Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 102.75 | EURUSD 1.35988 | EURJPY 139.723 | AUDUSD 0.92782 | NZDUSD 0.84168 | USDCAD 1.09401 | EURCHF 1.22011 | USDCHF 0.89722 | GBPUSD 1.67376 | EURGBP 0.81246 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.76 | 102.445

EUR/USD             1.36055 | 1.3594

EUR/JPY               139.75 | 139.34

AUD/USD            0.9289 | 0.9257

NZD/USD             0.8451 | 0.8419

USD/CAD             1.0957 | 1.0939

EUR/CHF              1.2208 | 1.21995

USD/CHF             0.8978 | 0.89665

GBP/USD             1.6750 | 1.6735

EUR/GBP             0.8126 | 0.81195

 

For today

  • EUR: 1.3595/1.3605 was all she wrote as the market moved around the 1.3600 with no excitement for the pair so far. Bids and offers are likely to disappear before the announcement to some extent with the likelihood of specs and range players side-lined until the full details are released. However, for what its worth offers around the 1.3700 areas with light stops above 1.3720/30 likely to increase for the breakout with 1.3750 remaining a sell area from the middle of last month, a move through 1.3770 opens up the topside completely and a revisit to above 1.3900 is possible. Downside, having seen the market over the past month decline from the 1.4000 areas for something close to 3.5% one suspects any cuts in interest rate are well and truly accounted for and only some further easing action will take it much further however, anything is possible. The support level is the obvious 1.3580 level which we’ve been close to on several occasions, through there the 200dma is close and all this may be immaterial as the market is sold through the 1.3500 level and then this year’s lows around the 1.3450 areas.
  • GBP: Limited EURGBP selling dominated the session, with the Cable moving steadily from the opening 1.6740area to above 1.6750 however, no surprise there as light position taking in a quiet market was always possible. For the day ahead its anyone’s guess as the Cable is the least liquid of the majors its likely to be dragged around by the Euro, if the ECB just cut rates then the Cable will outperform the Euro as EURGBP moves higher however, if against the odds they introduce QE then Euro’s will move lower and outpace the Cable. On the off chance of major moves 1.6400 and 1.7000 are the levels to watch and anything in between is likely to be insignificant.
  • JPY: USDJPY has spent the day easing back as the EURJPY dominated the flows with selling pushing the pair from above the 139.70’s to below 139.40, USDJPY or the JPY strengthened against the USD just on this movement as the retail market took flight in light trading overall. Topside 102.80 has to be respected for the moment with weak stops through the 103.20 levels before offers again start to dominate through 103.50 and build into 104.00. Downside has light bids from 102.30 with better bids the close you move the figure areas, a break through 101.70 will see some light stops before the bids appear. A move to the 101.00 area would be a surprise however, bids around this area are particularly strong and if it did get there would cause a serious bounce from the level.
  • AUD: From the opening it was a quiet session opening around the 0.9278 area and trading into the Tokyo session with little difference. A worse than expected trade balance sent the market lower to below the 0.9260 levels but even this was muted by events to come and the market quickly retraced and pushed steadily to the 0.9285 levels. Offers remain around the 93cent areas with weak stops above the levels now around the 0.9325 area with congestion from there onwards to 94 cent where offers thicken appreciably. Downside has reasonable support from the 0.9215 levels however; a push through the 92 cent level opens the 90 cent area.

 

Not a day for the faint hearted I think.

 

Overnight News

CNY:

China’s HSBC May composite PMI rose to 50.2 vs. 49.5 in April

G7:

Warns Russia to curb Ukraine unrest or face further sanctions

JPY:

A downturn in the foreign bond buying out of Japan was partially offset by increased Equity buying

 

Today’s data

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

01:30     AUD       Trade Balance (AUD) Apr A -122M | C 510M | P 731M

01:45     CNY        HSBC China Services PMI May A 50.7 | P 51.4

08:10     EUR        Eurozone Retail PMI May P 51.2

09:00     EUR        Eurozone Retail Sales M/M Apr C 0.00% | P 0.30%

11:00     GBP       BoE Rate Decision C 0.50% | P 0.50%

11:00     GBP       BoE Asset Purchase Target C 375B | P 375B

11:30     USD       Challenger Job Cuts Y/Y May P 5.70%

11:45     EUR        ECB Rate Decision C 0.10% | P 0.25%

11:45     EUR        ECB Deposit Facility Rate C -0.10% | P 0.00%

11:45     EUR        ECB Marginal Lending Facility C 0.60% | P 0.75%

12:30     USD       Initial Jobless Claims (MAY 31) C 313K | P 300K

12:30     CAD       Building Permits M/M Apr C 4.00% | P -3.00%

14:00     CAD       Ivey PMI May P 54.1

 

Harry Hindsight

  • EUR: A very narrow day as the market waits for Thursdays events to arrive, with a slight dip in the Eurozone services number and no fresh impetus in the GDP the market was unable to shake off the waiting and make a move in either direction holding to a 1.3600/40 range broadly, Asia sold steadily through the session moving if from the 1.3630 areas to the 1.3610 levels and into London, A little bit of movement around early comments reversing the losses to set the market slowly rising to above the 1.3635 levels into the NYK session. A weaker ADP figure in the US helped to turn the flow but overall it was a lacklustre day with the market taking its time moving as no one wants to hold positions into the ECB. The USD strengthened into the back end of the day as the ISM figure boosted the reserve currency sending the Euro back to the 1.3600 levels.
  • GBP: Opening around the 1.6750 levels the Cable was sold throughout the Asian session steadily dropping to the 1.6700 levels in early London as position squaring with anything remotely connected to the Euro went through. Better than expected PMI services helped to reverse the move lower and the market bounced back to the 1.6740 areas before steadying before the NYK session. NYK carried the move forward to just short of 1.6770 as opposing position flattened through the late session, once the liquidations were over for the second time in the day the market settled back to trade the rest of the session quietly around the 1.6740 level.
  • JPY: The USDJPY managed a rise in early trading from the opening 102.50 levels to push against 102.80 for the only time during the day, before drifting in the balance of the Asian session with little interest in the pair apart from the flattening of EURJPY and GBPJPY positions, the move into London was little different and the market struggled in the early part of the session around the 102.60 levels before the ADP figure hit in early NYK to set the market back to 102.45 and the low of the day. The market bounced off the level, maybe bounce is a bit strong but it moved off rising back to the 102.75 levels and filling a small gap on the charts with the help of the ISM number. The market went out quietly as with the rest of the market.
  • AUD: While the early part of the session was dominated by a better than expected GDP number the day was mediocre at best. The market initially drifted lower into Tokyo from the 0.9265 areas and down below 0.9255 before rallying strongly to just below 93 cents, looking by the price action it may have taken the market by surprise and awaiting offers were quickly executed sending the market back to the 0.9285 level and then causing a bit of a scramble as it dropped quickly as longs from the move found themselves in the wrong place. The market stabilised around the opening levels and although the market rose of the session the range had been set and we meandered around the 0.9275 levels for the most part with only one minor dip after the ISM numbers.

 

Yesterday’s premiership results

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

GBP       BRC Shop Price Index Y/Y May A -1.40% | C -1.30% | P -1.40%

AUD       GDP Q/Q Q1 A 1.10% | C 0.90% | P 0.80%

EUR        Eurozone Services PMI May (F) A 53.2 | C 53.5 | P 53.5

GBP       Services PMI May A 58.6 | C 58.2 | P 58.7

EUR        Eurozone GDP Q/Q Q1 (P) A 0.20% | C 0.20% | P 0.20%

EUR        Eurozone PPI M/M Apr A -0.10% | C -0.10% | P -0.20%

EUR        Eurozone PPI Y/Y Apr A -1.20% | C -1.20% | P -1.60%

USD       ADP Employment Change May A 179K | C 208K | P 220K | R 215K

USD       Trade Balance Apr A -47.2B | C -$40.6B | P -$40.4B

USD       Non-Farm Productivity Q1 (F) A -3.20% | C -2.60% | P -1.70%

USD       Unit Labour Costs Q1 (F) A 5.70% | C 4.80% | P 4.20%

CAD       International Merchandise Trade (CAD) Apr A -0.6B | C 0.10B | P 0.08B

CAD       BoC Rate Decision A 1.00% | C 1.00% | P 1.00%

USD       ISM Non-Manufacturing Composite May A 56.3 | C 55.5 | P 55.2

USD       Crude Oil Inventories A -3.4M | C -0.2M | P 1.7M

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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