above the 0.9415 levels it never really backed off and remained around the level into the close.

Yesterday’s premiership results

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

EUR        Eurozone Industrial Production M/M Feb A 0.20% | C 0.30% | P -0.20% | R 0.00%

USD       Advance Retail Sales Mar A 1.10% | C 0.80% | P 0.30%

USD       Retail Sales Less Autos Mar A 0.70% | C 0.50% | P 0.30%

USD       Business Inventories Feb A 0.40% | C 0.50% | P 0.40%

Good Luck,

Andy