Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 119.544 | EURUSD 1.09228 | AUDUSD 0.75897 | NZDUSD 0.75756 | USDCAD 1.24828 | USDCHF 0.95854 | GBPUSD 1.48813 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.67 | 119.45

EUR/USD             1.0955 | 1.0918

EUR/JPY               130.95 | 130.58

AUD/USD            0.7700 | 0.7578

NZD/USD             0.7565 | 0.7517

USD/CAD             1.2491 | 1.2455

EUR/CHF              1.0478 | 1.04605

USD/CHF             0.95835 | 0.95595

GBP/USD             1.4911 | 1.4880

EUR/GBP             0.7349 | 0.7340
For today

• EUR: The market opened in the mid 1.0930’s and held for a good proportion of the session moving through into Tokyo and deep into the session before the market moved out of the range and pushed gradually to above the 1.0950 with the movement more to do with a gradual rise in the EURJPY cross than anything in the EURUSD. The RBA provided the entertainment in the later part of the session and the quick reaction of the Oz did little for some of the majors and Euros moves towards London holding the 1.0930 areas with little going through. As the Oz tested higher the market in the Euro was slowly forced lower as the EURAUD cross dominated the market. Downside bids into the 1.0920 level and through to the 1.0880 areas before some weakness is likely to appear  Topside offers again start to appear into the 1.1000 level and while we’ve breached the level the market into the area is likely to provide limited offers before moving to above the 1.1020 areas where strength on the offer side increases and is likely to continue to the 1.1050 level, suspicion of weak stops above that level however, once through those levels you hit the next level with in-depth offers from the 1.1080 levels onwards.
• GBP: No real difference in early trading with Cable moving off the 1.4880 levels and trading around the 1.4890 levels for much of the session, the market as with the Euro started a steady rise higher and pushed briefly towards the 1.4910 levels before settling back to 1.4900 areas, and into the RBA announcement. Cable initially moved through the 1.4910 levels as some strange GBPAUD buying moved in however, it was limited and the market again moved to the 1.4900 levels and holding in the area as the market moves to the grey hours. Topside offers appear to be weak until the Cable pushes towards the 1.5000 level and is becoming something a level however, for the moment the market is likely to see sellers into that area from short term types and strong stops likely to be building on the far side of the level anywhere from the 1.4920-80 level is open. Downside bids likely to be weak to the 1.4850 levels and the level only slightly better however, a move through will see support getting stronger around the 1.4800 level aw the market has spent several days now moving off the 1.4750-1.4800 levels and although the possibility of the level containing some reasonable bids the market will be dictated by the EURGBP for the day with stronger European data to be released.
• JPY: With USD stalled for the moment and looking for the next commentary or data release to give clear indications the USDJPY moved for the most part around the 119.50 opening levels in very quiet trading having seen Fridays losses quickly eroded and the USD back to the higher 119 levels, concerns over Abenomics and the fact that 2% is no closer than it was a year ago has the market waiting for the next move, more QE, fiscal movement, I guess we just wait to see. The later part of the session saw the market move to the 119.60 levels as the market saw reasonable EURJPY buying moving in and a push into the mid 60’s into the RBA release and strong buying in the carry trade over the course of the session pushing of the 90.60 levels and to the 91.10 areas before stalling and waiting for the release. RBA release and the USDJPY was put under mild pressure as the Oz rallied strongly taking the carry trade higher and pushing through the 92.00 level before meeting profit taking and sufficient amounts to push the USDJPY back towards the 119.50 areas. Topside offers from the 119.70 level and likely to continue into the 120.20 areas before the weak stops appear through that level however, even through there the market is likely to meet resistance all the way along as the Japanese economy continues to disappoint and the QE has limited impact on the market, however, the real strong level the market will have to push through is the 121.00 levels and having been through the level the next 50 pips or so have stalled the market for the most part and the handle would really need to be cleared to get into a new range and difficult to see for the moment. Downside has its own life and the bids into the 118.50 level while not as strong as the offers side has the yield players moving in to take any advantage of the moves down so light bids into the 119.00 areas before strengthening into the 118.50 levels, a push through the 118.40 area will allow the market back to the 117.50-118.00 range and reasonable strength.
• AUD: Oz saw mixed fortunes during the early part of the session with early Sydney willing to buy into the market and push the market up above 76 cents and touch the 0.7610 level before dropping back and through the opening 0.7590 level and testing the 0.7580 levels again as Tokyo took the opposite opinion on the coming RBA announcement, carry trade buying then moved into the market from the lows and the market gradually moved to the 0.7620 areas before holding and drifting back to the starting point as the market neared the release. The release was as expected and the market quickly ran higher pushing immediately to the 0.7670 levels before finding some light resistance into the 77 cent level however, it did continue to push and is heading into the grey hours to test that level. The second time we’ve tested the 77 cent level this month and although the market through the level opens up a little the topside still is likely to contain strong patches of offers around the sentimental areas with likely weak stops now building through the 0.7720 areas as the market see’s light selling and day traders moving in at current levels however, 0.7760 now is likely to provide the next key level. Downside bids light into the 0.7650 areas and then increasing as the market moves to 76 cents, a push through the level is not likely to buckle and the bids are likely to run into the 0.7550 areas where the market is likely to be very strong, a move through the area will see stops being triggered and whether or not there are option bids they are likely to be tested quickly.

Overnight News

USD:

Fed’s Lockhart Favours July-September Lift off on Weak Jobs Report

JPY/CNY:

Japan and China Aiming for Finance Minister Meeting in June: Aso

JPY/USD:

Japan, U.S. Mull Joint Peacetime Operations: Nikkei

JPY:

Japan’s Amari: no change to Japan’s reluctance to join AIIB – RTRS

BOJ Easing Hurts Consumption by Raising CPI: Waseda’s Noguchi

USD/EUR:

FedEx Offers to Buy TNT Express for EU8 per Share in Cash

AUD:

RBA’s Stevens Holds Benchmark Interest Rate at 2.25%

Australia retail sales rise 0.7% in Feb – RTRS

Australia March ANZ Job Ads Falls 1.4% vs 0.7% in Feb.

Australia March Services Index Falls 1.5 Pts M/m to 50.2

NZD:

Key Say N.Z. Dollar Gains Reflect Economy’s Strength

New Zealand Statistics Agency Revises Card Spending Lower

RUB/EUR:

Russia May Offer Greece Cheaper Gas, New Loans: Kommersant

Today’s data

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

AUD       Retail Sales M/M Feb A 0.70% | C 0.40% | P 0.40% | R 0.50%

AUD       RBA Rate Decision A 2.25% | C 2.25% | P 2.25%

07:00     CHF        Foreign Currency Reserves Mar P 509.3B

07:45     EUR        Italy Services PMI Mar C 51.1 | P 50

08:00     EUR        Markit Eurozone Services PMI Mar (F) C 54.3 | P 54.3

08:30     EUR        Eurozone Sentix Investor Confidence Apr C 20.9 | P 18.6

08:30     GBP       Services PMI Mar C 57.1 | P 56.7

09:00     EUR        Eurozone PPI M/M Feb C 0.20% | P -0.90%

09:00     EUR        Eurozone PPI Y/Y Feb C -3.00% | P -3.40%

Harry Hindsight              

• EUR: A fairly quiet day opening higher in Asia around the 1.1000 level before pushing to the Tokyo session and rising to just below the 1.1020 levels before dropping back after the initial later comers had finished their buying. The market dropped back as the USD buyers started to move into the market and the market pushed down into the 1.0980 levels and into the London market, which was devoid with most of the European’s still away. The market continued to drift but with out any strong motivation could only make it through the 1.0970 levels before starting a steady rise as the market moved towards the NYK session. With a reasonably active session the market moved steadily to the 1.1010 level as the early USD sellers pushed for the topside helped by the slightly weaker than expected Non-manufacturing numbers the market pushed to the 1.1030 levels and deeper into the waiting offers and although the market traded in the area for a significant period it was unable to push through the topside offers, FOMC Dudley comments on the subject of inflation firming by the second half of the year and rate hikes would follow albeit shallow initially was enough to send the Euro lower, pushing quickly to the 1.0980 levels before triggering weak stops and a quick stab lower to the 1.0910 to set up a reasonable good range for the day and placing the market close to where it was pre NFP.
• GBP: Opening around the 1.4920 areas the market struggled for awhile to make any real movement touching briefly above 1.4930 before drifting down to the 1.4900 levels where the market held before returning to the opening levels. The move into the London session saw the market start to gradually rise into the NYK session to push against the 1.4950 levels, US ISM numbers were sufficient to push the market through the level and gradually to the 1.4980 levels before dropping back with the Dudley comments and light profit taking. The market eventually stopped declining only once it had pushed through the 1.4880 levels and held in the area into the close.
• JPY: USDJPY spent most of the day holding the 119.00 levels rising from the lows of 118.80 and back through the opening 118.90 levels and pushing into the 119.15 areas in Tokyo before drifting back to the figure and holding for the most part deep into the NYK session, even the ISM had little effect on the USDJPY and only the commentary from Dudley stirred the market and the USDJPY ran steadily higher and pushed to above the 119.60 levels before drifting into a close around the 119.50 levels.
• AUD: A little more movement in the Oz, opening around the 0.7640 levels and then ranging in a slightly wider levels than the rest through the Asian session, talk of the AUDNZD parity level saw a two way battle unfold in a weakly populated market and the Oz managed to dip to the 0.7610 levels before rallying steadily once the market realised the downside on the cross was sufficiently defended for the weak amounts attempting to breach the level. The run to the London session saw the market move to the 0.7650 level and holding a range down to the 0.7630 through London and into the NYK, the market moved higher to push above the 0.7660 area from the US number before the USD came into its own in late trading and undoing the days work and a lower Oz but not suffering beyond that of the NZD and the cross remained away from parity and the Oz dipped into the 0.7580 areas before holding into the close around the 76 cent levels.

Yesterday’s premiership results

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

USD       ISM Non-Manufacturing Composite Mar A 56.5 | C 56.6 | P 56.9

CAD       Ivey PMI Mar A 47.9 | C 51.1 | P 49.7

Good Luck,

Andy

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