Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 101.654 | EURUSD 1.38404 | EURJPY 140.696 | AUDUSD 0.93752 | NZDUSD 0.86449 | USDCAD 1.08302 | EURCHF 1.2181 | USDCHF 0.8801 | GBPUSD 1.69321 | EURGBP 0.81738 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               101.755 | 101.55

EUR/USD             1.38445 | 1.3831

EUR/JPY               140.79 | 140.55

AUD/USD            0.9373 | 0.9347

NZD/USD             0.8651 | 0.8612

USD/CAD             1.0837 | 1.0825

EUR/CHF              1.2190 | 1.2180

USD/CHF             0.8813 | 0.8800

GBP/USD             1.6935 | 1.6916

EUR/GBP             0.8178 | 0.81725

 

For today

  • EUR: The Euro played out quietly after the fallout yesterday, moving in and around the 1.3840 levels where the market opened and was unable to find any meaningful movement. One has to suspect that the market was either already short of flat for the number. Downside bids start not far below around the 1.3820 areas with a severe congested area until a break of the 1.3780 levels triggering weak stops likely to build beforehand, with that level out of the way there is a mixed bag from then on and 1.3700 level is the next weak support area and defends the lows of 1.3680 for the month of April. Topside remains more or less where it was with light offers to the 1.3880 levels and stronger offers are not seen until you move deep into the 1.39 handle to the 1.4000 area.
  • GBP: While the Cable came off the movement was all Euros so the market is still fairly well long of the stuff and 1.6900 levels sees light bids and although likely to be a little patchy 1.6850 has the stronger level of buying. Topside is still capped at the 1.7000 area still and option barriers likely to be still in play before stops from breakouts and weak shorts.
  • JPY: A very tight range on the USDJPY with nothing going through per sae, early Tokyo sellers of the USDJPY took the market slightly lower into the fixing supply before the market recovered again from the 101.55 levels and then pushed to a high of 101.75 in limited action, since the highs the market has remained in touch with the highs in slow going. Offers limited around the 102.00 area with several pieces of research now suggesting to fade the market on any move higher, even so through the 102.20 level weak stops will again open up the topside 103.00 area for inspection, if only the volumes were not so weak. Downside has bids from just below the 101.50 area going all the way down to the 101.00 levels before the first stops are likely to appear, and then only limited, 100.80 provides more support however, the stops below this level are likely to be a bit larger from medium term types.
  • AUD: The Oz for the most part has been very quiet and has given up ground from yesterday’s strong rally higher, opening around the 0.9370 level the market held into early Tokyo before carry trade selling appeared in the market and further AUD selling involved with other crosses after poor CNY numbers left the market drifting to the 0.9350 levels before finding its legs and trading in  a narrow 10 pip range. Topside offers remain intact around the 94 cent level and stops are likely to be closely tucked in behind the level from both techies and weak shorts. Downside looks to be well supported for the moment around the 0.9350 however, given the limited volumes again overnight the bids may not be that strong and you have to look for the 0.9320 area as stronger support and only a break below 0.9270 would trigger anything meaningful in the market.

Overnight News

CNY:

Weaker than expected inflationary numbers draw concern for the market

JPY:

Official figures see Reserve assets continue to grow

GBP:
Britain is set for stronger growth than previously expected research body

 

Today’s data

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

CNY        PPI Y/Y Apr A -2.00% | C -1.80% | P -2.30%

CNY        CPI Y/Y Apr A 1.80% | C 2.10% | P 2.40%

JPY         Leading Index Mar (P) A 106.5 | C 106.9 | P 108.9

06:00     EUR        German Trade Balance (EUR) Mar C 16.9B | P 16.3B

08:30     GBP       Visible Trade Balance (GBP) Mar C -9.0B | P -9.1B

08:30     GBP       Industrial Production M/M Mar C -0.20% | P 0.90%

08:30     GBP       Industrial Production Y/Y Mar C 2.40% | P 2.70%

08:30     GBP       Manufacturing Production M/M Mar C 0.30% | P 1.00%

08:30     GBP       Manufacturing Production Y/Y Mar C 2.90% | P 3.80%

12:30     CAD       Net Change in Employment Apr C 14.9K | P 42.9K

12:30     CAD       Unemployment Rate Apr C 6.90% | P 6.90%

14:00     GBP       NIESR GDP Estimate Apr P 0.90%

14:00     USD       Wholesale Inventories Mar C 0.50% | P 0.50%

 

Harry Hindsight

  • EUR: The Euro opened around the 1.3910/15 levels and moved into the London session only just north of the 1.3920 level with volumes in Asia drab at best, the market once London opened started to see buyers appear as weak shorts took back there positions and those willing to bet that the ECB do nothing went Long, this limited buying had the effect of moving the Euro to the 1.3940 level initially after a few hours of buying, ignoring the German IP numbers which again were down and considerably worse than expected. Opening in NYK saw limited buying also and then the number was released, the market immediately shot upwards as no change meant all the EA’s bought the number and as usual it was absorbed and then the communique started and negative deposit rates was thrown out to the masses as the likely form any intervention would take with later talk of August time being a target period, but then its talk and we all know that is cheap. Real money sellers appeared in the market and the Euro ran quickly from above the 1.3980 level to 1.3920, limited bids held the market up for a very short period before the market moved again and took out further stops on the break through 1.3880 to touch the 1.3850 level. The market stabilized to some extent however, it still continued to slowly ease down over the course of the session to finish the day around the 1.3940 levels into the close. US initial jobless claims helped a little which came in a little better than expected helping the USD to rally slightly to add to the already 1.5 big figure move lower for the Euro.
  • GBP: Cable moved quietly in the early part of the session moving around the 1.6955 opening levels for much of the session with a brief fall off to the 1.6945 into the Tokyo lunch period. From that point on the market started a slow climb to the 1.6975 levels into early NYK before the release of the European decision and communique, although this put the market on its head to some extent the fall off for the Cable was less pronounced and the market although choppy around the couple of hours after the Draghi speech settled down and slowly drifted lower against the USD not least helped by the US initial claims number. At the Option cut the market hit its lows trading the 1.6925 level and bounced a little as late profit taking entered the market before drifting into the close just above the lows.
  • JPY: The USDJPY looked early in the session set to recapture some of the losses from the previous day breaking to above the 101.95 level in Asia however, the attempt was initially prompted by some demand for the fix which once over with allowed sellers to creep back in and the market moved back to the 101.80 levels and held into the grey hours, early Europeans sold light EURJPY positions and the market in USDJPY eased to the 101.70 levels before the London opening. London did little with the pair and the market moved in a tight 101.75-85 range for several hours, even the movement in the Euro had little affect and apart from a small USD rally after the US numbers the market could only reach 101.85 before falling back sharply as the JPY started to be bought against the Euro and GBP in the NYK session, this continued throughout the NYK session until what would have been once the IMM close and halted the slide just below the 101.50 levels for a minor bounce to the 101.65 level into the close.
  • AUD: A better than expected set of employment numbers helped the AUD higher moving from the 0.9335 levels the market initially drifted lower holding the 0.9320 into the figures before shooting to above the 0.9360 levels pausing and then heading to the 0.9375 levels into the grey hours. London opening saw fresh buying and the market moved to the highs just short of the 0.9395 levels doing a lot of work from the 0.9375 level onwards and clearing a lot of offers. This was despite the fact that good cross selling was seen throughout the day with in particular AUDJPY carry trade. The move into the NYK session saw a limited attempt to the topside again hitting similar levels just below 0.9395 before the USD numbers forced a limited USD recovery and the market settled back to the 0.9375 level and traded in a limited range thereafter. With RBA statement little changed from previous the market had little to glean from the communique.

Yesterday’s premiership results

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

GBP       RICS House Price Balance Apr A 54% | C 55% | P 57%

AUD       Employment Change Apr A 14.2K | C 7.5K | P 18.1K | R 21.9K

AUD       Unemployment Rate Apr A 5.80% | C 5.90% | P 5.80%

CHF        SECO Consumer Confidence Apr A 1 | C 3 | P 2

EUR        German Industrial Production M/M Mar A -0.50% | C 0.20% | P 0.40% | R 0.60%

CHF        CPI M/M Apr A 0.10% | C 0.10% | P 0.40%

CHF        CPI Y/Y Apr A 0.00% | C 0.10% | P 0.00%

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

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

EUR        ECB Rate Decision A 0.25% | C 0.25% | P 0.25%

CAD       Housing Starts Apr A 195K | C 177K | P 156.8K

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

USD       Initial Jobless Claims A 319K | C 328K | P 344K | R 345K

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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