Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 101.70 | EURUSD 1.3552 | EURJPY 137.826 | AUDUSD 0.94272 | NZDUSD 0.86821 | USDCAD 1.08552 | EURCHF 1.21755 | USDCHF 0.89843 | GBPUSD 1.69277 | EURGBP 0.80059 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               101.94 | 101.66

EUR/USD             1.3565 | 1.3548

EUR/JPY               138.245 | 137.77

AUD/USD            0.9427 | 0.9408

NZD/USD             0.8690 | 0.8656

USD/CAD             1.0859 | 1.0851

EUR/CHF              1.2180 | 1.2172

USD/CHF             0.8985 | 0.8978

GBP/USD             1.6972 | 1.6923

EUR/GBP             0.8008 | 0.79915

 

For today

  • EUR: The Euro continues to struggle against the GBP however, is being dragged along by the said currency with limited support in the EURGBP cross and the market looking more likely to break lower, so the direction of the Euro may well depend on the defence of 1.7000 in the Cable if we move in that direction. The market has moved off the opening 1.3550 areas and touched the 1.3565 levels a couple of times with little conviction. Offers remain around the 1.3570 areas and into the 1.3600 levels however, they are likely to be thinner than previous as sellers watch for the movements in Cable, a push through the level will catch weak stops through the 1.3630 areas before running into some light offers. Downside bids are weak around the opening levels with the bulk of the bids holding the 1.3500/20 areas and then light stops on a break through 1.3470.
  • GBP: Cables quick rise after comments from Mark Carney at the Mansion House dinner raised the threat of interest rate rises, whether in the current year remains to be seen and while he said the market’s expectations may be faulty it was he that actually pinpointed next year. However, the comments have continued to push the Cable higher into Asia with market steadily moving to the 1.6970 areas before drifting back a little as light GBPJPY selling kicked in. With said news in the market importer offers are now likely to have moved away, and the road to 1.7000 is more likely to be protected by light option barriers with stops closely following through the level as we make highs not seen since 2009 however, above this level has not been really seen since the strong Cable days of the late 80’s and 2005/8 periods. Downside has bids moving in from the break though around the 1.6920 levels and weak stops below 1.6880 levels and then light bids in numbers from then on.
  • JPY: USDJPY found decent support from exporter bids after the lows in NYK, with a quiet start in the Sydney session drifting a little from the opening 101.70 areas before Tokyo moved in and the market pushed to the 101.80 level and into weak offers. The monetary policy was little changed whoever iteration of better economies around the world helped the market to some extent against the back drop of Fitch comments which had sent the market hunting that 102.00 level again. For the moment 102.10/20 area has a light mix of weak stops and offers however, from there the market is very patchy and not until the 102.80/103.00 levels do we see any concentration of offers. Downside bids seem light from 101.50 however; the market does thicken as it drops to the 101.30 level and beyond seeing some good importer interest.
  • AUD: The Oz has really done very little with the market drifting a little as the AUDJPY sellers sell into a rising USDJPY slowly pushing the Oz down from the opening 0.9425 to 0.9410 for a low. It remains steady though above the 94 cent and with offers above the 0.9440 levels the focus has to be on the USD now for upside movement in the Oz. Downside has light bids to the 94cent level with stops likely below the 0.9380 levels if you take yesterday’s drop as abnormal. The topside now sees 0.9450 as the next target with April’s highs likely to have some half decent offers protecting it however, weak stops will appear quickly through the 0.9460 levels and the range to 97cents opens up.

Overnight News

JPY:

Japan PM Abe to Announce Govt Policy on Corp. Tax: Jiji

GPIF’s Yonezawa Sees Cutting JGB Allocation to 30-50%: Mainichi

Aso: Not Big Gap with Amari on Starting Tax Cut From Next FY

Fitch Warns Japan Has No Plan B for Bringing Down Budget Deficit

BoJ keeps policy unchanged revises up view on overseas economies

JPY/CNY:

Suga: No Truth in China Explanation of Fighter Plane Incident

CNY:

PBOC Doesn’t Want Yuan Weakness: Market News

NZD:

New Zealand’s May Manufacturing Activity Eases Slightly Versus April

New Zealand food prices rise 0.6% in May

 

Today’s data

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

JPY         Industrial Production M/M Apr (F) A -2.80% | C -2.50% | P -2.50%

CNY        Industrial Production Y/Y May A 8.80% | C 8.80% | P 8.70%

CNY        Retail Sales Y/Y May A 12.50% | C 12.20% | P 11.90%

CNY        Fixed Assets Ex Rural YTD Y/Y May A 17.20% | C 17.10% | P 17.30%

06:00     EUR        German CPI M/M May (F) C -0.10% | P -0.10%

06:00     EUR        German CPI Y/Y May (F) C 0.90% | P 0.90%

09:00     EUR        Eurozone Employment Q/Q Q1 C 0.10% | P 0.10%

09:00     EUR        Eurozone Trade Balance (EUR) Apr C 15.9B | P 15.2B

12:30     CAD       Manufacturing Shipments M/M Apr C 0.90% | P 0.40%

12:30     USD       PPI M/M May C 0.10% | P 0.60%

12:30     USD       PPI Y/Y May P 2.10%

12:30     USD       PPI Core M/M May C 0.20% | P 0.50%

12:30     USD       PPI Core Y/Y May P 1.90%

13:55     USD       U. of Michigan Confidence Jun (P) C 83 | P 81.9

 

Harry Hindsight

  • EUR: Asia pushed higher from the opening with USD broadly weaker as the AUD and NZD moved higher after the RBNZ announcement. Moving to above the 1.3545 levels after opening around 1.3530. The Market stalled at the highs and drifted sideways into the grey hours, early sellers in Europe pushed the Euro a little lower after the release of the German wholesale price index again showing a fall. The market continued to push lower inspite of better IP numbers for the month to touch through the supportive 1.3515 levels before failing and pushing steadily back higher. However, the rise was not without consequence as the Euro suffered poorly at the hands of the GBP as EURGBP dropped through the 0.8100 firmly and triggered stops. Cable being the less liquid rallied strongly and the Euro was dragged higher against the USD over the session into NYK, the late session saw the market drop back from the 1.3570 areas quiet quickly as profit taking from day traders moved in and a final move in EURGBP pushed the Euro back to the 1.3550 levels.
  • GBP: A strong move in the EURGBP over the session helped to raise the GBPUSD through the 50DMA. Moving quietly in the Asian session the market moved from the opening 1.6790 levels slowly through the 1.6800 level and into the first EURGBP movement. The Cable held the gains above the 1.6820 levels for several hours pushing steadily to the 1.6860 levels before dipping back as EURGBP cross changed direction with some buying forcing up steadily and the Cable dropped almost to the 1.6800 levels again. The market held as the faint hearted cleared out and then a sudden push as the Mansion House speech got underway and Cable was forced quickly through the 1.6900 level and the EURGBP was pushed perilously close to the 0.8000 level where Tech types will be watching for a move through the break up levels from Nov 2012 depending how you read the charts. The Cable made slow gains into the close to finish around the 1.6930 levels on a large move for Cable.
  • JPY: The USDJPY maintained its hold on the 102.00 level throughout Asia as the cross Yen selling subsided however, the range was subdued at best and it was never able to push back above the 102.15 levels, the market held with only brief sojourns below the level as the market attempted a break out in London before failing and pushing again to above 102.10, NYK was another matter with poor numbers across the board the market made its move and the bids were quickly exhausted and the market tumbled to the 101.80 level and held for an hour or so before a final push moved into the stops and pushed the market to below the 101.65 levels. The market again stabilised and there was a small bounce into the close from profit takers.
  • AUD: After a nervous and jittery Asian session the market settled down to a steady rise. The opening saw the market whip a little as the RBNZ, as expected raised their interest rate to the 3.25% level, Oz quickly rallied to above the 0.9410 levels before dropping back to the 0.9380 level where it closed in NYK. The market then drifted in anticipation of the employment numbers, again we saw algo’s quickly buy the better than expected before the obverse types sold for no change on the previous month moving the market to above the 0.9390 levels and then straight down to close to 0.9350 and then back to the 0.9380 level, whether anyone other than the banks won remains to be seen but it’s a good advertisement of what internalization can do. Once the market moved from the Asian session the early Europeans started to buy with the market again moving to above the 0.9410 levels and although a little choppy remained steadily stronger moving into a NYK market with fresh buying on USD weakness seeing the market make highs above the 0.9435 levels before closing just off those highs.

Yesterday’s premiership results

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

NZD       RBNZ Rate Decision A 3.25% | C 3.25% | P 3.00%

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

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

AUD       Employment Change May A -4.8K | C 10.0K | P 14.2K | R 10.3K

AUD       Unemployment Rate May A 5.80% | C 5.90% | P 5.80%

EUR        German Wholesale Price Index M/M May A -0.10% | C 0.30% | P 0.20%

EUR        Eurozone Industrial Production M/M Apr A 0.80% | C 0.50% | P -0.30% | R -0.40%

CAD       New Housing Price Index M/M Apr A 0.20% | C 0.30% | P 0.20%

USD       Advance Retail Sales May A 0.30% | C 0.60% | P 0.10% | R 0.50%

USD       Retail Sales Less Autos May A 0.10% | C 0.40% | P 0.00% | R 0.40%

USD       Initial Jobless Claims (JUN 7) A 317K | C 309K | P 313K

USD       Import Price Index M/M May A 0.10% | C 0.20% | P -0.40% | R -0.50%

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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