Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 101.68 | EURUSD 1.39274 | EURJPY 141.62 | AUDUSD 0.93519 | NZDUSD 0.87548 | USDCAD 1.08911 | EURCHF 1.21766 | USDCHF 0.87428| GBPUSD 1.6975 | EURGBP 0.82051 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               101.77 | 101.535

EUR/USD             1.3936 | 1.3924

EUR/JPY               141.74 | 141.425

AUD/USD            0.9355 | 0.9331

NZD/USD             0.8744 | 0.8685

USD/CAD             1.0898 | 1.0888

EUR/CHF              1.21765 | 1.2169

USD/CHF             0.8745 | 0.87365

GBP/USD             1.6984 | 1.6970

EUR/GBP             0.8206 | 0.8200

 

For today

  • EUR: The Euro opened around the 1.3930 level and maintained the levels for the most part touching above the 1.3935 levels but unable to find any gaps to push higher with EURJPY selling appearing from the fix. With the ranges nothing to write home about and only reasonable volume the market in Asia remains in holiday mode. Offers above the 1.3960 level and into the 1.4000 level with the ECB still on the side-lines and whether a breach of 1.4000 will force them into action remains to be seen given the reasonable numbers appearing in the market their head remains in the sand. Option barriers are suspected around the 1.4000 levels so it’s likely to be a slow grind in the fashion we’ve seen over the past month however, there are plenty shorts in the market that could be squeezed out and any attempt higher could see a quick and savage move. Downside has light bids from the 1.3920-00 areas now with weak stops below there, a slightly stronger area is the 1.3880 level and the market is then very lightly mixed to the 1.3810 levels.
  • GBP: Good numbers plenty of interest in M&A keep the Cable bubbling away and rising towards the 1.7000 levels having not quiet pushed through the highs of AUG 2009, offers appear around the 1.7000 areas with weak option related protection however, the story above is a mixed one with nothing clear and more likely a fundamental concern about the high rate impacting those good numbers in the coming months. Downside has light bids around the 1.6970 levels with nothing special between there and big figure lower where stronger bids are seen. Concerns here are that Euro’s leads higher and drags Cable or Cable drags Euro higher on further takeover news.
  • JPY: USDJPY drifted in early trading around the 101.70 levels before starting a slow move lower on fixing supply, the market moved down to the 101.55 levels and currently holds just above that level with 101.50 seeing some reasonable bids holding the market, below sees a light mixture to the 101.30 level where again we see importer bids appearing in the market.
  • AUD: The Oz opened just above the 0.9350 level and although we had a weak Retail sales number the Oz has held up reasonably well and looks to be a lot stronger than you would have guessed yesterday. The market has slowly drifted around the 0.9340 levels in slow trading and heads into London with everyone wondering what the next step will be. For the moment light bids down around the 93 cent level with stops on a break below the 0.9280 areas before better support in the mid 92cents. Topside offers from the 0.9370 levels running towards the 94 cent area with suspected stops above on a break.

 

Overnight News

NZD:

Rise in the participation rate to 69.3% vs. 68.9% on the previous qtr.

Private wages remain muted at 0.3% in the 1st Qtr. Below expectations

RBNZ governor hints that if the currency remains strong then a hike in June is not a done deal.

JPY:

Markit services PMI for Apr remain muted at 46.4 vs. 52.2

And the Composite PMI for Apr dips further to 46.3 vs. 52.8

CNY:

HSBC service PMI 51.4 vs. consensus 51.9

Gold bar consumption in China fell nearly 44% in the 1st Qtr. From a year ago.

 

Today’s data

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

NZD       Unemployment Rate Q1 A 6.00% | C 5.80% | P 6.00%

NZD       Employment Change Q/Q Q1 A 0.90% | C 0.60% | P 1.10%

GBP       BRC Shop Price Index Y/Y Apr A -1.40% | P -1.70%

AUD       Retail sales M/M Mar A 0.10% | C 0.40% | P 0.20%

05:45     CHF        Unemployment Rate Apr C 3.20% | P 3.20%

06:00     EUR        German Factory Orders M/M Mar C 0.30% | P 0.60%

07:00     CHF        Foreign Currency Reserves Apr P 437.9B

12:30     CAD       Building Permits M/M Mar C 3.90% | P -11.60%

12:30     USD       Non-Farm Productivity Q1 (P) C -0.90% | P 1.80%

12:30     USD       Unit Labour Costs Q1 (P) C 2.30% | P -0.10%

14:30     USD       Crude Oil Inventories P 1.7M

 

Harry Hindsight

  • EUR: A quiet Asian session however, the indications were there with the market not giving up any ground and rising slowly back to the 1.3885 levels that had been the top the previous day. Having opened around the 1.3875 level the trading was particularly quiet in the Euro however, it continued to rise and it wasn’t really until we moved into the London session that the market started to push with a Spanish PMI hitting a 7 year high or so they tell me leading a predicated Eurozone PMI number however, the big mover was GBP and with the UK number coming in a lot better than expected the market was unprepared for the move higher and Euro coasted on its coattails moving through the 1.3900 level to briefly hold the 1.3910 area before another leg into the 1.3930 levels before holding for several hours. The lead into the NYK session saw some buying appear as they awoke to the new level and the market moved to above the 1.3950 levels on sentiment alone, once the NYK session was in full flow the market slipped back to the 1.3925 levels and this now seems to be a weak supportive area from the breakout. A quiet evening session left the market moving between 1.3925-35 levels into a mid-range close.
  • GBP: Cable rose slowly through the Asian session moving from the 1.6870 levels to just above the 1.6890 as the market moved into the grey hours, the London opening saw some good buying as the market made its way to the 1.6900 levels and once the number was released better than expected it was off to the races, moving quickly to eclipse last week’s higher and then steadily rising over the course of the early London session as steady buying appeared across the board against all other currencies until into the NYK session. NYK continued to buy however, the volumes were already to drop off and the market eventually ran out of steam with strong option related offers around the 1.7000 level in play for the moment however, it was a close call nonetheless, the market dipped back from the highs and held around the 1.6980 levels for the remainder of the session and into a quiet close.
  • JPY: USDJPY struggled in early trading to maintain levels and the market seemed satisfied to into the Oz rally as the AUDJPY moved higher. The USDJPY was forced lower and onto the 102.00 live of support, with the move into London and GBP going strong the USDJPY was forced eventually lower with offers in EURJPY above the 142.00 level and in GBPJPY around the 173.00 levels, USDJPY tripped into stops through the 101.80 level and again below 101.70 falling eventually to the 101.50 level as the NYK market opened and followed the exit. The market was unable to penetrate the 101.50 level with any conviction and the market held the level with reasonable buying interest entering the market from real money types. As the market moved towards the close profit taking from early sellers helped the market make some headway moving up a pinch to the 101.65-70 levels into the close but it was a quiet affair.
  • AUD: The Oz traded lightly in front of the RBA announcement gradually moving from the opening 0.9275 area to touch above the 0.9290 level, the market then held the areas into the number, once the number was released the market reacted as usual with a spike higher to above the 0.9315 level before dropping back again just as quick to dip to the low 0.9270’s as the machines again chose the wrong moment to send buy signals on a forgone conclusion, even the communique was little changed from the previous months. The market moved steadily from that point higher while the initial direction had been correct the movement was to sharp and ran into cross sellers. The rise into London saw the market towards its highs again and although London only steadily took it higher once we moved towards the NYK opening the market jumped quickly triggering stops along the way to above the 0.9340 levels touching briefly above 0.9350, the market then struggled the next 10-15 pips slowly pushing to the upper 0.9360’s and into offers in front of the 94cent levels and suspected option plays. With the market capped the Oz drifted from the highs to settle just below the 0.9350 levels as the early Pacific rim players started to take profit.

 

Yesterday’s premiership results

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

AUD       Trade Balance (AUD) Mar A 0.73B | C 1.10B | P 1.20B | R 1.26B

AUD       RBA Rate Decision A 2.50% | C 2.50% | P 2.50%

EUR        Eurozone Services PMI Apr (F) A 53.1 | C 53.1 | P 53.1

GBP       Services PMI Apr A 58.7 | C 57.9 | P 57.6

EUR        Eurozone Retail Sales M/M Mar A 0.30% | C -0.20% | P 0.40% | R 0.10%

CAD       Trade Balance (CAD) Mar A 0.1B | C 0.4B | P 0.29B

USD       Trade Balance Mar A -40.4B | C -40.1B | P -$42.3B

CAD       Ivey PMI Apr A 54.1 | C 54.5 | P 55.2

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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