Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 102.24 | EURUSD 1.38151 | EURJPY 141.241 | AUDUSD 0.93718 | NZDUSD 0.8633 | USDCAD 1.10124 | EURCHF 1.21828 | USDCHF 0.88185 | GBPUSD 1.67961 | EURGBP 0.82253 |

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.26 | 101.855

EUR/USD             1.3842 | 1.3814

EUR/JPY               141.37 | 140.98

AUD/USD            0.9390 | 0.9352

NZD/USD             0.8649 | 0.8610

USD/CAD             1.1016 | 1.1001

EUR/CHF              1.2186 | 1.2179

USD/CHF             0.8818 | 0.8800

GBP/USD             1.6838 | 1.6791

EUR/GBP             0.8228 | 0.82155

For today

• EUR: Systematic buying in the Cable drove the markets higher, taking the Euro from a slow rise from the 1.3815 level into Tokyo and a steepening level of buying to the 1.3835 level and some small stops through the 1.3840. The market since the move has held the top at for the moment drifting lower only slightly as we head to the grey hours, volumes have been reasonable on the move higher but the market remains quiet awaiting some further clarification on unusual measures speech from the weekend, don’t hold your breath. Offers appear above the highs and onwards, with some light mixture through the 1.3860 levels. Stronger offers appear towards the 1.3900 levels. Downside is open to the 1.3805/10 levels with light bids below sees a light mixture through the levels as profit taking mixes with some weak stops. Bids then continue from the 1.3750 level getting stronger towards the 1.3730 areas.
• GBP: Cable led the way with a break through the 1.6820 level with decent buying from the figure driving the market into systematic stops above for the breakout however, the move was limited with some reasonable offers in the Cable above 1.6830, one assumes that the concern will start to appear about inflation continuing to dip, thus negating any effects that a large working base spending more money would generate. With a 4yr high made today the question is where now, it certainly opens up a new range to 1.7000, this relies on continuing good numbers and a general rise in the economy without any outside factors, best laid plan of men and mice. For the moment sentimental levels will start to see some resistance however, the market is likely to be more fundamentally driven from this point on to the topside however, further movement to the topside will need to see the EURGBP moving down through this year’s support 0.8200/0.8180 level, not unrealistic if the ECB can pull the rabbit out of the hat. Downside now has bids down to the 1.6800 levels with weak stops below the level and a mix from then on better support around the 1.6700/30 levels.
• JPY: Having made its move yesterday through the some substantial offers the market moved into Asia quietly and slipping slightly into the Tokyo session. Once the market had bypassed the fix we started to see the market drop off as natural demand for USD’s dried up with the Easter bank holidays around the world kick in. The market continued drifting over the session a by-product of the rally in GBP and Euro limited by cross selling, the USDJPY shifted to below the 101.90 levels and held moving slowly to above the 102.00 levels. Light offers up to the 102.30/40 areas with very little in the way of stops showing before the next levels of offers from 102.60 onwards kick in, these are more substantial with them scattered across a 50 pip range.
• AUD: As with the previous day the market is being buffeted by the Euro, GBP and to a lesser extent JPY, moving higher with the initial moves in Euro and GBP the market met some reasonable AUDJPY profit taking pushing both legs lower and moving the AUD from its highs around the 0.9390 levels back through the opening 0.9370 and triggering a few weak stops to touch below 0.9355 and a slight bounce into the grey hours. Topside has light offers from the 0.9400 level into 0.9430 before stops kick in; offers again dominate from the 0.9460 levels and increase in size the higher you go. Downside is a little light with nothing special until the 0.9330 levels with some minor support and stops behind the level.

Overnight News

JPY:

Japan’s GPIF Should Sell 25 Trillion Yen of JGBs, Ito Says

GPIF Portfolio Change Likely in Next Two Months, Ito Says

LDP Panel Majority See Problems in Cutting Corp Taxes: Miyazawa

Japan Econ Min Amari: Can’t Swallow U.S. TPP Stance – Kyodo

Kuroda Says BOJ Will Make Policy Adjustments If Needed

Japan to Announce Bold Reforms in June, Taniguchi Says

Japan Seeking to Admit Foreigners on Short-Term Contracts: Abe

Aso says It’s Important Japan Show Resolve to Restore Finances

Japan business mood up, outlook clouded by tax hike-Reuters Tankan

BOJ Raises Assessment of 1 Region, Keeps Other 8 Unchanged

CNY:

China March Foreign Direct Investment -1.47% on Year at $12.24 Bln

China commerce ministry: Economy faring better than data shows

EUR:

France’s Montebourg Calls for ‘Rapid’ EU Meeting on Euro: Echos

AUD:

Australia’s central bank sold A$736M in March

Australia businesses upbeat on Q1 sales, profits and orders -poll

NZD:

NZ consumer confidence rises in April – survey

Today’s data

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

AUD       NAB Business Confidence Q1 A 6 | P 8

JPY         Consumer Confidence Index Mar A 37.5 | C 40.2 | P 38.3

06:00     EUR        German PPI M/M Mar C 0.00% | P 0.00%

06:00     EUR        German PPI Y/Y Mar C -0.70% | P -0.90%

08:00     EUR        Eurozone Current Account (EUR) Feb C 22.3B | P 25.3B

12:30     CAD       CPI M/M Mar C 0.40% | P 0.80%

12:30     CAD       CPI Y/Y Mar P 1.10%

12:30     CAD       BoC CPI Core M/M Mar P 0.70%

12:30     CAD       BoC CPI Core Y/Y Mar P 1.20%

12:30     USD       Initial Jobless Claims (APR 12) C 316K | P 300K

14:00     USD       Philly Fed Survey Apr C 9.5 | P 9

Harry Hindsight

• EUR: The day did liven eventually however, the Asian market did not fail to disappoint as usual, opening around the 1.3815 level it dipped in early trading to the 1.3807 areas before pushing back through the opening levels and touching the 1.3820 level for the usual stunning range, the move into London saw the market rally sharply to above the 1.3850 levels as the Euro was dragged along for a ride by GBP. In itself the Euro numbers still raise the prospects of continuing falls in inflation however, still no details of how the ECB are going to control this left the market meandering before falling back to the starting areas and the 1.3805 levels deep into NYK, the market in NYK had only a little more action before the market closed moving from the NYK option cut from the lows to above 1.3830 before giving up once London had left and drifting back to where we started at the beginning of the day.
• GBP: And you thought Euro was quiet in Asia, the market opened just short of the 1.6630 levels and managed to move a little above the levels into the Tokyo session before slipping back and basing on the 1.6720 line. As the market entered the grey hours we saw early buying taking the market through the Asian highs and holding just below the 1.6750 levels. Into the London session and the move was quick and fairly savage with the market gapping as it broke through the 1.6780 levels and rose to just short of 1.6820 running into the resistance level a couple of times the market settled down to trade around the 1.6800 area for the rest of the session and the move over. EURGBP broke from above the 0.8265 levels and traded down to the 0.8220 levels with 0.8200 levels being the support area the market failed to follow through and held around the 0.8225 levels into the close for a quiet later part of the session. The movement as I’m sure you are all aware having read and watched all the sensationalism in the press or on the news was the employment numbers and the movement through the original forward guidance point of 7%, why this is significant remains to be seen as I don’t think it means anything other than what the US has done. Cynicisms aside in the big picture it means very little and the point that the next movement in rates is planned for April 2015 makes me wonder what all the fuss is when we are a year away and as they said in Stingray anything can happen in the next half hour.
• JPY: Early gains from the opening 101.90 area saw the market move steadily higher to the 102.10 level and the sticking point from last week. The market moved steadily through the offers and by the time the market moved into the grey hours we had pushed through the 102.20 level and into the next set of offers. London took its time with Cable being the focus in the early part of the session before moving to above 102.35 in mid-morning. There I’m afraid the market ground to a halt holding through the session above the 102.20 level but never able to move that far away from it. The market eventually ran out just above the 102.20 in a quiet evening session.
• AUD: A choppy day overall with a reasonably tight range, the market opened around the 0.9360 area and slowly drifted off as expectation for the CNY number was beset by the rumour factory with some saying 7.00% was likely however, this had the effect of seeing the market drift lower and touch the 0.9335 levels before the release. The market expectations were unfounded and the market moved back pushing quickly to 0.9370 before changing direction and then moving steadily higher to the 0.9380 level into the grey hours. London saw AUD selling as both GBP and Euro moved higher. The market moving into the NYK session again saw fresh buyers and this time the market edged up to just above the 0.9385 levels and then drifted into the close. Apart from the China numbers there was little interest in the pair and it was beset by peripheral currencies affecting the market.

Yesterday’s premiership results

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

NZD       CPI Q/Q 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%

GBP       Claimant Count Change Mar A -30.4K | C -30.2K | P -34.6K | P -37.0K

GBP       ILO Unemployment Rate 3M Feb A 6.90% | C 7.20% | P 7.20%

EUR        Eurozone CPI Y/Y Mar (F) A 0.50% | C 0.50% | P 0.50%

EUR        Eurozone CPI – Core Y/Y Mar (F) A 0.70% | C 0.80% | P 0.80%

CHF        ZEW Survey (Expectations) Apr A 7 | P 19

CAD       International Securities Transactions (CAD) Feb A 6.08B | C 4.57B | P 1.09B | R 1.22B

USD       Housing Starts Mar A 946K | C 968K | P 907K

USD       Building Permits Mar A 990K | C 995K | P 1018K | R 1014k

USD       Industrial Production Mar A 0.70% | C 0.50% | P 0.60%

USD       Capacity Utilization Mar                A 79.20% | C 78.80% | P 78.80%

CAD       BoC Rate Decision A 1.00% | C 1.00% | P 1.00%

USD       Crude Oil Inventories A 10.0M | 1.3M | 4.0M

Good Luck,

Andy