Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close Wellington open

USDJPY 101.822 101.78-83 | EURUSD 1.37606 1.3750-60 | EURJPY 140.106 140.00-05 | AUDUSD 0.93612 0.9363-68 | NZDUSD 0.86147 0.8617-22 | USDCAD 1.0898 1.0900-05 | EURCHF 1.21962 1.2187-92 | USDCHF 0.88639 0.8860-65 | GBPUSD 1.68501 1.6840-47 | EURGBP 0.8166 0.8164-69 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.05 | 101.78

EUR/USD             1.37635 | 1.3749

EUR/JPY               140.36 | 140.11

AUD/USD            0.9367 | 0.9349

NZD/USD             0.8634 | 0.8619

USD/CAD             1.0909 | 1.0892

EUR/CHF              1.2208 | 1.2196

USD/CHF             0.8878 | 0.8865

GBP/USD             1.6862 | 1.6840

EUR/GBP             0.8165 | 0.8159

 

For today

  • EUR: The market opened more or less unchanged and remained in a very tight range with the market drifting from the opening to the 1.3750 levels before steadily rising back to the opening levels in quiet trading. Downside has light bids from the lows to the 1.3700 area before stops start to make an appearance however; it is mixed from then on. Topside offers now around the 1.3800 levels where the market broke down from with chatter in the market of the ECB doing something in June to alleviate the pressure for the Euro to move higher. They did blow trumpets to a fanfare of the Euro becoming “the” reserve currency.
  • GBP: Shall we sharnt we as they say in the N.England, with one side wanting to block the Pfizer’s bid for A.Zeneca and others warning of raising the drawbridge as detrimental to free trade and openness. In the meantime the market now seems to be ignoring the bid until something concrete comes along. The market has remained fairly static over the Asian session. Opening around the 1.6850 level, touching just above the 1.6860 levels and doing very little else. Light bids from this point from profit taking with better bids around the 1.6800, after that very mixed with congestion over the next big figure, towards the top its wide open and not until we get back above the 1.6900 levels do we see better offers and the 1.7000 become a technical breakout level with plenty of stops likely to be behind there.
  • JPY: USDJPY opened close to the closing levels and although the fixing demand quickly ran the market to above the 102.00 levels and into weak offers, before settling back to the 101.95 level in slow trading from that point. With offers from the 102.00 going back to the 102.20 levels before suspected stops appear, from then on the offers increase the closer to 103.00 levels. Towards the bottom 101.50 downwards to the 101.20 level sees some reasonable bidding with stops coming into the mix from the bottom level and increasing through the 101.00 levels, once the stops are cleared we return to a bid market with bids going down to the 100.50 levels and likely further.
  • AUD: The Oz is now stuck in the middle of nowhere holding a tight range with the topside above the 0.9368 area and again the downside 0.9350 level tested as it was on Friday. Bids from the lows down to 0.9330 areas before the stops start to appear in the mix however, it is fairly bid and any moves without some fundamental news are likely to be thin and weak. Topside still remains strong into the 94 cent level and as with the downside the market seems to be caught for the moment with no chance of momentum building.

Overnight News

JPY:

Japan’s shrinking current account surplus highlight weak exports

Japanese Sold Record Long-Term Bunds, Dutch Debt: MOF Data

GPIF Needs Short-Term Plan to Guard Against Bond Rout, Ueda Says

LDP Lawmaker: to Push to Replace GPIF President Role With Board

Itoh: Private Members to Urge Initial Corp Tax Cut to Below 30%

Japan service sector sentiment falls in April

CNY:

Chinese Premier Calls Forex Reserves ’Big Burden’: Phoenix TV

China’s April fiscal revenue rises 9.2 pct

China to Accelerate Low-Income Housing Construction

Ex-PBOC Official: China Unlikely to Cut Banks’ Reserve Rate Soon -Report

KRW/CNY:

South Korea yuan bank deposits rise to new record in April

AUD:

Australia business confidence improves in April survey

NZD:

N.Z. Labour Would Target 4% Jobless Rate by End of First Term

New Zealand House Sales Tumble as Interest Rates Rise

 

Today’s data

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

JPY         Current Account (JPY) Mar A -0.78T | C -0.54T | P -0.04T

AUD       NAB Business Confidence Apr A 6 | P 4

JPY         Eco Watchers Survey: Current Apr A 41.6 | C 45 | P 57.9

07:15     CHF        Retail Sales Y/Y Mar C 1.90% | P 1.00%

18:00     USD       Monthly Budget Statement Apr C $114.0B | P $112.9B

 

Weekend News

EUR:

French Call for ECB Action on Euro Said to Rile German Lawmakers
Merkel Adviser Calls for Swiss-Style Intervention for Euro: Welt
USD/CNY:

Lew Urges China to Move Ahead With Long-Term Economic Measures
CNY:

Xi Says China Must Adapt to ‘New Normal’ of Slower Expansion
PBOC’s Zhou Says No Big China Stimulus: Shanghai Sec. News
China Central Banker Calls for Tougher Rules on Shadow Financing
PBOC’s Liu: China Banks’ Non-Performing Loans Are Rising
China Pledges to Strengthen Market Reforms to Improve Access
EUR/RUB:

Germany-France Threaten Full Russia Sanctions in Ukraine Crisis
UAH/RUB/EUR:

Ukraine Regions Vote in Referendums Challenged by Europeans
JPY:

Japan Health Minister Says Pension Returns Must Beat Pay Gains
KRW/JPY/USD:

S.Korea, Japan, U.S. Defence Heads to Meet in Singapore: Yonhap
Asean:

Asean Expresses Concern Over Rising Tensions in South China Sea
USD/KRW:

North Korea Urged by U.S. to Show Restraint on Nuclear Tests
AUD:

Australian Prime Minister Orders Lawmaker Salary Freeze: Herald
Australians Back Debt Tax to Help Balance Budget: Fairfax Poll

Harry Hindsight

  • EUR: The Euro continued its decline steadily over the day after the previous days drop. Moving from the 1.3840 level and a quiet session in Asia the market renewed the move lower once London opened moving through the 1.3800 level into the NYK session and continuing to below the 1.3750 levels with no major dramas along the way. With German trade balance less than expected adding to the downward pressure.
  • GBP: While the Euro remained under pressure the Cable was dragged lower at a greater pace having failed to follow the Euro the previous day to the same extent. Asia was quiet opening around the 1.6930 area and dipping to just below the 1.6920 levels before pushing higher in early London to the 1.6940 levels before decent numbers across the board sent the market tumbling for some reason, so they were not as good as previous but better than the consensus so one assumes it was time for the Cable to play catch up.  Falling after the numbers into the NYK session pushing below the 1.6840 level on a big figure move. The market stalled from that point and narrowed down into a tight range into the close.
  • JPY: The fall in the Euro led the market to a broad based USD rally, early Tokyo sold the USDJPY initially taking the market down to the support levels before turning and starting a steady climb back higher moving into London around the 101.70 level and struggling until NYK opened. While the US numbers were poor with wholesale inventories increasing and a revision of the previous month on top the market generally ignored it pushing to the highs above 101.85 in a steady move overall before failing against the resistance levels above the highs. The market drifted into a quiet finish around the 101.80 levels.
  • AUD: The Oz found itself in a reasonably tight range with the market been sold lower in Asia after a broadly similar RBA policy statement and poor inflationary numbers in CNY sent the pair off to below 0.9350 before finding support and moving quietly through the rest of the session around the 0.9360 levels. The move into London saw the market start to move higher into the London session as the carry and movement to quality took the market to its highs close to 0.9380, again maybe I missed something but USD’s moved from the opening in NYK and the market retraced to the lows once again over the next few hours and then traded sideways into a quiet close.

Friday’s premiership results

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

EUR        German Trade Balance (EUR) Mar A 14.8B | C 16.9B | P 16.3B

GBP       Visible Trade Balance (GBP) Mar A -8.5B | C -9.0B | P -9.1B | R -8.7B

GBP       Industrial Production M/M Mar A -0.10% | C -0.20% | P 0.90% | R 0.80%

GBP       Industrial Production Y/Y Mar A 2.30% | C 2.40% | P 2.70% | R 2.50%

GBP       Manufacturing Production M/M Mar A 0.50% | C 0.30% | P 1.00%

GBP       Manufacturing Production Y/Y Mar A 3.30% | C 2.90% | P 3.80% | R 3.90%

CAD       Net Change in Employment Apr A -28.9K | C 14.9K | P 42.9K

CAD       Unemployment Rate Apr A 6.90% | C 6.90% | P 6.90%

GBP       NIESR GDP Estimate Apr A 1.00% | P 0.90%

USD       Wholesale Inventories Mar A 1.10% | C 0.50% | P 0.50% | R 0.70%

 

Stay lucky

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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