Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 101.918 | EURUSD 1.38143 | EURJPY 140.79 | AUDUSD 0.93621 | NZDUSD 0.86465 | USDCAD 1.09769 | EURCHF 1.21592 | USDCHF 0.88022 | GBPUSD 1.6728 | EURGBP 0.82583 |

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.26 | 101.81

EUR/USD             1.3820 | 1.3807

EUR/JPY               141.33 | 140.69

AUD/USD            0.9373 | 0.9333

NZD/USD             0.8649 | 0.8578

USD/CAD             1.0993 | 1.0976

EUR/CHF              1.2167 | 1.2153

USD/CHF             0.8809 | 0.8800

GBP/USD             1.6735 | 1.6721

EUR/GBP             0.82615 | 0.8254

For today

• EUR: I’d like to say you can tell there is a long weekend on its way however, to be honest this has been subdued for a long time and is not likely to change anytime soon, unless of course there is some attempt to pull their collective heads out of the sand. The market opened today around the 1.3815 and has pottered around that area all day dipping to below the 1.3810 and to the 1.3820 levels in the lacklustre manner we’ve come to know outside of news items. For the moment the market holds just below the highs if that makes any sense as we move towards the grey hours. The market has weak stops to the topside today from those that sold the move through the 1.3800 level one suspects, with a mixture from the 1.3860 level onwards thickening to a bias of offers into the 1.3900 levels. Market feels slightly short and would suggest that all the stops are those willing to carry the positions into the Easter weekend. Downside remains bid with decent bids from the 1.3790 level back to 1.3770 before we starts to see some light bids, profit taking is likely to show below the 1.3760 area and expect supportive bids below 1.3730 for what may be another tight range.
• GBP: A similar range to the Euro’s with the market in Asia reluctant to take new positions as we head towards a long weekend. Opening around the 1.6725 area the market has managed to move to the 1.6735 level and then drift back to just above the 1.6720, as we head to the grey hours the market holds around the opening. With employment numbers today the market has a chance to get excited however, it has to be a big variation from the expected to get this moving one suspects. Whether bids were removed yesterday into the inflationary numbers remains to be seen however, downside still looks to be bids from the 1.6690 level to 1.6650 sentimental area, with only light stops through the level and 1.6600 then provides support. Topside offers are a little mixed with light offers into the 1.6750-70 level with some lighter stops appearing in the mix before better offers from 1.6800-20 areas. However, as with yesterday expect the bids and offers to disappear for the most part into the number.
• JPY: The USDJPY has been on a mission today, as the market has slowly and steadily driven through the available offers in the market through the 102.00 levels, initially making its way to the 102.05 area during fixing demand the market held the areas for a couple of hours before the offers were exhausted and we moved another leg to the 102.25 area, we’ve drifted since that point and hold the 102.20 levels as we move towards the grey hours. However, while some Japanese had weak stops into this range the market now is all offers from the highs and back to the 102.50 a brief break before the next set of offers kick in from the 102.80 up to the figure. Downside sees the market a little played out from here to the 101.50 area where light stops make an appearance with mostly weak types in there, bids then make an appearance around the 101.20 levels to the figure before stops start to become mixed down to the 100.80 levels.
• AUD: Sell the rumour buy the fact. With the market a little jittery about the coming CNY numbers the opening levels around the 0.9360 level were soon left behind as the market in Oz drifted lower, a small respite as Tokyo opened and AUDJPY buyers opened there account however, the move was contained from the 0.9350 level to just above the opening before continuing its slide lower. The market eventually traded to below the 0.9335 level when the number was released and all though the number was below the previous months release, it was better than had been forecast and the market started to recover. The market moved steadily higher apart from a brief flurry and has pushed back towards the 0.9375 levels as we move into the grey hours. With a light mix from this level onwards the offers begin to thicken above the 0.9400 levels before better stops are seen above 0.9420. Downside remains bid just below the lows and into the 93 cent level with only light mixture seen to the downside beyond there.

Overnight News

JPY:

Aso Says Foreign Investors May React to GPIF Move from June

Japan Govt set to cut economic view for 1st time since 2012 Nikkei

Japan’s Aso: Post-sales tax hike pullback milder than expected

Kuroda: Volatility in Tokyo Share Markets Not Having Major Negative Impact on Real Economy

Kuroda: No Intention to Keep Yields Low Irrespective of Prices

Kuroda: Early Talk of QQE Exit Could Invite Market Confusion

Japan’s Population Shrinks for Third Year as Aging Increases

JPY/AUD:

Kokusai to Buy Aussie as China Risk Overstated: Australia Credit

CNY:

China 1Q GDP +7.4%; Market Expected +7.3%

China March Industrial Output +8.8% on Year; Market Expected +9%

China Property Market Is Seeing Some Changes, NBS’s Sheng Says

China statistics bureau: Q1 GDP growth still within targeted range

China January-March Housing Sales CNY1.11 Trillion; Down 7.7% on Year

China May Expand Tax Rebates for Exports: Securities Journal

China 4 Big Banks New Loans 100b Yuan in 1st 2 Weeks: 21st Herald

China to Set Up Housing Bank This Year: Securities Journal

NZD:

NZ Q1 consumer prices +0.3%, but rates rises still beckon

Today’s data

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

NZD       CPI QoQ Q1 A 0.30% | C 0.50% | P 0.10%

AUD       Westpac Leading Index M/M Mar A 0.00% | P -0.10%

CNY        GDP YTD Y/Y Q1 A 7.40% | C 7.30% | P 7.70%

CNY        Industrial Production YTD Y/Y Mar A 8.80% | C 8.80% | P 8.60%

CNY        Fixed Assets Ex Rural YTD Y/Y Mar A 17.60% | C 18.00% | P 17.90%

CNY        Retail Sales YTD Y/Y Mar A 12.20% | C 11.90% | P 11.80%

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

08:30     GBP       Claimant Count Change Mar C -30.2K | P -34.6K

08:30     GBP       ILO Unemployment Rate 3M Feb C 7.20% | P 7.20%

09:00     EUR        Eurozone CPI Y/Y Mar (F) C 0.50% | P 0.50%

09:00     EUR        Eurozone CPI – Core Y/Y Mar (F) C 0.80% | P 0.80%

09:00     CHF        ZEW Survey (Expectations) Apr P 19

12:30     CAD       International Securities Transactions (CAD) Feb C 4.57B | P 1.09B

12:30     USD       Housing Starts Mar C 968K | P 907K

12:30     USD       Building Permits Mar C 995K | P 1018K

13:15     USD       Industrial Production Mar C 0.50% | P 0.60%

13:15     USD       Capacity Utilization Mar C 78.80% | P 78.80%

14:00     CAD       BoC Rate Decision C 1.00% | P 1.00%

14:30     USD       Crude Oil Inventories P 4.0M

Harry Hindsight

• EUR: A narrow range overall for the day as the market awaits more details if there are any of the drastic measures to be taken to re-inflate the Eurozone. The market opened in Sydney around the 1.3820 level and slowly drifted into the low teens with very little happening after the previous day’s action, the move into the London session saw the market drop quickly to push through the 1.3800 levels and holding the 1.3790 levels. European data did little to lift the market and it remained around the lows into the NYK session. With only marginally better numbers the Euro was able to put in a rally to post a high above the 1.3830 levels as a short squeeze occurred in a limited market. Once the squeeze was over with, the market drifted back towards the low teens and finished the day only slightly lower than it started.
• GBP: Although the day was little changed in the end the HFT’s certainly proved a point. Hands up all those using a model that evaluates inflation neglecting to factor in the interest rate is already at the bottom. The market traded slowly down from the opening 1.6725 levels holding in early Tokyo the market made its way into the mid-teens before early sellers entered the market, amazingly the risk for myself was the topside with a large number sending Cable a lot higher however, the sellers have it with their safe bet and the market dropped through the lows to touch below 1.6690 into the London opening. The numbers when they came were broadly in line with expectations, PPI input numbers showed best while the others held little in surprise, the machines kicked in and we quickly saw the market move to the 1.6660 level however, the click and trade brigade managed to work out that rates are not going to change for the long term and nothing had changed from a couple of hours earlier. The buyers took the market back to the opening levels and the rest is history or not depending how you look at the dull session that followed. Cable did make new highs on the back of US numbers however it was limited to just below the 1.6750 area before again dropping back as those non automated traders took profit. The market then moved back to the 1.6720 levels and held all the way to the end of the day with barely a couple of tics difference from the opening.
• JPY: USDJPY had a lacklustre day, with the market pressed close to the 102.00 level but unable to penetrate the level all day, moving from the opening 101.88 level we traded through the Asian session around the 101.90 levels before moving into London and losing the will to survive, the market in early London was dominated by GBP selling as a limited amount of position cutting occurred before the numbers release, GBPJPY was sold from just before the London session and USDJPY moved to the 101.70 levels into the numbers before slowly making its way back to the opening levels and into the NYK session. A set of mixed numbers from the US sent the pair quickly lower however, bids slowed the decent and the supply eventually ran out before pushing through the 101.50 levels and started a more determined rally pushing back to the opening levels and holding in those areas. The move from the lows coincided with a Nikkei report that Japan was to downgrade its economic assessment in April, which clouded easing expectations.
• AUD: The overall tone of the RBA minutes was little changed from previous may be slightly more dovish but in general nothing to write home about. The market opened around the 0.9420 areas and did seem set for an attempt to push against the resistance areas higher up however, key words in the speech seemed to trigger a selling spree and the market dropped on the minutes to the 0.9405 areas and never really recovered. Drifting ever lower through the session the market eventually settled around the 0.9390 area and traded quietly around the level to deep into the London session. NYK and the US numbers figured differently for the AUD and although the USD was falling against most pairs the tic data was of more import for the pair than the others and the Oz dropped back initially to 0.9370 and then continued into the session dropping slowly and grinding through some light bids to the 0.9340 levels as longs started to cover with the impending CNY GDP figures causing rumours to move through the market of sub 7% numbers. The market eventually started to move off the lows through the NYK option cut period (so there may have been something there) to push slowly back to the 0.9360 area into the close.

Yesterday’s premiership results

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

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

CHF        Producer & Import Prices M/M Mar A 0.00% | C -0.10% | P -0.40%

CHF        Producer & Import Prices Y/Y Mar A -0.70% | C -0.90% | P -0.80%

GBP       CPI M/M Mar A 0.20% | C 0.20% | P 0.50%

GBP       CPI Y/Y Mar A 1.60% | C 1.60% | P 1.70%

GBP       Core CPI Y/Y Mar A 1.60% | C 1.60% | P 1.70%

GBP       RPI M/M Mar A 0.20% | C 0.30% | P 0.60%

GBP       RPI Y/Y Mar A 2.50% | C 2.50% | P 2.70%

GBP       PPI Input M/M Mar A -0.60% | C -0.10% | P -0.40% | R -0.50%

GBP       PPI Input Y/Y Mar A -6.50% | -6.10% | P -5.70%

GBP       PPI Output M/M Mar A 0.20% | C 0.10% | P 0.00% | R 0.10%

GBP       PPI Output Y/Y Mar A 0.50% | C 0.30% | P 0.50% | R 0.60%

GBP       PPI Output Core M/M Mar A 0.10% | C 0.10% | P 0.10%

GBP       PPI Output Core Y/Y Mar A 1.00% | C 0.90% | P 1.10%

GBP       DCLG UK House Prices Y/Y Feb A 9.10% | C 7.20% | P 6.80%

EUR        German ZEW Survey (Economic Sentiment) Apr A 43.2 | C 46 | P 46.6

EUR        German ZEW Survey (Current Situation) Apr A 59.5 | C 52 | P 51.3

EUR        Eurozone ZEW Survey (Economic Sentiment) Apr A 61.2 | C 60.7 | P 61.5

EUR        German ZEW Survey (Current Situation) Apr A 59.5 | C 52 | P 51.3

EUR        Eurozone ZEW Survey (Economic Sentiment) Apr A 61.2 | C 60.7 | P 61.5

EUR        Eurozone Trade Balance (EUR) Feb A 15.0B | C 13.9B | P 13.7B | R 13.9B

CAD       Manufacturing Shipments M/M Feb A 1.40% | C 1.10% | P 1.50% | R 0.80%

USD       Empire State Manufacturing Apr A 1.29 | C 7.75 | P 5.61

USD       CPI M/M Mar A 0.20% | C 0.10% | P 0.10%

USD       CPI Y/Y Mar A 1.50% | C 1.50% | P 1.10%

USD       CPI Core M/M Mar A 0.20% | C 0.10% | P 0.10%

USD       CPI Core Y/Y Mar A 1.70% | C 1.60% | P 1.60%

USD       Net Long-term TIC Flows Feb A 85.7B | C 14.6B | P $7.3B | R 7.7B

USD       NAHB Housing Market Index Apr A 47 | C 50 | P 47

Good Luck,

Andy