Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 119.131 119.05-18 | EURUSD 1.08895 1.0885-95 | AUDUSD 0.77499 0.7741-48 | NZDUSD 0.7568 0.7562-72 | USDCAD 1.26141 1.2600-20 | USDCHF 0.96162 0.9600-35 | GBPUSD 1.48722 1.4870-90 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.33 | 119.105

EUR/USD             1.0900 | 1.08545

EUR/JPY               129.89 | 129.44

AUD/USD            0.7758 | 0.7712

NZD/USD             0.7565 | 0.7525

USD/CAD             1.2629 | 1.2597

EUR/CHF              1.04685 | 1.0449

USD/CHF             0.9635 | 0.9606

GBP/USD             1.4901 | 1.4847

EUR/GBP             0.73185 | 0.73065

 

For today

• EUR: The market opened quietly in line with Fridays close around the 1.0890 levels and drifted into the Asian session with little difference to the market selling moved in around the fix and EURJPY selling dipped below the 129.50 level taking the Euro to below 1.0860 for the first time before rallying after the supply ran out, the market then moved back to trade above the 1.0880 level before a slow drift lower and back to the 1.0860 level over the course of the session to hold in the areas as the market moved into the grey hours. Today is likely to be dominated by the Greece situation and whether Europe will cede further funds to help Greece move through the coming days, there are a number of confidence numbers and German CPI of probably more import however, topside offers are light until the market starts to move the 1.0980 level and suspected stronger offers through the 1.1000 areas however, a strong push through the 1.1050 areas is likely to open a larger move to the topside with weak stops likely. Downside bids into the 1.0820 levels are likely to form a little barrier to the downside with stronger bids not likely until closer to the 1.0720 areas, possible weak stops through a break of 1.0780-70’s but a good push through the 1.0700 levels are likely to open up further tests of the lows in the coming weeks and the end of the rally till the next dovish comment from the US.
• GBP: Cable opened only slightly above Fridays close and continued to rise from the opening around 1.4885 area to ease lightly through the 1.4900 levels before dropping back on the fixing supply with JPY crosses dipping and taking the Base leg lower, Cable moved to the 1.4860 levels before finding some limited support which lasted for several hours before the market again started to give way and looks to be moving into the grey hours around the 1.4850 levels. Downside has limited bids into the current levels however, these are light and the market doesn’t strengthen until the 1.4800 level, through that level better bids are likely to be seen in a move into the 1.4750 levels and those bids are likely to continue through the 1.4700 level before break out plays move in and possible bids in protection of the 1.4650 area lows. Topside offers strengthen on any move through the 1.4950 areas with the 1.5000 level being particularly stubborn on the few attempts to push through the level with decent offers suspected just beyond and into the 1.5050 level.
• JPY: A very quiet day for the USDJPY with the impact of cross selling doing very little in the USDJPY leg and the market rising from the opening levels around 119.15 to test to above the 119.30 levels into the fixing in Tokyo, the market since then has traded for the most part above the 119.20 area and remains around the level as the market moves into the grey hours. Topside offers and downside bids continue to pin the market in a narrow range, however, a break through the 119.50 level is likely to see weak stops through the level before running into offers from the 119.80 level and into 120.00, a push through the 120.20 level is likely to see the market in open ground however, that is only likely to the 120.80 areas and then the usual offers abound from then on. Downside bids into the 119.00 level are reasonably weak and likely to give way to light stops however, the low the market goes the more scope for yield buyers to enter the market and it would seem that any move towards the 118.00 will likely see buying enter the market and only a strong selloff pushing through 118.50 will push the market below the 118.00 area before they move in and then we are towards the low end of the congestion and support into the 117.50-117.00 areas.
• AUD: The Oz dipped lower as the market moved into Tokyo having opened slightly lower around the 0.7740 levels, with the prices of Iron ore as a main concern for the Oz economy, the market dipped into the 0.7715 over the course of the session before rising back to the opening prices later in the session and holding around the 0.7730 area as the market moves towards the grey hours, the whole session has been fairly lacklustre and volumes have been very limited. Light bids into the 77 cent areas are likely to give way to a mixture from there to the 0.7650 areas where the market is likely to become better bid increasing in size through the 76 cent level and towards those lows of the year. Topside offers still see light offers in the 78 cent area however, although there are likely to be offers on the way up the market see’s the strongest area on the move to the 79 cent level and through to 0.7940.

Overnight News

JPY:

Japan Govt. weighing income tax hike on wealthy to meet fiscal goals

Industrial production fell 3.4% raising doubts about domestic demand

BoJ chief says monetary policy not targeting FX Markets

Kuroda: BOJ Not Aiming at Bringing FX into a Specific Range

Meiji Yasuda Investing 50b Yen in Japanese Equity Funds: Nikkei

NOK/JPY:

Norwegian Pension Fund’s Japan Holdings Grow: Nikkei

CNY:

China’s Zhou says PBOC has room to act on growth slowdown

EUR:

Greece seeks happy ending as creditors mull loan deal

Sarkozy wins French local elections with the far right making limited gains

AUD:

Company tax in planned tax overhaul

NZD:

New Zealand Central Bank Says It Sold Net NZ$13 Mln in February

NZ Treasury: Most Firms Expect Sales Prices to Remain Unchanged

NZ’s Key Forced to Abandon Central Reform after By-Election Loss

Today’s data

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

JPY         Industrial Production M/M Feb (P) A -3.40% | C -1.50% | P 3.70%

07:00     CHF        KOF Leading Indicator Mar C 89.3 | P 90.1

08:30     GBP       Mortgage Approvals Feb C 62K | P 60.8K

08:30     GBP       M4 Money Supply M/M Feb C -0.20% | P -0.80%

09:00     EUR        Eurozone Business Climate Indicator Mar C 0.18 | P 0.07

09:00     EUR        Eurozone Industrial Confidence Mar C -4.2 | P -4.7

09:00     EUR        Eurozone Consumer Confidence Mar (F) C -3.7 | P -6.7

09:00     EUR        Eurozone Economic Confidence Mar C 102.5 | P 102.1

09:00     EUR        Eurozone Services Confidence Mar C 5 | P 4.5

12:00     EUR        German CPI M/M Mar (P) C 0.50% | P 0.90%

12:00     EUR        German CPI Y/Y Mar (P) C 0.30% | P 0.10%

12:30     CAD       Industrial Product Price M/M Feb C 0.50% | P -0.40%

12:30     CAD       Raw Materials Price Index M/M Feb C 5.00% | P -7.70%

12:30     USD       Personal Income Feb C 0.30% | P 0.30%

12:30     USD       Personal Spending Feb C 0.20% | P -0.20%

12:30     USD       PCE Deflator M/M Feb C 0.20% | P -0.50%

12:30     USD       PCE Deflator Y/Y Feb C 0.30% | P 0.20%

12:30     USD       PCE Core M/M Feb C 0.10% | P 0.10%

12:30     USD       PCE Core Y/Y Feb P 1.30%

14:00     USD       Pending Home Sales M/M Feb C 0.40% | P 1.70%

Weekend News

USD/CNY:

U.S.’s Lew to Press China on FX Transparency, U.S. Official Says
CNY:

Xi Reaches Out to Asia Nations With Investment Opportunities
China Central Bank Governor Calls for Vigilance on Deflation
PBOC Adviser Chen Says Continuous Policy Easing Needed: Caixin
IMF Needs to Consider Yuan’s Position When Reviewing SDR: Zhu
More Than 40 Nations May Join China-Led AIIB, Nikkei Says
GBP/CHF/CNY:

U.K., Switzerland Join AIIB as Founding Members, China Says
AUD/CNY:

Abbott Says Australia Is Set to Join China-Led Investment Bank
JPY:

BOJ’s Kuroda: Japan Inflation to Accelerate From Early Autumn
Approval Rating for Japan’s Abe Rises to 55.4%: Kyodo Survey
Japan Mulling Preparatory Meeting for Six-Party Talks: Sankei
USD/JPY:

U.S. Expects Greater Japan Role in South China Sea Patrols: NHK
EUR/CHF:

Dufry Agrees to Buy Control of World Duty Free for $1.4 Billion
GBP:

BOE’s Broadbent Sees Rates Rising in Next 2-3 Yrs: Times
U.K. Conservatives Plan Benefit Cuts, Leaked Document Shows: BBC
AUD:

Australian Government Planning Bank Deposit Tax, AFR Reports
NZD:

NZ National Party Loses Northland By-Election to Winston Peters
EUR:

Greek Reform Deadlock Creates Extra EU10-20b Fund Gap: Spiegel
Portugal Says Rating Upgrade Not Probable Before Election: RTP

Harry Hindsight

• EUR: The market opened around the 1.0880 levels and moved quietly through the Asian session trading around the opening levels, the move into the London session saw the market drop back falling from the opening in London to the 1.0800 levels in a quick move as the market see’s concern over the Greek situation which is likely to be resolved one way or the other on Mondays session. The market traded slightly higher for several hours holding around the 1.0820 and then started to rally into the NYK session to push back to the opening levels. The move to the end of London saw the market rising again pushing to above the 1.0940 levels before drifting for the remainder of the session to hold just below 1.0900 areas.
• GBP: Strong EURGBP selling helped Cable move higher over the course of the day, opening in Asia around the 1.4850 levels before trading quietly around the levels briefly pushing through the 1.4860 area but generally maintaining the 1.4850 area, the move into London saw the Cable dragged lower by the move in EURGBP with Cable touching just below 1.4800 level as the EURGBP fell from the 0.7330 and through to the 0.7270 levels, Cable moved off the lows after a time pushing higher and briefly stalling the 1.4880 before pushing through the 1.4900 levels and bouncing off the 1.4920 levels several time before drifting to a close around the 1.4880 levels into the close.
• JPY: USDJPY was confined to a reasonably tight range again moving around the 119.20 levels with the market reluctant to test above 119.40 in the Asian session and holding the 119.10 levels, London were quick buyers taking the market to 119.50 however, even that was pushed back and the market drifted lower through the course of the NYK session and into the 119.00 levels before holding 119.20 into the close and a disappointing day for the pair.
• AUD: The Oz declined over the session with Carry trade selling and a weakening economy appearing in the market. The initial selling took the market move from the 0.7830 levels and down through 78 cent before holding and then drifting into the London session pushing only just through the 0.7780 levels before moving to the 78 cent level into the NYK session the market then dipped lower once the Michigan number was released and the market moved to the 0.7760 to trade quietly over the next few hours to the close.

Friday’s premiership results

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

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

JPY         Household Spending Y/Y Feb A -2.90% | C -3.10% | P -5.10%

JPY         National CPI Core Y/Y Feb A 2.00% | C 2.10% | P 2.20%

JPY         Tokyo CPI Core Y/Y Mar A 2.20% | C 2.20% | P 2.20%

JPY         Retail Trade Y/Y Feb A -1.80% | C -1.40% | P -2.00%

USD       GDP (Annualized) Q4 (T) A 2.20% | C 2.40% | P 2.20%

USD       GDP Price Index Q4 (T) A 0.10% | C 0.10% | P 0.10%

USD       U. of Michigan Confidence Mar (F) A 93 | C 92.1 | P 91.2

Stay lucky

Andy

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