Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close Wellington open

USDJPY 101.776 101.81-85 | EURUSD 1.3632 1.3630-40 | EURJPY 138.742 138.77-92 | AUDUSD 0.9311 0.9313-17 | NZDUSD 0.84957 0.8478-0.8495 | USDCAD 1.08466 1.0839-58 | EURCHF 1.22068 1.2201-1.2210 | USDCHF 0.89546 0.8937-57 | GBPUSD 1.67558 1.6752-75 | EURGBP 0.81358 0.8126-40 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.09 | 101.76

EUR/USD             1.3644 | 1.36205

EUR/JPY               139.12 | 138.695

AUD/USD            0.9321 | 0.9255

NZD/USD             0.8497 | 0.8468

USD/CAD             1.0856 | 1.0838

EUR/CHF              1.2209 | 1.22025

USD/CHF             0.8962 | 0.8949

GBP/USD             1.6770 | 1.6738

EUR/GBP             0.81385 | 0.8130

 

For today

  • EUR: The market gradually slipped in early trading moving from the opening 1.3635 areas to just above the 1.3620 levels as speculative selling continues to enter the market on the back of perceptions that the ECB will at last increase easing within the Eurozone, I’m still not holding my breath even though some of the major banks are starting to call another 0.2% drop in inflation for the coming number. The light support held the market and a break through the 102.00 in the USDJPY helped to support the Euro as cross buying again materialized in the market. With some analysts calling a move to ZIRP and others an increase in the LTRO’s, if they do anything remains to be seen however, what is certain is a dead week until Wednesday at least as the market awaits a decision of any sort. For the moment downside see’s light bids to the 1.3590 levels with suspected weak stops below the 1.3580 levels, patchy from then with a mix to the 1.3530 levels before bids appear to dominate the market. Topside has offers from the 1.3650 levels into 1.3680 and then light stops before more offers around 1.3700.
  • GBP: A steady decline as the news that the in out referendum on Europe may be a moot point according to one German paper. The market opened slightly higher than Fridays close but quickly closed the gap and has been on the back foot all through the session slipping the 1.6740 if a 20 pip move is a market. Light bids from the 1.6730 levels down to the 1.6700 level dominate and while the expected decision later this week is unchanged the minutes will be of more interest. Below the 1.6700 the market is mixed with better bids around the 1.6650 levels. Topside sees light offers into the 1.6800 levels with light stops mixed in to that level. Beyond sees stronger offers building over the course of the 1.6840-80 area, likely even stronger above 1.6900.
  • JPY: With the BoJ starting to talk of more easing to reach the 2% target the market moved steadily higher over the early part of the Tokyo session. Opening just above the closing levels around the 101.85 area the market moved down first as the Sydney market sold into the high opening to fill the small gap in the charts, once Tokyo entered the market the USDJPY started to rise steadily to above the 102.00 levels before running into the offers above the 102.05 levels and holding steady for the balance of the session so far. Topside offers from here into the 102.20/30 area before weak stops appear, then more offers move in quickly from 102.50/70. Downside has light bids from the 101.80 levels and again around the 101.60 level with patches of stops around but not really that strong, better bids 101.40 areas back into the figure level.
  • AUD: Weak numbers again impacted the Oz with the market with business indicators upsetting the market the most chasing it quickly through the 93 cent level to 0.9270 before slowing its descent. The market eventually stopped short of the 0.9255 level but has not recovered at all and looks weak. Offers above the 93 cent level now having moved down a little dominate to around 0.9330 before weak stops appear. Offers get stronger the closer you get to 94 cent and given the figures it’s doubtful. Downside bids a light until the 0.9215 levels and stronger bids appear, a move through the 0.9180 levels will likely see some stops triggered.

Overnight News

AUD:

Australian inflation gauge climbs 0.3% in May

Australian manufacturing picks up in May Survey

JPY:
Japan Q1 revised GDP seen little changed after solid capex growth

 

Today’s data

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

JPY         Capital Spending Q1 A 7.40% | C 5.80% | P 4.00%

AUD       TD Securities Inflation M/M May A 0.30% | P 0.40%

AUD       Building Approvals M/M Apr A -5.60% | C 2.00% | P -3.50%

JPY         Manufacturing PMI May (F) A 49.9 | C 49.9 | P 49.9

07:30     CHF        SVME-PMI May C 55.5 | P 55.8

08:00     EUR        Eurozone Manufacturing PMI May (F) C 52.5 | P 52.5

08:30     GBP       PMI Manufacturing May C 57 | P 57.3

08:30     GBP       Mortgage Approvals Apr C 64.5B | P 67.1K

08:30     GBP       M4 Money Supply M/M Apr C 0.30% | P -2.30%

12:00     EUR        German CPI M/M May (P) C 0.10% | P -0.20%

12:00     EUR        German CPI Y/Y May (P) C 1.10% | P 1.30%

14:00     USD       ISM Manufacturing May C 55.5 | P 54.9

14:00     USD       ISM Prices Paid May C 56.9 | P 56.5

14:00     USD       Construction Spending M/M Apr C 0.70% | P 0.20%

 

Weekend News

CNY:

China’s Manufacturing Expands at Fastest Pace in Five Months
China to Cut Reserve Requirement Ratio for Qualified Lenders
PBOC to Set Up Re-Lending Facility for Small Companies: CCTV
China to React If Provoked Over Regional Disputes: Xinhua
China Housing Ministry Prepares Property Market Report: Journal
China to Close Over 2,000 Coal Mines by 2015: Xinhua
USD/CNY:

Hagel Says China’s Actions in South China Sea Destabilizing
CNY/USD/JPY:

Hagel, Abe Speeches Viewed as Provocative Against China: Wang
AUD/CNY:

Australia Says China’s Actions in South China Sea ‘Unhelpful’
VND/CNY:

Vietnam Prepares Legal Challenge Against China, Premier Says
JPY:

Japan’s Fukuoka City to Ask for 15% Corporate Tax Rate: Asahi
JPY: Japan’s Security Efforts No Change to Peaceful Path: Onodera

EUR/JPY:

Japanese Banks Mull Bid for BNP Paribas U.S. Unit, Times Says
SGD/JPY:

Singapore Lifts Restrictions on Japan Food Imports
Japan, Singapore to Collaborate for Early Conclusion of TPP
GBP/EUR:

U.K. Could Leave EU If Juncker Chosen, Cameron Cited by Spiegel
ECB’s Mersch Says EU Election Result Due to Lack of Jobs, Growth
Rajoy Says Spain to Spend $8.2 Billion on Plan to Boost Growth
Padoan Says EU’s Stability Pact Must Evolve to Favour Employment
CHF:

Jordan Says SNB Policy Independent of Other Cen. Banks: Nikkei
UAH:

Ukraine Fights Separatists in East, Approaches Russian Gas Deal

Harry Hindsight

  • EUR: With no data for the day the Euro was quiet during Asia testing the 1.3600 level a few times before heading higher into the grey hours as early Europeans started in on some weak buying, even so the market was only able to rise to just above the 1.3610 levels from the opening 1.3605 areas. The market really had to wait until the NYK session before we started to see some better movement with the Euro’s heading higher after a poor Personal spending number leads one to suspect that GDP numbers may be under pressure in the near future. Euro’s pushed to above the 1.3635 levels before stalling and then running again higher as we approached the NYK option cut, this time rising to the 1.3650 levels before a slow decline into the close around the 1.3635 levels on thin volume.
  • GBP: Cable was only slightly more active rising steadily over the day with little help from the news wires; opening around the 1.6720 areas the Asia session pushed the pair to above the 1.6735 levels into the grey hours. The move above the 1.6750 area was short lived, dipping from the highs in the early part of the London session. The market found a base around the 1.6730 areas and struggled into the NYK session before moving higher on the USD weakness, to trade to a high above the 1.6775 levels and holding onto the bulk of the gains into the close around 1.6760.
  • JPY: A slow day for the USDJPY with little interest once the initial selling had finished in early Tokyo. Moving from the opening areas of 101.75 to a low just through 101.50, the market then began a steady climb during the rest of the day to the 101.85 level and settling down to a quiet ending around the 101.80 only just above the opening. What movement we saw during the latter part of the session seemed to be cross related specifically EURJPY/GBPJPY.
  • AUD:  No data but an announcement of a M&A drove the Oz initially higher in the Asian session with the market moving from the 93 cent level and pushing through to above the 0.9325 levels into the grey hours. While the market caught a bid the M&A news was not strong enough to impact into the London session and the Oz was sent back to the opening levels in the first couple of hours in London and although bids held the market initially through into the NYK session it eventually broke back below to the 0.9290 levels and held into the close with only a slight rise to 0.9310 as volumes disappeared for the weekend.

Overnight News

AUD:

Australian inflation gauge climbs 0.3% in May

Australian manufacturing picks up in May Survey

JPY:
Japan Q1 revised GDP seen little changed after solid capex growth

 

Friday’s premiership results

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

NZD       Building Permits M/M Apr A 1.50% | C 8.30% | P 9.20%

GBP       GfK Consumer Sentiment May A 0 | C -1 | P -3

JPY         Unemployment Rate Apr A 3.60% | C 3.60% | P 3.60%

JPY         Household Spending Y/Y Apr A -4.60% | C -3.40% | P 7.20%

JPY         National CPI Core Y/Y Apr A 3.20% | C 3.10% | P 1.30%

JPY         Tokyo CPI Core Y/Y May A 2.80% | C 2.90% | P 2.70%

JPY         Industrial Production M/M Apr (P) A -2.50% | C -1.90% | P 0.30% | R 0.70%

JPY         Housing Starts Y/Y Apr A -3.30% | C -8.20% | P -2.90%

CHF        KOF Leading Indicator May A 99.79 | C 102.05 | P 102.04 | R 101.81

CAD       GDP M/M Mar A 0.10% | C 0.10% | P 0.20%

CAD       Industrial Product Price M/M Apr A -0.20% | C 0.40% | P 0.40%

CAD       Raw Materials Price Index M/M Apr A 0.10% | C 1.20% | P 0.60%

USD       Personal Income Apr A 0.30% | C 0.30% | P 0.50%

USD       Personal Spending Apr A -0.10% | C 0.20% | P 0.90%

USD       PCE Deflator M/M Apr A 0.20% | P 0.20%

USD       PCE Deflator Y/Y Apr A 1.60% | P 1.10%

USD       PCE Core M/M Apr A 0.20% | P 0.20%

USD       PCE Core Y/Y Apr A 1.40% | P 1.20%

USD       Chicago PMI May A 65.5 | C 60.2 | P 63

USD       U. of Michigan Confidence May (F) A 81.9 | C 82.9 | P 81.8

 

Stay lucky

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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