Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 102.378 | EURUSD 1.35966 | EURJPY 139.202 | AUDUSD 0.92465 | NZDUSD 0.84519 | USDCAD 1.08998 | EURCHF 1.22197 | USDCHF 0.89875 | GBPUSD 1.67453 | EURGBP 0.81194 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.455 | 102.33

EUR/USD             1.3605 | 1.35935

EUR/JPY               139.345 | 139.19

AUD/USD            0.9271 | 0.9229

NZD/USD             0.8467 | 0.8440

USD/CAD             1.0903 | 1.0896

EUR/CHF              1.2223 | 1.22165

USD/CHF             0.89895 | 0.89835

GBP/USD             1.6751 | 1.6741

EUR/GBP             0.81235 | 0.8119

 

For today

  • EUR: Euro’s was helped back above the 1.3600 level by the CNY PMI number however the range and volumes have been limited as we await this week’s earth shattering events, or not as the case maybe. Offers appear almost continually to the topside now with patches of stops mixed in as weak speculators ease into positions. 1.3650 area looks to be more strongly populated as does any move towards the 1.3700 levels. 1.3590 down to the 1.3580 levels holds range play bids and then stops appear on a break through the 1.3570 level from breakout players and new lows for the year however, 1.3560 looks to be a better break with the 200dma around that level.
  • GBP: Cable was dead in the water moving in a tight range, opening around the 1.6745 levels the market drifted to just above the 1.6740 levels before pushing above 1.6750 with the Euro’s move, since then its continued to trade around the opening range. As mentioned below there seems to be interest to supply the market above the 1.6760 level at the moment and until that is exhausted the topside is limited, with offers again building in front of the 1.6800 level and light stops above 1.6820 before Thursdays rate decisions in the Eurozone the market is likely to be on hold. Downside bids begin in earnest around the 1.6720 level and down to the 1.6700 levels once through there the market should see some weak stops before running into the next level around the 1.6650 area and the market remains congested in either direction.
  • JPY: USDJPY did a lot of work yesterday to push through the offers however, now that the market thought it was through them it runs into another set from the 102.50 level, technical players are arguing for the move high based on a reverse H+S with a peak from 21st of last month however, it’s a weak argument for me and the call of above 103.40 seems a little farfetched given movements over the past month or so. Offers above the 102.50 levels continue and strengthen into the 102.80 areas and 103.00 remains a target albeit a strong one to push through and would need some strong fundamentals. Downside is more open with bids now around the 101.60 level but only light and then strong bids the closer you move to 101.00 and the 100.80 areas.
  • AUD: The Oz was a little more active than the rest of the complex but only a little, moving from the opening 0.9245 areas slowly lower to below 0.9240 before holding its opening level again into the numbers for the day, slight movement around the Non-manufacturing number out of CNY, a poor retail sales number sent the market tumbling only to be taken over by a current account balance number to shove it higher, while the movement was limited, the movement was still choppy as the different numbers pulled it about, eventually having dipped to a low of 0.9230 level the market again returned to the median and rose quickly once the RBA announcement was out of the way with a close rerun of the previous announcement and no change for the foreseeable future. The downside remains fairly well bid into the 0.9215 area and down to the figure, a break through the figure opens up limited downside, while the topside remains open to the 0.9310 areas before we start to see any real offers showing.

Overnight News

AUD:
RBA leaves cash rate target unchanged at 2.50%

RBA says monetary policy remains accommodative

RBA repeats it sees likely period of interest rate stability

RBA says commodity prices have continued to decline of late

RBA says A$ remains high relative to drop in commodity prices

EUR:
ECB’s Stark says ECB rate cut would be rather cosmetic- financial press

 

 

Today’s data

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

NZD       Terms of Trade Index Q/Q Q1 A 1.80% | C 2.00% | P 2.30% | R 2.50%

JPY         Monetary Base Y/Y May  A 45.60% | C 51.20% | P 48.50%

CNY        Non-manufacturing PMI May A 55.5 | P 54.8

AUD       Retail Sales M/M Apr A 0.20% | C 0.30% | P 0.10%

AUD       Current Account Balance (AUD) Q1 A -5.7B | C -7.0B | P -10.1B | -11.7B

JPY         Labour Cash Earnings Y/Y Apr A 0.90% | P 0.70%

CNY        HSBC China Manufacturing PMI May (F) A 49.4 | C 49.7 | P 49.7

AUD       RBA Rate Decision A 2.50% | C 2.50% | P 2.50%

08:30     GBP       Construction PMI May C 61 | P 60.8

09:00     EUR        Eurozone CPI Estimate Y/Y May P 0.60%

09:00     EUR        Eurozone Unemployment Rate Apr C 11.80% | P 11.80%

14:00     USD       Factory Orders Apr C 0.50% | P 1.10%

 

Harry Hindsight

  • EUR: While volumes were reasonable the range was narrow at best with the market opening around the 1.3635 area and drifting through the Asian session moving to a low just above 1.3620 and really not moving much beyond the opening areas. The move into the London session saw the market quickly sold down to the lows and then more steadily through the 1.3600 level before finding bids sufficient to turn the market a little, pushing back above the 1.3625 levels into early NYK. The initial release of the ISM manufacturing was incorrect in the seasonal adjustment giving a very low reading, this was corrected eventually and the market moved away from the highs as the USD recovered a little sending the Euro to new lows on the day around the 1.3590 areas before a quiet finish below the 1.3600 levels.
  • GBP: Cable was more or less dragged along by the Euro and although it faired a little better over the day still faced a resurgent USD if somewhat limited. Moving from a high opening above the 1.6765 levels the market dropped back to fill the gap in the charts and then steadily dipped lower into the 1.6740 areas and into the grey hours. Early buyers took the market steadily back to the 1.6760 levels however, looking by the movement through the day there seemed to be interest that had moved into the market around the level as a good portion of the day was spent banging up against the offer. The market took the Mortgage approvals to heart and sold the market down to make the lows around 1.6725 however; this looks more like the market looking for something to do rather than a significant number to move around on, although a weaker M4 number maybe worth noting. The market eventually drifted off in the same manner as the Euro with the eventual US ISM M number coming out only just lower than expectations and USD strength reappeared into the latter part of the session before a quiet close between the 1.6745/50 levels on the day, EURGBP rose during the Asian session from the 0.8130 areas to just above 0.8140 however, as soon as London opened this was quickly reversed as the Euro dipped and Cable was unable to push beyond the 1.6760 level and probably distorted the Euro market a little.
  • JPY: USDJPY continued to push higher throughout the day opening above Friday’s close around the 101.85 levels the market filled the small gap on the charts before climbing steadily through the 102.00 level triggering minor stops and holding the areas deep into London. NYK sent the market higher squeezing through the offers before dipping back sharply on an incorrect ISM, the market recovered and that really was the only dip back and the market continued climbing to just below the 102.50 levels before drifting into a 102.40 level close.
  • AUD: A massively lower building approvals sent the market lower having slowly risen from the opening 0.9302 area to above the 0.9312 levels, the market in Tokyo was not overly impressed and we saw light AUDJPY selling in the market before the number hit and the market reacted with its usual savagery dipping from the 0.9305 area and gapping to 0.9297 and then stopping it’s initial fall around the 0.9280 area, there was insufficient bids to do anything but slow the decent and the market moved through the session declining steadily into the London session and popping below the 0.9250 areas before a slight bounce on London’s open. The day from then on was more or less over as interest in the pair waned drifting through the day touching a low in the upper 0.9230’s and finishing holding in a tight 0.9240/50 range.

Yesterday’s premiership results

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% | R -4.80%

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

CHF        SVME-PMI May A 52.5 | C 55.5 | P 55.8

EUR        Eurozone Manufacturing PMI May (F) A 52.2 | C 52.5 | P 52.5

GBP       PMI Manufacturing May A 57 | C 57 | P 57.3

GBP       Mortgage Approvals Apr A 62.9K | C 64.5K | P 67.1K | R 66.6K

GBP       M4 Money Supply M/M Apr A -0.20% | C 0.30% | P -2.30%

EUR        German CPI M/M May (P) A -0.10% | C 0.10% | P -0.20%

EUR        German CPI Y/Y May (P) A 0.90% | C 1.10% | P 1.30%

USD       ISM Manufacturing May A 55.4 | C 55.5 | P 54.9

USD       ISM Prices Paid May A 60 | C 56.9 | P 56.5

USD       Construction Spending M/M Apr A 0.20% | C 0.70% | P 0.20%

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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