Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 101.431 101.37-47 | EURUSD 1.36484 1.3646-48 | EURJPY 138.433 137.91-138.50 | AUDUSD 0.94251 0.9416-30 | NZDUSD 0.87783 0.8765-90 | USDCAD 1.06652 1.0661-78 | EURCHF 1.21588 1.21555-625 | USDCHF 0.89082 0.8907-20 | GBPUSD 1.70348 1.7014-36 | EURGBP 0.80126 0.80025-18 |

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               101.48 | 101.26

EUR/USD             1.36475 | 1.3641

EUR/JPY               138.46 | 138.195

AUD/USD            0.9427 | 0.9409

NZD/USD             0.8782 | 0.8738

USD/CAD             1.0675 | 1.0661

EUR/CHF              1.2158 | 1.2156

USD/CHF             0.8912 | 0.89075

GBP/USD             1.7040 | 1.7024

EUR/GBP             0.80145 | 0.8008

For today

• EUR: The Euro flat lined through the Asian session with the market barely moving from the opening and trading throughout the day around the 1.3645. The market looks close to testing the topside resistance of last week around the 1.3650 with likely offers moving from that level to the 1.3700 level the likely scenario and only a push through 1.3720 likely to see anything substantial on the stops, saying that weak stops are likely as shorts pick tops. Downside bids remain around the 1.3610 and downwards with the 1.3580 level broadly holding over the past week likely to be supportive, stops on a break through the 1.3560 levels are likely before running into further bids into the 1.3540-20 levels the lows through the month.
• GBP: Cable has drifted away from the opening moving from the 1.7030 opening to touch towards 1.7040 before the Tokyo market opened and a steady drift off to the 1.7025 levels that we saw several hours during the Friday session. With topside offers from the 1.7050 level and onwards with the next levels possibly through the sentimental 1.7100 level however, the market would need to get somewhere close and that is a tough one as it stands. Downside sees light bids down to the 1.7000 levels then the market becomes a little mixed with light bids and stops running through 1.6980 and to the 1.6950 levels. A break through the low end sees the market open up for the next big figure with 1.6850/30 likely to be the next support line.
• JPY: While the USDJPY opened in line with the Fridays close and struggled around the 101.45 level into early Tokyo before again testing the downside, IP numbers while not as good as expected showed better than the previous months and the market headed lower to again test the 101.30 areas as it did on Friday, and as with Friday did not have the impetus to break through the bids. Downside bids from here too probably 100.80 before stops start to dominate once through there then the target becomes the 100.70 lows for the year however, we have been here before on a number of occasions and the bids have held so look for continued support with stops in greater numbers once the lows have been well and truly broken, topside now sees light offers into the 102.00 levels and the market struggles through the level with offers likely to move in and a general fade of any move higher until a break of the 102.20-30 areas, even a break there still leaves offered stacked and the general market feeling of more movement lower, 102.70-103.00 has probably less offers than the last time we visited the area but they remain in play for the moment. With the USD broadly weakened by last week’s numbers watch the crosses for any major plays I think.
• AUD: It would seem that the Oz is dependent for the moment on USDJPY movement more than usual, with the pair moving in a reasonably tight range initially buoyed by the USDJPY dipping the market held onto the opening levels before light carry trade AUDJPY selling sending it to the lows of 0.9410 before moving back to above the 0.9425 level. Topside offers still remain above the 0.9440 level and onwards with day trades likely to try and fade any gradual movement to those areas, weak stops are likely to appear close through the 0.9450 levels however, whether they would be strong enough to move the market further remains to be seen, offers however, remain constant to the 95 cent area and a possibility of option plays around that level. Downside sees light bids from the 0.9410 area and onwards a push through the 0.9340 area opens up the downside but it still remains limited unless carry trade stops to the downside are triggered in a strong move.

Overnight News

JPY:

Japan May Indus Output +0.5% on Mo; Mkt Expected +0.9%

Tokyo Neighbour Kawasaki Grabs Abe-Zone Growth Freedoms: Economy

Suga: Cabinet to Approve defence Shift Tomorrow If Parties Allow

GPIF Says Mitani’s $169,874 Compensation ‘Isn’t Too Expensive’

CNY/JPY/KRW:

China, Japan, S. Korea Central Bank Governors Met on June 29

NZD:

N.Z. Treasury Says Terms of Trade Have Most Likely Peaked

Key Says N.Z. Dollar Should Decline With Commodity Prices

N.Z. Business Activity Gauge Lowest Since September, ANZ Says

AUD:

Australia’s May Private New Home Sales Fall 4.3% M/m

Australia May Private Credit Rises 0.4% M/M, Matching Estimate

CNY: Number of China Party New Members Drops First in 10 Yrs: Xinhua

Today’s data

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

NZD       Building Permits M/M May A -4.60% | C 1.50% | P 1.90%

JPY         Industrial Production M/M May (P) A 0.50% | C 0.90% | P -2.80%

NZD       NBNZ Business Confidence Jun A 42.8 | P 53.5

6:00        JPY         Housing Starts Y/Y May C -10.10% | P -3.30%

8:00        EUR        Eurozone M3 Y/Y May C 0.70% | P 0.80%

8:30        GBP       Mortgage Approvals May C 62K | P 62.9K

8:30        GBP       M4 Money Supply M/M May C 0.20% | P -0.20%

9:00        EUR        Eurozone CPI Estimate Y/Y Jun C 0.60% | P 0.50%

9:00        EUR        Eurozone CPI – Core Y/Y Jun (A) C 0.70% | P 0.70%

12:30     CAD       GDP M/M Apr C 0.20% | P 0.10%

13:45     USD       Chicago PMI Jun C 63.2 | P 65.5

14:00     USD       Pending Home Sales M/M May C 1.40% | P 0.40%

Weekend News

GBP:

BoE Monitoring ‘Evolution of Economy’ on Rates, Carney Says
BOE Can’t Stop U.K. House Price Rises, Dale Tells Mail on Sunday

U.K. Long-Term Interest Rates May Reach 5%, BOE’s Bean Tells Sky
CNY:

PBOC’s Zhang Says Foundation for Recovery Not Solid: Caixin

China’s Xi Urges Asian Security Framework in Challenge to U.S.
RUB:

Russia Govt. Bond Rating Assigned Negative Outlook by Moody’s
EUR/RUB:

EU Gives Russia Three Days to Avoid More Ukraine Sanctions
EUR/GBP:

Juncker to Steer EU Future Facing U.K. Concerns about His Past
EUR/USD:

BNP Paribas Said to Plan Guilty Plea Monday to End U.S. Case
JPY:

Abe Cabinet Approval Falls to Lowest Since Dec. 2012: Mainichi
Amari Says Japan to Mull Increasing NISA Tax Break Amount: NHK
Japan Warned for Deficiencies in Anti-Money Laundering Measures

JPY/KRW:

Japan Defence Ministry Says N.Korea Launched Missiles Today
UAH:

Five Ukraine Soldiers Killed as Rebels Defy Extended Cease-Fire

Harry Hindsight

• EUR: Having missed the week little surprising to find no change for the Euro and Friday was a quiet day by all accounts. Having opened just above the 1.3610 levels the market moved quietly into the Tokyo session and eventually started a steady rise over the course of the session to above 1.3625 and into the grey hours. Early London bought a quick round to take the market into the opening and then the market was put smartly back to the opening areas before holding for the morning and into NYK around the 1.3610-20 areas. From NYK onwards the market started to rise steadily higher pushing to the 1.3650 areas into the close as the fall out over the US GDP slowly seeped into the late market with USD longs cutting positions steadily into the session.
• GBP: The Cable opened around the 1.7025 levels and with the 1.7060 close at hand the market made an attempt moving from the opening area and steadily rose to test above the 1.7050, the only time for the day before playing the rest of the day as second fiddle to the Euro from the London session onwards as the Ypres failure soften the GBP against the EUR and USD. Moving to the close the market rallied back from the lows around the 1.7010 level to above the 1.7045 level before widening significantly into and unsteady close as players struggled to close open positions in an uncertain market and a weekend of news and speculation to come.
• JPY: USDJPY made its way to the lows for Jun from the start, opening around the 101.70 level and drifting into Tokyo only slightly lower before safe haven flows appeared in the market and system selling or should I say buying of JPY across the board took the market to below the 101.35 levels by mid-session, stronger data may have had a little to do with it as unemployment dipped. Bids from the 101.30 area onwards stayed intact and the market was unable to push any lower throughout the day however, the market was unable to move off the level and traded in the 101.35-45 levels for the bulk of the day moving through late Tokyo and into London the market was mired on the lows and nothing changed it through the day. A slight push to above the 101.45 levels into the close as day traders took back the shorts.
• AUD: As the early selling bit into early Tokyo so the Oz pushed off from the lows just above the 0.9405 levels, it didn’t save a steady drift in the carry trade however the steady move down from the opening 95.75 level through to around the 95.40 levels saw the Oz rise to compensate for the JPY strength. Moving to the 0.9420 levels and then spiking a second time to around the 0.9440 levels the market held only into the grey hours before facing selling in front of those topside offers that have held the market this month. Once London moved in and the day sellers jumped on the level the market held in the 0.9420 levels for much of the day from then on, dipping to below 0.9410 in NYK before profit taking moved in for the final hours and moving the market back to those first rally areas around the 0.9425.

Friday’s premiership results

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

NZD       Trade Balance (NZD) May A 285M | C 250M | P 534M | R 498M

GBP       GfK Consumer Sentiment Jun A 1 | C 2 | P 0

JPY         Unemployment Rate May A 3.50% | C 3.60% | P 3.60%

JPY         Household Spending Y/Y May A -8.00% | C -1.90% | P -4.60%

JPY         National CPI Core Y/Y May A 3.40% | C 3.40% | P 3.20%

JPY         Tokyo CPI Core Y/Y Jun A 2.80% | C 2.80% | P 2.80%

JPY         Retail Trade Y/Y May A -0.40% | C -1.90% | P -4.40% | R -4.30%

CHF        KOF Leading Indicator Jun A 100.4 | C 100.2 | P 99.8

GBP       Current Account (Pounds) Q1 A -18.5B | C -17.1B | P -22.4B | R -23.5B

GBP       GDP Q/Q Q1 (F) A 0.80% | C 0.80% | P 0.80%

GBP       Index of Services 3M/3M Apr A 0.90% | C 0.90% | P 0.90% | R 0.80%

EUR        Eurozone Consumer Confidence Jun (F) A -7.5 | C -6.7 | P -7.1

EUR        Eurozone Economic Confidence Jun A 102 | C 103 | P 102.7

EUR        Eurozone Industrial Confidence Jun A -4.3 | C -3 | P -3 | R -3.1

EUR        Eurozone Services Confidence Jun A 4.2 | C 4 | R 3.8

EUR        Eurozone Business Climate Indicator Jun  A 0.2 | C 0.4 | P 0.37

EUR        German CPI M/M Jun (P) A 0.30% | C 0.20% | P -0.10%

EUR        German CPI Y/Y Jun (P) A 1.00% | C 1.00% | P 0.90%

CAD       Industrial Product Price M/M May A -0.50% | C 0.40% | P -0.20%

CAD       Raw Materials Price Index M/M May A -0.40% | C 1.30% | P 0.10%

USD       U. of Michigan Confidence Jun (F) A 82.5 | C 82.2 | P 81.20%

Stay lucky

Andy