Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 120.137 | EURUSD 1.07312 | AUDUSD 0.76059 | NZDUSD 0.74728 | USDCAD 1.26834 | USDCHF 0.97254 | GBPUSD 1.48181 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.15 | 119.42

EUR/USD             1.0792 | 1.0731

EUR/JPY               129.20 | 128.565

AUD/USD            0.7664 | 0.7605

NZD/USD             0.7490 | 0.7440

USD/CAD             1.2692 | 1.2645

EUR/CHF              1.04595 | 1.04335

USD/CHF             0.9728 | 0.9684

GBP/USD             1.4871 | 1.4820

EUR/GBP             0.72575 | 0.7242
For today

• EUR: A slow start started to see reasonable buying emerge once the market moved into the Tokyo session with USD’s drifting after the Tankan report and allowing the Euro to move ahead, pushing to the 1.0760 levels and then triggering some weak stops through the level to push up against the 1.0780 and light offers, the market then took several hours to push through and into the 1.0790’s. However, the Greek situation still remains with the likelihood of a deal unlikely before the long weekend. Downside bids around the 1.0700 levels continue to hold, a push through the 1.0680 levels opens up another test into the 1.0600 areas with likely stronger bids before opening up to a test below the 1.0570 levels and the downside bids into the years lows just below 1.0500. Topside offers are likely light into the 1.0800 level with a better line of offers likely from the 1.0820-60 area before the market opens up for a test through the 1.0900 levels.
• GBP: Cable moved off the opening levels once the market had moved into the Tokyo session and the with Cable leaping from the 1.4820 area to above 1.4860 in a short movement as the Euro squeezed higher, the market gradually moved to the 1.4870 however, the market struggles against offers into the 1.4880 levels and through 1.4900 a push through the 1.4930 areas is likely to see light stops and the market then opening to the 1.5000 and very strong offers. Downside bids are light until the 1.4760-50 areas which now seem to be a fairly strong bidding area with a strong breach of the area likely to expose the lows of the year below 1.4650 for further tests.
• JPY: Tankan report had little impact on the market and the USDJPY moved into the Tokyo session pushing down through the 120.00 level and resting again on the 119.90 levels, China numbers seemed to be the catalyst for the move and USD slipped on the release with better PMI figures and USDJPY dropped quickly to test below the 119.50 before holding, it was interesting to note that just prior to the releases Eminis in USD products dropped sharply, bids continue through the 119.50 level and although there are some light/weak stops through the level bids quickly return in any move towards the 119.20 areas to slow any descent, even through the 118.80 level bids are likely to overweight the stops in the area and will slow the market further, with the possibility of yield bids making an appearance. Of note is the selling of crosses against the Yen in the past few days and one has to wonder whether hedging of yield hunters currency risk is beginning to make an appearance, no point in hunting out yield if you lose it on the currency movement in the short term.
• AUD: The Oz moved out of the 0.7605-20 range it sat in from the NYK close and quickly moved higher once the China data was released however, again like the Emini contracts the market was already moving well before the release and moved to the 0.7635 level and then jumped above the 0.7660 level on the release, having hit the highs though the market drifted as the buying was absorbed and dipped back to the 0.7630 areas to trade quietly into the latter stages of the session. Offers into the 0.7670 levels before the possibility of a small short squeeze and a move back through the 77 cent level however, this discounts current situations with commodity pricing for the Ozzies and even if the CNY numbers show improvement it will take time to filter through in the meantime the market waits for next week’s RBA meeting so chances are movement is limited. Downside bids into the 76 cent level are reasonably strong with medium term profit taking and local buying supplying the demand, a push through the level will target the lows for the year around the 0.7560 levels and a push through that level opens up deeper moves.

Overnight News

JPY:

Aide to Abe, Yamamoto says BoJ must ease again in April

Tankan Q4 Manufacturing index 12 vs. 14

Large all industrial capex YoY -1.2% vs. 0.5%

USD:

Lew says strong USD is good for US

Lew says China understands more reform need on FX

Yuan rate still at top of US economic agenda with China

CNY:

Weak deman weighs on China factory outputs and service firms in March

Today’s data

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

JPY         Tankan Large Manufacturers Index Q1 A 12 | C 14 | P 12

JPY         Tankan Non-Manufacturing Index Q1 A 19 | C 17 | P 16

AUD       Building Approvals M/M Feb A -3.20% | C -6.00% | P 7.90% | R 5.90%

CNY        Manufacturing PMI Mar  A 50.1 | C 49.7 | P 49.9

CNY        Non-manufacturing PMI Mar A 53.7 | P 53.9

JPY         Manufacturing PMI Mar (F) A 50.3 | C 50.4 | P 50.4

CNY        HSBC China Manufacturing PMI Mar (F) A 49.6 | C 49.4 | P 49.2

07:30     CHF        SVME-PMI Mar C 47.9 | P 47.3

07:45     EUR        Italy Manufacturing PMI Mar C 51.9 | P 51.9

08:00     EUR        Eurozone Manufacturing PMI Mar (F) C 51.9 | P 51.9

08:30     GBP       PMI Manufacturing Mar  C 54.5 | P 54.1

12:15     USD       ADP Employment Change Mar C 225K | P 212K

14:00     USD       Construction Spending M/M Feb C 0.00% | P -1.10%

14:00     USD       ISM Manufacturing Mar C 52.5 | P 52.9

14:00     USD       ISM Prices Paid Mar C 37 | P 35

14:30    USD       Crude Oil Inventories P 8.2M

Harry Hindsight              

• EUR: Having opened around the 1.0830 levels the market moved into to the Tokyo session rising slightly before cross selling against the Yen moved in and concerns about Greece weighed on the market and the market moved off the highs just short of the 1.0850 level and started a steady decline towards the London session pushing to the 1.0780 supportive areas, the move into the London session and a push through the level triggering only light stops the market continued to decline through the European numbers with employment numbers again disappointing apart from Germany and CPI numbers still in negative territory, the market continued its move and touched through the 1.0720 levels before finding limited support from end of month USD sellers and although the market bounced back to the 1.0770 levels a couple of times the weakness remained and returned to trade below the 1.0750 levels for the majority of the session especially once London finished.
• GBP: Cable followed the movement of the Euro through the Asian session slipping away from its highs above the 1.4810 levels and through the figure opening areas and then a steady drift lower and into the London session moving off the 1.4760 areas into early London, final GDP was a little better than expected and helped the market hold the level and EURGBP cross being sold steadily through the session dipping from the 0.7320 highs and moving through the day and into late NYK to trade down towards the 0.7220 levels before finding limited support. While the Euro stalled towards the 1.0720 areas the GBP started to rally and the market squeezed back above the 1.4810 levels and moved quickly to the 1.4870 levels and then held in a range of 1.4840-60 for several hours before the market drifted into the close as profit taking moved into the close.
• JPY: USDJPY held a tight range through the day moving from the opening levels around the 120.10 dipping initially before attempting a break to the topside and moving to above the 120.30 levels, the rally failed and drifted back to the opening areas, the market eventually started to give ground drifting into London and pushing down through the 120.00 and resetting the range to the 119.80-120.00 for the most part before rising back above the 120.00 levels into the close.
• AUD: The Oz moved to the 0.7660 levels before starting a steady slide lower over the course of the Asian session, dropping quickly from the highs and down to the 0.7630 areas before slowing, concerns about the effects of lower commodities on the economy and possible movement into recession. The market moved into the London session dipping to the lows of the 0.7590 areas but was unable to move any lower as bids held for several hours through London and into the NYK session, the failure to break lower saw the market move higher quickly and back to the 0.7640s on a small short squeeze before drifting into the end of the session to just above 76 cents.

Yesterday’s premiership results

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

NZD       Building Permits M/M Feb A -6.30% | P -3.80% | R -4.60%

GBP       GfK Consumer Sentiment Mar A 4 | C 1 | P 1

NZD       NBNZ Business Confidence Mar A 35.8 | P 34.4

JPY         Housing Starts Y/Y Feb A -3.10% | C -7.00% | P -13.00%

EUR        German Unemployment Change Mar A -15K | C -10K | P -20K

EUR        German Unemployment Rate Mar A 6.40% | C 6.40% | P 6.50%

EUR        Italian Unemployment Rate Feb (P) A 12.70% | C 12.50% | P 12.60%

GBP       Current Account (GBP) Q4 A -25.3B | C -21.2B | P -27.0B | R -27.7B

GBP       GDP Q/Q Q4 (F) A 0.60% | C 0.50% | P 0.50%

GBP       Index of Services 3M/3M Jan A 0.80% | C 0.70% | P 0.80% | R 0.90%

EUR        Eurozone Unemployment Rate Feb A 11.30% | C 11.20% | P 11.20%

EUR        Eurozone CPI Estimate Y/Y Mar A -0.10% | C -0.40% | P -0.30%

EUR        Eurozone CPI – Core Y/Y Mar (A) A 0.60% | C 0.70% | P 0.70%

CAD       GDP M/M Jan A -0.10% | C -0.20% | P 0.30%

USD       S&P/Case-Shiller Composite-20 Y/Y Jan A 4.60% | C 4.60% | P 4.46%

USD       Chicago PMI Mar A 46.3 | C 52 | P 45.8

USD       Consumer Confidence Mar A 101.3 | C 96.3 | P 96.4 | R 98.8

Good Luck,

Andy

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