Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 101.918 | EURUSD 1.35953 | EURJPY 138.563 | AUDUSD 0.94085 | NZDUSD 0.8697 | USDCAD 1.08366 | EURCHF 1.21781 | USDCHF 0.89574 | GBPUSD 1.69945 | EURGBP 0.79998 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               102.005 | 101.865

EUR/USD             1.3597 | 1.3584

EUR/JPY               138.59 | 138.44

AUD/USD            0.9410 | 0.9393

NZD/USD             0.8736 | 0.8707

USD/CAD             1.0843 | 1.0825

EUR/CHF              1.2183 | 1.21755

USD/CHF             0.8965 | 0.8957

GBP/USD             1.7005 | 1.6986

EUR/GBP             0.80025 | 0.79945

 

For today

  • EUR: Another day in paradise with the market very quiet in the Asian session after the whipsaw actions of the previous session. The market opened around the 1.3590 areas and drifted in pre-Tokyo to just below the 1.3585 levels before fixing demand for EURJPY helped to make the highs above 1.3595 and although the market drifted after the fix it was unable to extend in either direction. Offers around the 1.3600 levels with patches to the 1.3640 level before weak stops make an appearance and then light and mixed to the 1.3680 levels and offers again start to dominate into the 1.3700-20 areas. Downside 1.3580 lends light support with weak stops behind before the main line in the sand the 1.3520/00 area which has held fairly well over the past week or so, below here remains thick with bids protecting the years lows.
  • GBP: Up or down, the market is now a little confused while the media discusses the ever increasing likelihood that a split in the vote or at least more active dissension within the BoE over what next the fact remains that inflation though below the 2% target is less likely to stay there given the prospects at hand. This would explain the move back to the 1.7000 area that we’ve seen. The market opened in Asia only slightly off the level around the 1.6990 levels and even attempted a move through the level in Early Tokyo before finding the offers and slipping back into the mid-range again. To the 1.7020 level its likely to be good offering and a struggle in normal circumstances, however, we’ve not backed away from the level and a drive through will open up a new range and technical buying to boot. Downside remains open to yesterday’s lows with weak stops below the 1.6920 levels and mixed with light bids in the area, a break down through the levels leaves the market open for a move to the low 1.68’s from Friday’s move high on the Carney/Mansion house exchange.
  • JPY: A quiet Asian session for the USDJPY even the limited fixing demand for end of week was nothing special and the market remains below the 102.00 levels from NYK’s close, the market opened around the 101.95 level and although we moved into the upper 80’s fixing demand turned it to the 102.00 level and since it’s been a quiet slide lower over the session and holds in the high 101.80’s. Offers to the 102.30 area are a lot thinner than they were however, it is all light offers from there until 102.80 where the markets offers increase in size, even then the offers continue from 103.00 with lighter size and a break above 103.20 is likely to see only weak stops. Downside bids remain with a light smattering from here to 101.80 before light stops and then more bids into 101.50 in fact the market is almost all bids with patches of stronger support around the more sentimental areas particularly protecting the 101.00 level.
  • AUD: With little movement from the opening the market has continued to move around the 94 cent level with little direction. Early Tokyo buying took the markets to the high from the fix but it was unable to push through the 0.9410 levels and slipped back to just below 94 cents again. With no tier numbers from CNY or AUD it’s been a dull day for the Oz. Support remains the 0.9330 levels and downwards and only a push through the congested level around 93 cent is likely to see any selling come through and even then the downside is as limited as the upside. The upside sees offers running all the way to 0.9450 and only then do we start to see a gathering of stops likely from a technical breakout play from mid-April, this would open up a more assertive move one would imagine and the 96 cent levels.

Overnight News

JPY:

JGB Selloff Looms as Post Office Joins GPIF’s Cuts: Japan Credit

Japan’s Aso: GPIF Management Goal Isn’t to Support Stock Prices

Japan Plan to Cut Corporate Taxes Credit Positive, Moody’s Says

Japan Cabinet May Approve Growth Strategy on June 24: Kyodo

Japan business mood suggests economy weathering sales tax hike – Reuters Tankan

BOJ Morimoto: Sustainable Finances Needed for Sustainable Growth

NZD:

NZ economy grows at fastest annual pace in 6 yrs. building booms

CNY:

China SAFE Revises 1Q Current Account Surplus to $7b from $7.2b

CHF:

SNB Sees Risk of Further Build-Up of Real Estate Imbalances

SNB Says Conditions Better, Substantial Risks Remain for Banks

 

Today’s data

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

NZD       GDP Q/Q Q1 A 1.00% | C 1.20% | P 0.90% | R 1.00%

NZD       GDP Y/Y Q1 A 3.80% | C 3.70% | P 3.10%

JPY         All Industry Activity Index M/M Apr A -4.3% | C -3.70% | P 1.50%

JPY         Leading Economic Index Apr A 106.5 | P 107.1 | R 107.4

07:30     CHF        SNB Interest Rate Decision C 0.00% | P 0.00%

08:30     GBP       Retail Sales M/M May C -0.50% | P 1.30%

10:00     GBP       CBI Industrial Order Expectations Apr C 2 | P 0

12:30     USD       Initial Jobless Claims (Jun 13) C 316K | P 317K

14:00     USD       CB Leading Indicator M/M May C 0.50% | P 0.40%

14:00     USD       Philly Fed Survey May C 14.8 | P 15.4

 

Harry Hindsight

  • EUR: After a quiet Asian session with the market opening around the 1.3545 areas the market held in a tight 1.3542/50 range into the grey hours where the market drifted off a little before London opened. London were steady buyers of the Euro with contributing factors being the movement in Cable and speculation of the later FOMC number the market in the Euro ground steadily higher through the whole of the London session moving off the 1.3545 levels to push just above the 1.3580 level and the waiting offers in the area. The market then traded around the 1.3575 areas awaiting the FOMC. Rates remained in place with a further $10B shaved from monthly asset purchases to $35B with little change in the rhetoric per sae, with Yellen downplaying firmer inflationary data. Euro’s initially moved higher on the number before dropping back just as quickly trading to just under 1.3600 and then down to just below 1.3550, the market remained choppy for a short time as people read into the commentary further which was interrupted as dovish in general. The market eventually settled down and rose steadily to the 1.3595 areas and a closed holding most of its gains.
  • GBP: With expectations running high on the subject of interest rates and the timing there of the market remained quiet in Asia moving around the 1.6960 levels throughout before moving higher into the grey hours and dipping from the 1.6985 areas into London open. The BoE minutes showed the usual 009, which strangely saw the market spike to above the 1.7000 level again before dropping back just as quickly to 1.6940 level before stabilizing, Weale’s hawkish comments later supporting a rise and likely to split the next vote. The current events in the Ukraine and Iraq may have some baring on this and need to be taken into account, the supermarket price war is not infinite either. The market then traded in a quiet period before the FOMC before rising back to touch again through the 1.7000 levels and into a close around the 1.6990 area, the move higher of course followed the obligatory spike the other way first trading to the 1.6920 level to hit both ends of liquidity. Euro gained on the Cable as the EURGBP levels touched to a low of 0.7970 areas before recovering and pushing back above the 0.8000 levels until the FOMC.
  • JPY: Having ground its way above the 102.15 level the market was barely able to capitalize on the movement holding from the opening level it hedged up in late Asian trading to above the 102.30 levels before holding and slowly drifting through the session on into the FOMC the market held roughly around the opening levels into the release. With the expected numbers curtailing much of the trading through the early part of the session the market leapt higher to touch the 102.35 levels before collapsing back just as quick to the 101.95 area, the market eventually settled around the 101.90 as the market at least held its losses as the USD gave ground.
  • AUD: The Oz had one of the larger ranges over the day however, the belays the fact that for 90% of the day it was stuck in a 10/15 pip range. Asia and into early NYK the market spent the session trading around the 0.9340 area unable to move above 0.9350 and leaving the downside bids almost untested. The FOMC was the only reason it moved and given the events in the other currencies you can imagine the movement down to nearly 0.9320 as the spike lower pushed into the support before bouncing quickly to 0.9380 and then continuing in a secondary move to 0.9410 areas and into the close.

Yesterday’s premiership results

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

NZD       Current Account Q/Q Q1 A $1.41B | C $1.42B | P $-1.43B | R $-1.51B

JPY         Trade Balance (JPY) May A -0.86T | C -1.01T | P -0.84T | R -0.88T

AUD       Leading Indicator Apr A -0.10% | P 0.00%

AUD       Westpac Leading Index M/M May A 0.10% | P -0.50%

GBP       BoE Minutes A 0–0—9 | C 0–0—9 | P 0–0–9

CHF        ZEW Expectations Jun A 4.8 | C 10 | P 7.4

CAD       Wholesale Sales M/M Apr A 1.20% | C -0.40% | P 0.30%

USD       Current Account Q1 A -111B | C $-95.9B | P $-81.1B | R $-87B

USD       Crude Oil Inventories A -0.6M | C -0.6M | P -2.6M

USD       FOMC Rate Decision A 0.25% | C 0.25% | P 0.25%

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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