Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 119.757 | EURUSD 1.09246 | EURJPY 130.823 | AUDUSD 0.7878 | NZDUSD 0.76459 | USDCAD 1.24936 | EURCHF 1.04668 | USDCHF 0.95811 | GBPUSD 1.48506 | EURGBP 0.73566 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.83 | 119.56

EUR/USD             1.0938 | 1.0900

EUR/JPY               130.875 | 130.61

AUD/USD            0.7891 | 0.7859

NZD/USD             0.7660 | 0.7623

USD/CAD             1.2510 | 1.2490

EUR/CHF              1.0491 | 1.0464

USD/CHF             0.9603 | 0.9581

GBP/USD             1.4877 | 1.4831

EUR/GBP             0.7355 | 0.73465
For today

• EUR: Early front pages lead with Fed’s Bullard with comments on a late interest rate hike could see a overheating economy as it boom’s quickly, so the Euro slowly slipped to the 1.0900 areas before moving into Tokyo and buyers appeared in the market and the Euro as research starts to point to a rallying GDP after yesterday’s PMI numbers leading to retail market buyers moving in from the Tokyo opening and the Euro pushed slowly to the 1.0940 areas before finding it hard going with the market remaining rather quiet, the market moves to the grey hours unchanged on the day. Light bids into the 1.0900 area improving in size as the market moves towards the 1.0880 levels before giving away to weak stops through the level and opening up a test of the 1.0850 areas a push through the 1.0800 levels will open up the downside however, it would have to get there in data on the day with Durable goods the possible fly in the ointment. Topside offers seem to be strong into the 1.1000 level now that we have only managed to stab through in a limited fashion and so likely to attract the speculators for a 3^rd attempt if it were to move through the 1.1030-40 areas will likely see strong breakout stops and an opening for a move higher.
• GBP: Opening around the 1.4850 levels the market dipped slightly towards the 1.4830 levels before rising with the Euro on the opening of Tokyo and a steady push towards the 1.4880 levels before slipping back a little in light trading with the market dominated to a certain amount by cross JPY selling. Downside sees bids from the 1.4830 areas and moving back into the 1.4800 level through that level is likely to see stops appearing and a test of 1.4750, although the level is likely to be weak it may take the edge of a move lower until the 1.4700 stronger bids appear. Topside offers light through the 1.4900 before increasing around 1.4950 and an increase and stronger levels into the 1.5000 areas, a push through the level opens up further gains but for the moment inflation/deflation worries are limiting topside movement, although looking at yesterday’s numbers one would say the media are sensationalizing again.
• JPY: USDJPY moved quietly through the Sydney session before heading into the Tokyo session and pushing above the 119.80 levels before USD’s started to weaken and more importantly cross JPY selling moved into the market, the market drifted only into the 119.60 areas slipping a little below before holding in a narrow range over the course of the session. With limited action between Corp types and with retail sellers and real money opposing. For the moment the USDJPY seems to be caught between the 118-122 range and they are likely to be the main key areas however, there is plenty of wood now between either side with offers to the topside now holding around the 119.90-120.20 area with weak stops through the 120.30 and opening to the 120.80 better offers. Downside bids 119.20 and running to the figure then the market becomes a little more mixed but with a likely bid tone until a push through the 118.80 levels still leaves plenty of bids on any move towards the 118.00 areas and especially around that level.
• AUD: Very limited action in the Oz dipping to the 0.7860 levels in early trading with the drag of the NZD after poor trade numbers only to rebound a little and move gradually to the 0.7890 level and then slipping back in very quiet trading for the pair. Offers into the 79 cent level and likely to be stronger above the highs of yesterday 0.7940/60 level before exposing a possible test into the 80 cent level and possible option plays. Downside sees only light bids into the 78 cents level however, light congestion in front of the level will give way to stops through the 0.7780 levels likely and nothing especially strong to note.

Overnight News

JPY:

BOJ’s Iwata Says More Will Start Feeling Recovery: Asahi

Japan to Decide by End-June Whether to Join AIIB, Nikkei Says

NZD:

N.Z. Posts Widest Annual Trade Deficit in 5 1/2 Years

Fonterra Cuts Dividend Forecast as First-Half Earnings Fall

Fonterra CEO Says Dividend Forecast Band Won’t Fall Any Further

GBP:

U.K. Commons Panel Calls for Study of BOE Probes after Election

Today’s data

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

NZD       Trade Balance (NZD) Feb A 50M | C 355M | P 56M | R 33M

JPY         Corporate Service Price Y/Y Feb A 3.30% | C 3.30% | P 3.40% | R 3.50%

07:00     CHF        UBS Consumption Indicator Feb P 1.24

09:00     EUR        German IFO – Business Climate Mar C 107.3 | P 106.8

09:00     EUR        German IFO – Current Assessment Mar C 112 | P 111.3

09:00     EUR        German IFO – Expectations Mar C 103 | P 102.5

09:30     GBP       BBA Mortgage Approvals Feb C 36.9K | P 36.4K

12:30     USD       Durable Goods Orders Feb C 0.60% | P 2.80%

12:30     USD       Durables Ex Transportation Feb C 0.50% | P 0.30%

14:30    USD       Crude Oil Inventories P 9.6M

Harry Hindsight              

• EUR: A reasonably quiet session in Asia with the market moving from the opening around the 1.0970 levels to push slowly into the late Tokyo session to just above the 1.0900 levels in light trading, with retail looking to buy USD’s again for the next move as it was the numbers in Europe saw an improvement in German PMI and the Eurozone area in particular this took the market higher into the London opening and through to the 1.1000 areas, the market was stuck for a period unable to push through the 1.1000 level and sinking back to the 1.0960 level before taking a second run at the level touching lightly through before failing again and the move towards NYK. Early numbers saw an improvement of the CPI figures and a leading indicator of better inflationary news possibly on the way however, although the USD initially rallied a sharp reversal saw the market spike to 1.1020/30 areas before reversing the days numbers and the market dropped back to the low 1.09’s in a quick savage move triggering plenty of weak stops along the way and eventually pushing through the 1.0900 levels after the better than expected PMI numbers, once the numbers were all done with the market slowed to a trickle and traded for the most part around the 1.0920 areas into the close.
• GBP: Cable traded pretty much in line with the Euro in Asia, with GBP gaining only marginally with the Euro during the session, the Market in Cable peaked around the 1.4970 areas before dropping back to trade around the 1.4930 levels rising slowly to the 1.4950 levels into the grey hours and then dipping back to the lows. London opening saw the market rise in anticipation of something most likely better PMI numbers in Europe however, it was short lived and although the market expected 0.00% headline number for CPI the market dipped to the 1.4900 levels as the market reacted. Cable rose on the US numbers and spiked briefly through 1.4980 before dropping back quickly as the US numbers on the face of it look better inflationary wise than the UK and fund selling saw Cable drop back steadily over the course of the session and moved to the 1.4850’s into the close.
• JPY: A better range for the USDJPY over the course of the day, dipping initially to the 119.60 level before early Japan came in as buyers and the market rallied through the Tokyo opening and pushed to the 119.85 areas and holding steadily over the course of the session around the 119.80 levels, talk of extending the time frame for inflationary targets and a weakening USD sent the market moving lower over the next couple of hours and the market was testing the 119.50 levels, the opening in London saw fresh selling and the market then generally ignored numbers and continued pushing lower and into the NYK session saw the market move the once to the 119.20 areas to test support before spiking on the US data and pushing initially to the 119.70 areas and then on to test 120.00 with a choppy market across the board. Having failed the topside a lack of liquidity allowed the market to return to the 119.60 levels and a quiet closing few hours to the 119.75 levels.
• AUD: The Oz had mixed fortunes over the course of the day however, at the end there was very little difference to the level. Moving off the 0.7880 levels the market moved a little higher to push through the 0.7900 level before dropping steadily back to the 0.7840 level and trading around the 0.7850 areas for several hours, PMI numbers in China contributing to the general weakness of the Oz. Late buying started to move in as a general weakness in the USD kicked in and the Oz rose over the later part of Asia and into the grey hours with London continuing the move to the 79 cent level, mixed movements on the US release and the market dropped to the 0.7870 and then a stab towards the 0.7940 levels before again dropping back having over stretched itself and settling into a narrow range play around the 0.7870 levels.

Yesterday’s premiership results

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

AUD       Conference Board Leading Index Jan A 0.40% | P 0.40% | R 0.30%

JPY         Manufacturing PMI Mar (P) A 50.4 | C 52.1 | P 51.6

CNY        HSBC Manufacturing PMI Mar (P) A 49.2 | C 50.3 | P 50.7

CNY        Conference Board Leading Economic Index Feb A 1.50% | P 0.90% | R 0.50%

EUR        France Manufacturing PMI Mar (P) A 48.2 | C 48.9 | P 47.6

EUR        France Services PMI Mar (P) A 52.8 | C 53.1 | P 53.4

EUR        Germany Manufacturing PMI Mar (P) A 52.4 | C 51.5 | P 51.1

EUR        Germany Services PMI Mar (P) A 55.3 | C 55 | P 54.7

EUR        Eurozone Manufacturing PMI Mar (P) A 51.9 | C 51.6 | R 51

EUR        Eurozone Services PMI Mar (P) A 54.3 | C 53.9 | P 53.7

GBP       CPI M/M Feb A 0.30% | C 0.30% | P -0.90%

GBP       CPI Y/Y Feb A 0.00% | C 0.10% | P 0.30%

GBP       Core CPI Y/Y Feb A 1.20% | C 1.30% | P 1.40%

GBP       RPI M/M Feb A 0.50% | C 0.50% | P -0.80%

GBP       RPI Y/Y Feb A 1.00% | C 1.00% | P 1.10%

GBP       PPI Input M/M Feb A 0.20% | C 1.60% | P -3.70% | R -3.60%

GBP       PPI Input Y/Y Feb A -13.50% | C -12.40% | P -14.20% | R -14.10%

GBP       PPI Output M/M Feb A 0.20% | C 0.10% | P -0.50% | R -0.40%

GBP       PPI Output Y/Y Feb A -1.80% | C -1.90% | P -1.80%

GBP       PPI Output Core M/M Feb A 0.10% | C 0.10% | P 0.20%

GBP       PPI Output Core Y/Y Feb A 0.20% | C 0.40% | P 0.50% | R 0.30%

GBP       DCLG UK House Prices Y/Y Jan A 8.40% | P 9.80%

USD       CPI M/M Feb A 0.20% | C 0.20% | P -0.70%

USD       CPI Y/Y Feb A 0.00% | C -0.10% | P -0.10%

USD       CPI Core M/M Feb A 0.20% | C 0.10% | P 0.20%

USD       CPI Core Y/Y Feb A 1.70% | C 1.70% | P 1.60%

USD       House Price Index M/M Jan A 0.30% | C 0.50% | P 0.80%

USD       Markit US Manufacturing PMI Mar (P) A 55.3 | C 54.6 | P 55.1

USD       New Home Sales Feb A 539K | C 475K | P 481K

Good Luck,

Andy

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