Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 102.258 | EURUSD 1.37028 | EURJPY 140.126 | AUDUSD 0.93582 | NZDUSD 0.8635 | USDCAD 1.09055 | EURCHF 1.21977 | USDCHF 0.89018 | GBPUSD 1.68262 | EURGBP 0.81439 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.28 | 102.13

EUR/USD             1.3721 | 1.3698

EUR/JPY               140.21 | 139.93

AUD/USD            0.9399 | 0.9355

NZD/USD             0.8662 | 0.8615

USD/CAD             1.0912 | 1.0903

EUR/CHF              1.2200 | 1.2191

USD/CHF             0.8902 | 0.8887

GBP/USD             1.6858 | 1.6825

EUR/GBP             0.8145 | 0.81375

 

For today

  • EUR: The market steadily rose over the session from an opening just above the 1.3700 levels and only briefly dipping to below the 1.3700 levels. Once the dip was over with the market moved steadily higher to push above the 1.3720 levels as USDJPY dropped, this ran into EURJPY bids in front of the 140.00 levels and the resultant highs in the Euro. Downside bids start around the 1.3690 levels and down to the 1.3665/70 levels, a break through the level will see stops triggered and the mixed interest to the 1.3630 level where bids thicken. Topside offers now has light offers above the 1.3750 levels and has light offers all the way up only thickening around the 1.3980/1.4000 levels.
  • GBP: Cable has been steadily bid through the session with the EURGBP remaining on the back foot the market was helped by the squeeze in Euro’s from the Cross JPY buying. Moving from the 1.6825 levels the market rose quietly in early Tokyo before rising a little more rapidly into the late session to above the 1.6855 levels in what appears to be a better range than we’ve seem for many a month. Light offers appear around the 1.6890 levels and into the 1.6900 levels before light stops appear and dominate the level. From that point the offers start to thicken again with the 1.7000 remaining the focus to the topside. Downside sees a breach of the H+S but as mentioned below I don’t think fundamentally you want to be on the wrong side of M+A news. The market to the downside still remains supported whichever way you want to look at it and while the movement in Euro continues to drag the Cable lower the EURGBP cross moves in the same direction. Bids are likely through the 1.6800 levels and only through 1.6780 do we start to see light stops making an appearance before bids again take over.
  • JPY: The USDJPY moved steadily lower through the session dropping from the 102.28 levels into fixing supply and to the 102.15 levels before finding support in EURJPY around the 140.00 levels, the market remains a little jittery as a move through the 140.00 would probably cause a squeeze on retail Japan longs and margins causing the JPY to strengthen. Light bids 102.05/00 however, the main bids remain around the 140.00 levels in EURJPY, stops in USDJPY don’t appear until below the 101.90 levels and again this has to be balanced with the EURJPY. Topside offers above the 102.40 but only light with very little showing stop wise until above the 103.00 levels, offers dominate to that level.
  • AUD: The Oz rose slowly moving from the 0.9360 area to push through the 94 cent level with very little difficulty, triggering weak stops above the 0.9380 levels the market was happy with the Australian budget with a return to a balanced budget by 2017/18 with the current budget deficit of 3.1% of GDP AUD49.9B reduced in 2014/15 to AUD 29.8B or 1.8% of GDP. This set the market moving strongly and resistance was removed allowing the market higher. Offers are light until the 0.9420 areas where stronger offers are likely, stops are few and far between and it could be all mute if the EURJPY breaks and margin calls send the AUDJPY carry trade lower. Downside now sees support around the 0.9320 levels to the 93 cent levels with congestion showing below that level and further bids from 0.9280, only light stops appear.

Overnight News

NZD:

Wheeler Says NZ Dollar Carry Trade Quite Strong, May Strengthen

JPY:

Japan Corporate Goods Prices Rise Most Since 1980 After Tax Rise

GPIF Active Japan Stock Investments May Fall on Revamp: Minutes

JPY/CNY:

Japan’s Tokio Marine, Mizuho to Buy into Citic Nikkei

 

Today’s data

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

NZD       Retail Sales Q/Q Q1 A 0.70% | C 0.90% | P 1.20% | R 1.40%

JPY         Domestic CGPI Y/Y Apr A 4.10% | C 4.00% | P 1.70%

06:00     EUR        German CPI M/M Apr (F) C -0.20% | P -0.20%

06:00     EUR        German CPI Y/Y Apr (F) C 1.30% | P 1.30%

06:00     JPY         Machine Tool Orders Y/Y Apr (P) P 41.80%

08:30     GBP       ILO Unemployment Rate 3M Mar C 6.80% | P 6.90%

08:30     GBP       Claimant Count Rate Apr C 3.30% | P 3.40%

08:30     GBP       Jobless Claims Change Apr C -30.0K | P -30.4K

09:00     CHF        ZEW (Expectations) May P 7

09:00     EUR        Eurozone Industrial Production M/M Mar C -0.30% | P 0.20%

09:30     GBP       BoE Inflation Report

12:30     USD       PPI M/M Apr C 0.20% | P 0.50%

12:30     USD       PPI Y/Y Apr C 1.70% | P 1.40%

12:30     USD       PPI Core M/M Apr C 0.20% | P 0.60%

12:30     USD       PPI Core Y/Y Apr C 1.40% | P 1.40%

14:30     USD       Crude Oil Inventories P -1.8M

 

Harry Hindsight

  • EUR: Asia was very quiet with little movement in the Euro moving around the opening 1.3760 levels with movement 5 pips either side, the move into the grey hour saw the market back on its highs above 1.3765 but until London actually opened the market remained stuck below the 1.3770 levels and unable to push through the offers. London was another story with comments from various sources and a poor set of ZEW numbers, although these numbers are based on analysts within the financial community and not inside the industries it is still worth noting as they do have some bearing on the actual numbers more closely followed, adding to increasing belief in Draghi, something I’m not going to hold my breath for. The market dropped back as further comments were made, primarily BUBA making comments that it has no problems with negative rates however, the rest of Europe may do but this does kind of give the nod for it to happen. After the comments the market dropped back to 1.3740 and then on a secondary move pushed to the 1.3700 levels and into the NYK session, the selling continued to some extent having seen US numbers which apart from the inventory number were poor at best. The market did rally a little to 1.3730 areas before the selling reasserted itself and the market pushed down below the 1.3700 for the first time bouncing off the 1.3690 levels and back above 1.3700 in quiet afternoon trading.
  • GBP: Cable remains supported to some extent but dragged lower by the movement in the Euro. Opening around the 1.6868 levels the market in Asia but lightly and the market moved to above the 1.6880 levels and held there for a good part of the session, before the market drifted lower into the grey hours, the movement in the Euro drove the market lower with EURGBP selling unable to keep pace with the movement in the Euro. Cable dipped through the 1.6830 levels before holding for a good portion of the early NYK session only to dip further at the NYK option cut to touch below the 1.6820 levels, while I’ll mention the H+S pattern showing on the charts one suspects that anyone running with it may find themselves in problems if the Pharma deal were to go through so the market held steady from that point into the close rising very little.
  • JPY: USDJPY was quiet but reasonably bid over the course of the Asian session moving from the opening 102.15 area to above the 102.35 in a steady rise into the grey hours, the market dipped into the London session back to mid-range before dipping for the first time as EURJPY selling kicked in. The release of the US numbers didn’t help the market and USDJPY dropped to below the 102.10 levels with a little bit of a gap from the release , the market haven bottomed started a second rally as lengthy as the first over the remaining period of the day to finish the session around the 102.25 levels.
  • AUD: The Oz was very quiet in the Asian session, opening around the 0.9360 levels and slowly dipping to the 0.9355 levels into the grey hours. Early sellers in Europe took the market into the London session to 0.9335 before finding some reasonable support to start a long reversal for back part of the London market. The release of poor numbers in the US helped the Oz to push up to the 0.9380 levels however, futures selling into the US session saw the market pushing back towards the 0.9350 levels before stabilising again and finishing the day no better than when it started.

 

Yesterday’s premiership results

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

GBP       BRC Retail Sales Monitor Y/Y Apr A 4.20% | C 1.60% | P -1.70%

JPY         Japan Money Stock M2+CD Y/Y Apr A 3.40% | C 3.40% | P 3.50% | R 3.60%

AUD       Home Loans Mar A -0.90% | C 1.00% | P 2.30%

AUD       House Price Index Q/Q Q1 A -1.20% | C 3.00% | P 3.40% | R 3.50%

CNY        Industrial Production YTD Y/Y Apr A 8.70% | C 8.70% | P 8.70%

CNY        Retail Sales Y/Y Apr A 11.90% | C 12.10% | P 12.20%

CNY        Industrial Production Y/Y Apr A 8.70% | C 8.90% | P 8.80%

EUR        German ZEW (Economic Sentiment) May A 33.1 | C 41.3 | P 43.2

EUR        German ZEW (Current Situation) May A 62.1 | C 60.5 | P 59.5

EUR        Eurozone ZEW (Economic Sentiment) May A 55.2 | C 63.5 | P 61.2

USD       Advance Retail Sales Apr A 0.10% | C 0.40% | P 1.10%

USD       Retail Sales Less Autos Apr A 0.00% | C 0.60% | P 0.70%

USD       Import Price Index M/M Apr A -0.40% | C 0.30% | P 0.60%

USD       Business Inventories Mar A 0.40% | C 0.40% | P 0.40%

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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