Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 118.976 118.845-119.03 | EURUSD 1.09756 1.0972-99 | AUDUSD 0.7633 0.7612-22 | NZDUSD 0.75953 0.7579-89 | USDCAD 1.2487 1.2448-97 | USDCHF 0.95228 0.95005-41 | GBPUSD 1.4918 1.4890-1.4945 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.17 | 118.80

EUR/USD             1.1018 | 1.0973

EUR/JPY               130.91 | 130.685

AUD/USD            0.7647 | 0.7610

NZD/USD             0.7622 | 0.7582

USD/CAD             1.2496 | 1.2453

EUR/CHF              1.0473 | 1.0465

USD/CHF             0.95405 | 0.9510

GBP/USD             1.4935 | 1.4900

EUR/GBP             0.7378 | 0.73565

 

For today

• EUR: The market opened officially higher having opened unchanged in the pre-market period, early buyers into the Tokyo session took the market to the 1.1020 areas and then the sellers appeared to take the market back to the closing levels of Friday and a quiet session trading around the 1.0980 levels into the grey hours. Topside offers through the 1.1020 levels and likely to continue into the 1.1050 areas before weak stops are likely to make an appearance and the market opening to test the 1.1080-1.1100 levels and possibly opening to further moves to the 1.1200 level. Downside bids not likely to be particularly strong until the market moves towards the 1.0920 areas and better strength likely to be closer to the 1.0880 levels before the downside opens. With little in the way of data either side is not likely to be tested.
• GBP: Cable has spent the day pretty much how it finished on Friday holding around the 1.4920 areas for the most part and making a couple of attempts to breach the 1.4900 level before returning to that central area. Topside offers likely to show into the 1.4950 levels however, they are fairly light and stronger offers appear towards the 1.5000 levels and just through before light stops kick in and daylight to the 1.5100 areas. Downside bids light into the now well traversed 1.4900 areas and better bids to the 1.4850 levels these likely to be light but in depth with the bids likely over the next big figure.
• JPY: With the reflationists now running out of time the market with those advising Abe keen to point out the price of oil being the biggest culprit for the unchanging inflationary rate over the past 12months which one would imagines was not the most important thing on the agenda back at the start of the QE on April 4^th 2013. So the question is where will they go from here? Will the linking of fiscal policy be the way forward? The opening in Asia saw the market dip initially before the Tokyo opening and the market testing the 118.80 levels before starting a steady rise to above the 119.15 levels but not quiet making the 119.20 level, as the market ran out of buyers the market drifted and has since been trading in the 119.00-10 areas for a few hours into the grey period before a holidaying London. Topside offers into the 119.20 levels are not likely to be substantial and once broken will open up a new test to the 119.80 levels and the waiting offers. Downside bids into the 118.80 levels and those bids are likely to extend into the 118.50 areas with a push through the 118.40 possibly only opening up a slightly lower test and further strength appearing into the 118.00 levels.
• AUD: The Oz has drifted for the most part with the market opening around the 0.7640 level slightly higher than the close before failing to push through 0.7650 as a little bit of a battle appeared in the limited market between the Oz and NZD with the cross perilously close to parity, the cross drifted from the opening 1.0060 levels down to the 1.0025 areas before the bids started to dominate and the market slowly lifted in the cross and the Oz pushed back to the 0.7630 level and off the lows of 0.7610. Downside bids light into the 0.7590 levels and then better bids into the 0.7550 area and the lows of the year, even through the level there is possibly strong option plays into the 75 cent levels. Topside offers into the 77 cent level and while possibly strong enough to hold a holiday market the topside offers are likely to be around the sentimental levels for the moment and not really thickening until 78 cents however, the market today could be driven by the cross plays with parity being a target.

Overnight News

EUR:

IMF’s Lagarde, Greece’s FinMin Varoufakis Hold Informal Talks

JPY:

Japan Cabinet Approval Rating Rises 2 Ppts to 57%, Yomiuri Says

Japan Bankruptcies Linked to Weak Yen Double in Fiscal 2014

Japan Feb coincident indicator index down 2.8 points -RTRS

JPY/KRW:

Japan, S. Korea May Hold Security Talks Next Week, Asahi Says

RUB/VND:

Russia, Vietnam to Discuss Increased Use of Ruble, Dong in Trade

Today’s data

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

JPY         Leading Index Feb (P) A 105.3 | C 105.2 | P 105.5

14:00     USD       ISM Non-Manufacturing Composite Mar C 56.6 | P 56.9

14:00     CAD       Ivey PMI Mar C 51.1 | P 49.7

14:30     CAD       BOC Business Outlook Survey

Weekend News

USD:

Obama Lobbies for Iran Deal as U.S. Assures on Sanctions
Obama Condemns ‘Terrorist Atrocities’ in Kenya: White House
EUR:

Greece Has Cash to Make IMF Payment Next Week, Minister Says
Greece’s Varoufakis to Meet Lagarde Sunday: Finance Ministry
JPY/GBP:

Ajinomoto Considering Bid for Tate & Lyle’s Splenda: Telegraph
JPY:

Japan Mulls Nuclear Energy at 20% of Total Energy, Sankei Says
JPY/USD:

Mitsui to Co-Invest Up To $400 Million in U.S. Homes: Nikkei
JPY/Asia:

Japan to Help Asian Tech Students Find School, Jobs, NHK Says
CNY/JPY:

Chinese People’s Congress Official Ji to Visit Japan: Yomiuri
GBP:

U.K. Pension Funds Brace for Inquiry Surge on Reforms: Times
CHF:

Switzerland Expects Tax Receipts to Fall CHF1.8b: Zurich Paper
UAH:

Ukraine Seeks $15.3 Billion From Restructuring of Pre-2014 Debt

Harry Hindsight

• EUR: As you’d expect for an Easter holiday the market opened around the 1.0880 levels and ranged around the level for most of the day rising slightly into the London session to trade above the 1.0890 levels, the release of the NFP numbers saw the market jump higher and push quickly to above the 1.1000 level easing to above 1.1020 at one stage before the offers pushed the market back to below the figure areas. With the number nearly half of what was expected and the bank holiday’s limiting the amount of liquidity the market reacted as expected and only the resting offers were sufficient to stop a greater rise, even last month’s figures were revised and whether anything can be deduced from one month’s numbers remains to be seen.
• GBP: A slightly better range for the Cable opening just short of the 1.6840 level and then ranging through into the London session to test the downside bids into the 1.4820 levels, and while they were not particularly strong, the market moved into the numbers and the market moved a little before breaking quickly higher and pushing quickly to above the 1.4920 levels and then steadily to 1.4940 before running out of impetus and drifting back to trade again in a tight range between 1.4900-20 into the close.
• JPY: USDJPY opened around the 119.75 levels tipping slowly to the 119.60 level before finding weak stops, the market dipped before the release of the numbers as traders flicked a coin to before making a move and the market touched into the 119.50 levels then literally minutes before the release those that got tails rallied the market quickly to above 119.90 and then the release, carnage for the tail side as the numbers came in weaker than expected and the USDJPY quickly dropped to the 119.10 level and light support and a steady push from there down into the 118.70’s and through the bulk of the resting bids. From the lows the market pushed steadily back to the 119.00 in slow trading finishing the day just short of the level.
• AUD: The Oz managed a steady climb higher from the early lows in Asia around the 0.7570 level and pushed quietly into the London session pressing the 76 cent levels, the move to the NYK session saw the market pushing to the 0.7620 areas and then a quick stab lower as traders jumped the gun and reacted with some of the USD buyers into the release, the dip was limited before the data release, the market reacted quickly moving of the 0.7590’s and pushing quickly higher towards the 77 cent level before running into sufficient offers to hold the market and while the market bounced around a little over the next half hour and tested that topside a couple of times the market then slipped slowly lower and back into the 0.7630-40 levels into the close.
• USD: Several points have been made over the weekend about the weakness of the NFP numbers however, the most coherent I’ve heard has been to do with the weather the US has faced over the first quarter of the year, and while it’s been severe in some parts the translation into the March figures does seem to be a little strange but does fit more than anything else that people are spouting.

Friday’s premiership results

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

USD       Change in Non-farm Payrolls Mar A 126K | C 250K | P 295K | R 264K

USD       Unemployment Rate Mar A 5.50% | C 5.50% | P 5.50%

USD       Average Hourly Earnings M/M Mar A 0.30% | C 0.20% | P 0.10%

Stay lucky

Andy

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