Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 102.069 | EURUSD 1.35318 | EURJPY 138.12 | AUDUSD 0.93851 | NZDUSD 0.85571 | USDCAD 1.08667 | EURCHF 1.21774 | USDCHF 0.89995 | GBPUSD 1.67881 | EURGBP 0.80603 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.14 | 101.97

EUR/USD             1.35465 | 1.3530

EUR/JPY               138.345 | 138.01

AUD/USD            0.9414 | 0.9348

NZD/USD             0.8658 | 0.8518

USD/CAD             1.0870 | 1.0859

EUR/CHF              1.2184 | 1.21765

USD/CHF             0.90025 | 0.8993

GBP/USD             1.6800 | 1.6786

EUR/GBP             0.8063 | 0.8058

 

For today

  • EUR: The Euro seemed to be feeling a little better after the continual cross selling became absent on the day, moving from an opening 1.3535 level and steadily rising through the session to above the 1.3545 in quiet but steady trading. Light offers from the 1.3560 areas with only limited stops above the 1.3575 levels then a fresh set of supply appears above the 1.3580 levels and into the 1.3600, the handle, downside has bids below the 1.3525 levels and for the moment looks resilient enough but with a couple of numbers on the day that could all change. A break through the 1.3500 level will open up the downside to just above the 1.3420/00 support area with possible good stops in the mix.
  • GBP: A steady climb off the 1.6790 levels but limited to only just over 10 pips and currently holding just below 1.6800 levels, nothing has really changed for Cable with one good number after the next as the fragile economy continues to expand. Offers on the topside through the 1.68 handle gaining in size to the 1.6900 level; only a clear break through 1.6920 is likely to trigger anything meaningful. Downside is not quite so comfortable however; bids start around the 1.6750 area and are every few pips to the 1.6700 areas with some reasonable stop suspected below the areas now.
  • JPY: USDJPY has had a reasonably uneventful day and although the market opened slightly lower due to movements in NZD and the AUD the gap from the slight gap was eventually filled on the charts with the USDJPY struggling to the 102.05 in a tight range. A break through 101.80 is likely to see stops triggered with support to that level standing in the way, this opens up a  new test to the 101.00 levels and ultimately new lows for the year however, we’ve been here many times over the past 6months. Topside offers around the 102.40 level are light with better offers all the way back to 102.80 and light stops.
  • AUD: A night at the races, the opening saw the AUD gap 5 pips on the opening as the RBNZ raised interest rates as expected, dragging the Oz with it with the AUDNZD selling unable to compete with the move, having been unable to stop itself the Oz jammed to the 0.9410 triggering some light stops on the opening wide ranges before settling back to the opening 0.9385 level and a steady drift into the Tokyo session. The next event was the unemployment numbers the expected slight rise not materializing and holding in line with the previous month’s number with the market sparking higher initially with HFT’s buying the better than expected before the next set sold with banks holding offers that possibly got triggered and a second lot of HFT’s selling the month on month number, the downside traded through the 0.9350 levels before the market moved back to the 0.9380 levels and a more sensible reaction to news that wasn’t. Topside still remains offered to an extent however, chances are that a lot of wood was cut on the moves up in the early stage and again from the employment numbers with offers now resting above the 0.9410 levels from range players the most likely scenario, above and a break through the 0.9420 area opens up the topside 0.9450 areas for a test but again the wood is likely to be thick. The downside has congestion through the supportive 0.9350 areas with 93 cents likely to be lightly guarded and stops on a break through there. Further down sees another likely congregation of bids around the 0.9250/20 levels, and the majority of the banks are still calling a lower Oz I think the carry trade may be back in vogue.

Overnight News

CNY:

China’s rapid FX reserves rise creates policy difficulties SAFE

China Can’t Rely on Hot Money Curb to Control FX Reserves: SAFE

AUD:

Australia employment falls by 4,800 jobs in May

NZD:

New Zealand Central Bank Raises Official Cash Rate to 3.25%

RBNZ’s Wheeler Says Rate Rises Depend on Data, Inflation

JPY:

Japan advisor Takatoshi Ito urges prompt GPIF reallocation

Takatoshi Ito: GPIF Should Review Fund Portfolio By September

Japan investors turn to REITs as inflation play

Japan to cut corporation tax rate below 30% within a few years -source

Japan April core machinery orders fall 9.1% MoM

GBP:  UK house prices rise more than expected in May – RICS

 

Today’s data

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

21:00     NZD       RBNZ Rate Decision A 3.25% | C 3.25% | P 3.00%

23:01     GBP       RICS House Price Balance May A 57.00% | C 52.00% | P 54.00% | R 55.00%

23:50     JPY         Machine Orders M/M Apr A -9.10% | C -10.80% | P 19.10%

01:30     AUD       Employment Change May A -4.8K | C 10.0K | P 14.2K | 10.3K

01:30     AUD       Unemployment Rate May A 5.80% | C 5.90% | P 5.80%

06:00     EUR        German Wholesale Price Index M/M May C 0.30% | P 0.20%

08:00     EUR        ECB Monthly Bulletin

09:00     EUR        Eurozone Industrial Production M/M Apr C 0.50% | P -0.30%

12:30     CAD       New Housing Price Index M/M Apr C 0.30% | P 0.20%

12:30     USD       Advance Retail Sales May C 0.60% | P 0.10%

12:30     USD       Retail Sales Less Autos May C 0.40% | P 0.00%

12:30     USD       Initial Jobless Claims (JUN 7) C 309K | P 312K

12:30     USD       Import Price Index M/M May C 0.20% | P -0.40%

 

Harry Hindsight

  • EUR: A tight range throughout the day with little data to affect the market overall. The Euro’s opened around the 1.3545 areas and headed into the Tokyo session unchanged on the couple of hours in Sydney. Closing of Long cross Yen positions continued in early trading with the Euro pushed down to below the 1.3525 levels before finding some support, the market moved off the lows in a gradual climb and into the grey hours to the point where we started. Fresh selling of the EURGBP cross sent the pair lower on the UK numbers release and the market again bounced just below 1.3525 but like a soggy cat only managing to move back to 1.3535 and struggling to maintain that level, the market slowly moved towards the NYK session and early buyers took the market to the high on little more than try the other direction, as it was the market was unable to push to far through the 1.3550 levels and stalled around the 1.3556 area before again descending back to the support areas again for a long drawn out finish to the day.
  • GBP: Cable suffered the same setbacks in early trading as cross Yen selling continued however, the pair was unable to push below the 1.6740 levels and gradually moved back to the starting levels for the grey hours. There was a mixture of plays with early Europeans going long into the numbers and once into the London hours traders going short so the market ended up around the 1.6755 levels when the good numbers were released, the market quickly moved to above the 1.6795 levels running into the light offers around 1.6800 and slipping back in a failure to push through, the market though remained quietly close to the level into NYK, dipping to the 1.6780 levels before moving into the NYK option cut and a quick rally through 1.6800 touching above the 1.6810 level before a steady slip back once the deed was done. With London gone the market moved slowly lower to rest on the 1.6790 levels and a quiet close.
  • JPY: USDJPY continued to ease back into the Tokyo session with the usual end of week fix fixing demand only managing a brief small move to just below 102.40 from the opening 102.35 areas, then the cross Yen started to dominate for the third day in a row with the USDJPY sinking to the 102.25 levels and the strongest end of the support to 102.00. The move into the London session saw little change for the USDJPY however, with a strengthening GBP the market continued to sell into the GBPJPY and USDJPY dropped quickly to the 102.05 level driving through the available bids eventually the protection of the 102.00 was exhausted and the market pushed through into the NYK session to trade below 101.90 before steadily rising over the remainder of the session to just above the 102.00 levels into the close.
  • AUD: The Oz rose steadily on the day moving through the Asian session quietly however, as with yesterday as the JPY strengthened the Oz followed suit peaking around the 0.9390 levels as we moved towards London and the AUDJPY carry moved to 96.00 areas. With some light profit taking in the carry occurring around the 96.00 levels the market dipped into the London opening however, the Oz was really not that far from the 94 cent level and the market had the bit between the teeth and we rose over the early part of the session to test the resistance. The move into early NYK gave the last added impetus and the market moved through the 94 cent level but was unable to capitalise on the move and drifted off from the 0.9406 area in a steady drift back into the mid 0.9390’s

Yesterday’s premiership results

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

JPY         BSI Large Manufacturing Q/Q Q2 A -13.9 | C 14.1 | P 12.5

JPY         Domestic CGPI M/M May A 0.30% | C 0.10% | P 2.80% | R 2.90%

AUD       Westpac Consumer Sentiment Jun A 0.20% | P -6.80%

GBP       ILO Unemployment Rate 3M Apr A 6.60% | C 6.70% | P 6.80%

GBP       Jobless Claims Change May A -27.4K | C -25.0K | P -25.1K | R -28.4K

GBP       Claimant Count Rate May A 3.20% | C 3.20% | P 3.30%

USD       Crude Oil Inventories A -2.6M | C -1.3M | P -3.4M

USD       Monthly Budget Statement May A -$130.0B | C -$130.5B | P -$138.7B

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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