Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 101.841 | EURUSD 1.35904 | EURJPY 138.409 | AUDUSD 0.92367 | NZDUSD 0.84896 | USDCAD 1.08768 | EURCHF 1.22102 | USDCHF 0.89844 | GBPUSD 1.67107 | EURGBP 0.81327 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               101.86 | 101.64

EUR/USD             1.3610 | 1.3592

EUR/JPY               138.445 | 138.22

AUD/USD            0.9287 | 0.9210

NZD/USD             0.8501 | 0.8473

USD/CAD             1.0878 | 1.0861

EUR/CHF              1.2213 | 1.2209

USD/CHF             0.89855 | 0.8973

GBP/USD             1.6728 | 1.6710

EUR/GBP             0.81365 | 0.81315

 

For today

  • EUR: The Euro struggled in early trading holding just off the 1.3590 levels and into Tokyo, Fixing demand for the EURJPY helped the market make its initial moves to the 1.3600 levels but as the USDJPY started to move lower the Euro was given more room to rise moving to just below the 1.3610 level on light volume before easing back a little as we head towards the grey hours. Light offers above 1.3620 with a mix thereafter until closer to the 1.3700 levels were offers thicken, downside seems to be the focus with light bids from 1.3590/80 area giving way to weak stops then better support 1.3560/50, and then 1.3530/20 a break through here could see the market moving quicker onto the 1.33 handle but the term quicker is subjective at best.
  • GBP: With the early papers talking about the oncoming rate rises, with some members of the MPC talking about earlier than later the Cable has been on a steady rise from the opening 1.6710 level to just below the 1.6730 level in just less than a 20 pip move, although it’s been in one direction it’s been slow going. Downside see’s 1.6700 as near term support before reaching the congested areas around the 1.6650 levels. Topside has light mix running from above the 1.6750 levels into 1.6800 with nothing special at all.
  • JPY: The USDJPY opened around the 101.85 having recaptured some of its losses however, from the onset the market was on the back foot and the selling continued for a good portion of the session as some of the sellers above the 102.00 levels start to become impatient. The market moved steadily to the 101.65 levels before holding and spent a couple of hours testing the level before the sellers backed off a little and the market rose back to above the 101.70 areas. Topside offers still remain from the 102.00 areas a little thinner than they were maybe but still there, beyond that light stops above the 102.20/30 levels before the market opens up to 103.00. Downside support from here to 101.50 with weak stops below and then bids from the 101.30 levels onwards with only light stops worked in.
  • AUD: The market started quietly and with only “low” importance numbers looked set to hover around the 0.9230 area having opened at 0.9235, the plans of men and mice saw the Capex numbers come in down twice what was expected and in line with the previous -4.5% number at -4.2% this sent the market to 0.9210/15 and into the waiting bids however, the number is skewed by buildings and structures declining -7.4% so once the detail was read and the effect on GDP negligible the market reacted violently to squeeze out the sellers and trigger HFT buying to push it too 0.9260 with the impetus on the buy side the market continued to push and broke in stages to push above the 0.9285 level on the first glimpse at 93 cent for just over a week. For the moment the market holds just off the highs into the grey hours. Topside offers stronger into the 93cent level with weak stops suspected above and into the mid-levels before offers start to dominate.

Overnight News

AUD:

Australia business investment falls in Q1, outlook brighter

JPY:

BOJ’s Shirai says QQE will continue beyond 2015

Japanese Bought Net 90.5 Billion Yen Overseas Debt Last Week

Japan Apr Overall Retail Sales -4.4% on Year

Japan Large Companies’ Summer Bonuses Rise 8.8% Y/Y: Keidanren

Explosion on Tanker off Japan Coast Coastguard

JPY/KRW:

Japan-North Korea Talks End without Significant Progress

CNY:

China Asks Banks to Control Worsening Bad Loan: Securities News

 

Today’s data

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

JPY         Retail Trade Y/Y Apr A -4.40% | C -3.20% | P 11.00%

12:30     USD       GDP (Annualized) Q1 (S) P -0.20%

12:30     USD       GDP Price Index Q1 (S) C 1.30% | P 1.30%

12:30     USD       Initial Jobless Claims (MAY 24) C 321K | P 326K

14:00     USD       Pending Home Sales M/M Apr C 1.10% | P 3.40%

15:00     USD       Crude Oil Inventories P -7.2M

 

Harry Hindsight

  • EUR: A reasonably tight range in Asia belays the fact that volumes were significantly better than we’ve seen for a while at least. Opening around the 1.3635 levels the market dipped on fixing supply for the EURJPY before moving back to the opening levels and generally holding in an 8 pip range. The market began to drift as soon as the London market opened with German unemployment as expected and a mix for the Eurozone confidence numbers, the general consensus though seems to be a nervous cutting of long Euro positions by longer term players and a gradual building of shorts. Cable was probably more to blame for the Euro as the supportive M&A’s disappear into the distance, EURGBP rose only smalls however, it was hard going with general Euro weakness and the market drifted steadily over the course of the London session to test the 1.3590 areas into late NYK and a quiet close around the low. As with the price the volumes also drifted off.
  • GBP: A very quiet Asian session with the market holding around the 1.6810 opening levels for the whole session, only into the grey hours did we start to see strong selling appear from real money types driving the market to the 1.6770 support areas where the market held for a few hours before buckling and renewed real money selling pushing into the NYK part of the day, the market eventually came to a stop around the 1.6700 dipping slightly below on a couple of occasions before rising slowly to the 1.6710 area close.
  • JPY: Struggled in Asia unable to continue to push higher into the waiting offers the market begrudgingly started to give ground moving from the 102.00 level and the highs just above to drift to the 101.90 levels and then a final dip into the London market to test the 101.80 levels. The market failed the low the first time and bounced back to the 101.95 area as range players picked the bottom however, the markets move into the NYK session saw fresh fund selling hit quickly and the market dropped to the supporting 101.80 and then a few minutes later down to 101.65 triggering weak stops. The market bounced like a soggy cat to the 101.80 levels and then gradually pushed to 101.90 however, a quiet finish left the market around the 101.85 and looking a little sick.
  • AUD: The Oz traded quietly through the Asian session holding a reasonably tight range after opening around the 0.9260 levels, the market dipped slowly as light AUDJPY carry trades were closed as pressure on margins hit from the fallout of the Gold another favourite of the Japanese retail market. The market held in the Asian session above the 0.9250 level and only started to really move into the grey hours as the selling increased dropping quickly to 0.9240 (well quicker than the first 10 pips) holding the area until further selling into the NYK open sent the market  to the 0.9215 support area and a weak bounce to 0.9240.

 

Yesterday’s premiership results

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

AUD       Westpac Leading Index M/M Apr A -0.50% | P 0.00%

CHF        GDP Q/Q Q1 A 0.50% | C 0.60% | P 0.20%

CHF        UBS Consumption Indicator Apr A 1.72 | P 1.84

EUR        German Unemployment Change May A 24K | C -14K | P -25K

EUR        German Unemployment Rate May A 6.70% | C 6.70% | P 6.70%

EUR        Eurozone M3 Y/Y Apr A 0.80% | C 1.20% | P 1.10% | R 1.00%

EUR        Eurozone Economic Confidence May A 102.7 | C 102.2 | P 102

EUR        Eurozone Industrial Confidence May A -3 | C -4 | P -3.6 | R -3.5

EUR        Eurozone Consumer Confidence May (F) A -7.1 | C -7.1 | P -8.6

EUR        Eurozone Services Confidence May A 3.8 | C 3.5 | P 3.5

EUR        Eurozone Business Climate Indicator May A 0.37 | C 0.35 | P 0.27 | R 0.28

GBP       CBI Reported Sales May A 16 | C 36 | P 30

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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