Daily FX Market Commentary

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 101.525 | EURUSD 1.36792 | EURJPY 138.876 | AUDUSD 0.94968 | NZDUSD 0.87804 | USDCAD 1.06316 | EURCHF 1.2140 | USDCHF 0.88755 | GBPUSD 1.71509 | EURGBP 0.79759 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               101.66 | 101.52

EUR/USD             1.3683 | 1.3669

EUR/JPY               139.035 | 138.87

AUD/USD            0.9499 | 0.9450

NZD/USD             0.8775 | 0.8747

USD/CAD             1.0642 | 1.0628

EUR/CHF              1.2143 | 1.2139

USD/CHF             0.8882 | 0.8874

GBP/USD             1.7152 | 1.7141

EUR/GBP             0.7980 | 0.7973

 

For today

  • EUR: As seems to be the normal at the moment Asia saw little movement in the Euro and in fact very little movement other than the AUD. Opening around the 1.3680 levels the market has failed to break above 85 and below 75 as we quietly moved through the session. Offers remain around the 1.3700-20, with stops likely beyond there from 1.3730 onwards, even so light mix is the name of the game and a move through the 1.3760 levels opens up the next 40 pips. Downside is likely to see bids from the current levels down to around the 1.3640 area with nervous shorts likely to be buying back some of them to average a little better, even so the 1.3640-10 areas are likely to be a little congested and no real stops likely until the market moves through all the bids and breaks down to the 1.3570 areas.
  • GBP: Cable traded in the same manner as the Euro struggling in a very tight range moving around the 1.7145 levels. Light offers continue however, there is likely to be very little now technically to stop it rising into the 1.7200 levels and beyond, with the likelihood of stops through the highs of yesterday towards 1.7180 levels. Downside bids are similar in make up as the Euro with nothing large likely but plenty of light bids for the same reason down to 1.7100, better bids around that area and only a test of the 1.7050 level will see any substantial stops and this is likely to run into buying.
  • JPY: Yesterday saw strong buying in the AUDJPY carry trade as the market moved from the 95.50 level as both the Oz and USDJPY moved higher, only offers around the 96.50 levels stalled the market however, having made monthly highs in the carry the profit taking emerged and movements in the Oz sent the cross lower, this turned the USDJPY from its steady climb from the opening 101.55 levels to just above 101.65 and the market hangs in the middle of the range for the moment. Topside offers from the 101.75-102.10 are likely to take time to chew through however, for the moment the market seems to have rejected the downside again and we are not likely to see much until the market again tests those bids around the 101.20 levels.
  • AUD: Having broken through the 95 cent level one would have been forgiven in thinking the topside was the way to go. That didn’t count on the latest number and call me a cynic but this is probably why the communique yesterday was not as dovish as the market expected, having hovered around the 0.9490 area for the early part of the session the release of the trade balance numbers far worse than expected sent the market straight back to the break up point yesterday. The market since the number has seen some minor buying to hold the market in play around the 0.9460 area however, the downside now looks to be vulnerable negating possibly yesterday’s moves and opening up a test of the 0.9390 support area from last week. Topside now has light offers around the 0.9490-0.9500 area gradually increasing in size through the 95 cent level as sentiment changes.

Overnight News

JPY:

Japan firms see BOJ fall short of price goal 5 yrs. ahead-survey

EUR:

ECB Needs to Go Further on Euro, French PM Valls Tells Les Echos

KRW/CNY:

S. Korea Finance Ministry, BOK Deny Report on China RQFII Quota

KRW:

North Korea Fires Two Short-Range Projectiles off East Coast

AUD:

Parkinson Sees Lower Australian Terms of Trade Weighing Incomes

Australia Trade Deficit Widens Sharply

NZD:

NZ commodity prices fall further in June – ANZ survey

N.Z. Home-Loan Approvals Fall 16% Y/Y, RBNZ Survey Shows

 

Today’s data

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

JPY         Monetary Base Y/Y Jun A 42.60% | C 48.30% | P 45.60%

AUD       Trade Balance (AUD) May A -1.91B | C -0.21B | P -0.12B | R -0.78B

08:30     GBP       Construction PMI Jun C 59.7 | P 60

09:00     EUR        Eurozone PPI M/M May  C -0.10% | P -0.10%

09:00     EUR        Eurozone PPI Y/Y May C -1.00% | P -1.20%

11:30     USD       Challenger Job Cuts Y/Y Jun P 45.50%

12:15     USD       ADP Employment Change Jun C 205K | P 179K

14:00     USD       Factory Orders May C -0.10% | P 0.70%

14:30     USD       Crude Oil Inventories P 1.7M

 

Harry Hindsight

  • EUR: Having opened around the 1.3695 levels the market again went into a holding pattern for the day with very little to excite, Eurozone unemployment held in place having been revised for the previous month giving no excitement. The market drifted in Asia dipping back to the 1.3680 level and some light bids held the market for several hours with early London moving the market back to the highs before drifting between the two levels. US number came out a little weaker than expected and the market made a quick move to the 1.3700 levels before drifting back again on the failure to move through the level with some weak stops triggered in a move towards the 1.3675 areas before holding the 1.3680 area into the close.
  • GBP: Cable as with the Euro did very little during the Asian session drifting from the 1.7110 levels to hold around the 1.7100 levels, London opening was quiet with the market unsure of which way to move until the release of the PMI numbers again showing good growth over the past month and sparking a quick move to the 1.7130 area and then a gradual climb over the session to around the 1.7165 levels into mid NYK, the later session drifted as the market starts to slow for the upcoming Independence day finishing around the 1.7150 and holding the balance of the gains. EURGBP again dipped below the 0.8000 levels holding around the 0.7975 level for the close as the Euro lost ground against GBP.
  • JPY: While the USDJPY started the day on the support areas the market moved from the 101.35 levels moving higher as the market absorbed the Tankan and various other titbits, retail Japan was big buyers early on and from the fix onwards the market moved to above the 101.50 levels and held for the most part with a brief dip once the RBA release ran through the market, but never making the lows again. The move into the London session saw the market rallying slowly to close to the 101.60 level and this continued for several hours with the market holding around the 101.50 levels and more or less ignored the weaker US numbers as it maintained the bulk of the gains on a steady day.
  • AUD: The Oz moved quietly during the bulk of the Asian session opening around the 0.9430 levels and moving to below the 0.9420 areas and ranging slowly between the two levels. The release of the RBA announcement and communique sparked the market higher as the chatter failed to dampen the movement higher in Oz we’ve seen in the past month rising to above the 0.9450 quickly and holding in the 0.9450-60 levels for the early part of the London session, cross buying in the GBPAUD moved the market in the Oz back below the 0.9450 levels before gradually recovering and then running strongly for a brief period into the US releases before steadily rising from the 0.9480 through some reasonable offers and lightly through the 95 cent levels.

Yesterday’s premiership results

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

JPY         Tankan Large Manufacturers Index Q2 A 12 | C 16 | P 17

JPY         Tankan Non-Manufacturing Index Q2 A 19 | C 19 | P 24

CNY        Manufacturing PMI Jun A 51 | C 51 | P 50.8

JPY         Labour Cash Earnings Y/Y May A 0.80% | C 0.80% | P 0.90% | R 0.70%

CNY        HSBC China Manufacturing PMI Jun (F) A 50.7 | C 50.8 | P 50.8

AUD       RBA Rate Decision A 2.50% | C 2.50% | P 2.50%

CHF        SVME-PMIs Index Jun A 54 | C 52.6 | P 52.5

EUR        Italian Manufacturing PMI Jun A 52.6 | C 53.5 | P 53.2

EUR        German Unemployment Change Jun A 9K | C -9K | P 24K

EUR        German Unemployment Rate Jun A 6.70% | C 6.70% | P 6.70%

EUR        Eurozone Manufacturing PMI Jun (F) A 51.8 | C 51.9 | P 51.9

GBP       Manufacturing PMI Jun A 57.5 | C 56.7 | P 57

EUR        Eurozone Unemployment Rate May A 11.60% | C 11.70% | P 11.70% | R 11.60%

USD       ISM Manufacturing Jun A 55.3 | C 55.5 | P 55.4

USD       ISM Prices Paid Jun A 58  | C 60 | P 60

USD       Construction Spending M/M May A 0.10% | C 0.50% | P 0.20%

 

Good Luck,

Andy

LMAX Exchange Market Commentary   AUDUSD   Andy Harrison  

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