Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 120.576 | EURUSD 1.06593 | AUDUSD 0.76922 | NZDUSD 0.75456 | USDCAD 1.25806 | USDCHF 0.9777 | GBPUSD 1.47132 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.625 | 120.44

EUR/USD             1.06845 | 1.0653

EUR/JPY               128.77 | 128.50

AUD/USD            0.7722 | 0.7693

NZD/USD             0.7598 | 0.7560

USD/CAD             1.2595 | 1.2575

EUR/CHF              1.04235 | 1.0416

USD/CHF             0.9778 | 0.9750

GBP/USD             1.4724 | 1.4704

EUR/GBP             0.72585 | 0.7245
For today

• EUR: Again a quiet market with Euro’s unable to move away from the opening 1.0660 level but failing to push through the 1.0680 level with any conviction, light buying from medium term players seems to be the name of the game for the moment and no real interest as the market rests and awaits the London session. Downside bids into the 1.0640 level and likely to continue with option barriers likely to be building around the sentimental levels a push through the 1.0600 level is likely to see continual bids appearing in the market and those bids are likely to increase as the market moves towards the 1.0500 levels and lows of the year. Topside offers into the 1.0700 are likely to be non-existent and only light into 1.0720and the stronger offers are likely to appear on a move into the 1.0760-80 areas, a push through the 1.0830 area is likely to see weak stops and an opening to the topside and a possible short squeeze however, I’d be surprised if it was as strong as the previous ones.
• GBP: Cable traded quietly as the Asian market ignores the mudslinging as the count down to the election continues, in the meantime no rate or QE changes and likely to continue for the moment, opening just below the 1.4720 levels the market has continued to trade around the level in a very tight range. Topside offers are not likely to be of any consequence until we reach the 1.4800 areas with offers increasing from that point into a very congested 1.4850 area, a push through the level opens up a move to the 1.4900 areas and limited stops in the mix. Downside is likely to see stronger bids below the 1.4700 level and into the 1.4650 levels and previous lows however, until the market breaks out of the current ranges in all pairs the volumes are likely to continue to deteriorate.
• JPY: USDJPY like the other currencies has been unable to break free and has traded for the most part between 120.50 and the opening 120.60 levels and moves towards the grey hours with no indication of moving out of the range for the moment. Topside offers from the 120.70 are likely to run to the 121.00 level, even through the level the market is likely to continue to be stubborn with congestion above the 121.20 areas from the last attempt last month, 122.00 is now the key to moving into a fresh range and a push through the level will likely see decent stops being triggered. Downside has been we traversed but on the inside market there are likely bids into the 120.00 level and a break through the 119.70 areas will open up a move to the 119.00 area again, with decent impetus a push to 118.50 level is a possibility however, those yield players are again likely to move in on any weakness.
• AUD: The Oz opened around the 0.7695 levels and the move into Tokyo saw the market move higher and to the 0.7720 with limited action but a slightly better range than the rest of the market, the release of the CNY data left the market a little weaker and for a short period the market was a little choppy, the Oz for the moment defies the economic woes of the Oz miners and the economy will likely see further pressures building along the way. Topside offers are strong into the 0.7740-60 levels and a solid push through the level is still limited to some degree however, a move will open the 79 cent level again with only minor suspected offers in between. Downside bids await on a move down into the 0.7650 areas and likely to continue down through the levels with 0.7650 providing minor support before opening up another test of the 76 cent levels which having previously been broken still remains fairly strong with those bids increasing as we move towards the yearly lows around the 0.7550 areas, of course this will be all moot if the USD rallies on a broad front and Euro, Cable and Oz test those lows and USDJPY makes new highs, this should quiet quickly see strong volatility reappear, a definite understatement.

Overnight News

JPY:

Aso: Clear That Most Buying of Japanese Stocks is by Foreigners

CNY:

China March Consumer Prices Rise 1.4% Y/y; Est. 1.3% Gain

China to Maintain Proactive Fiscal, Prudent Monetary Polices

China May Announce Measures to Stabilize Trade Growth: Daily

KRW/JPY:

S. Korea, Japan to Hold Security Policy Meeting April 14: Yonhap

KRW/EUR:

Korea Pension to Buy Bosch’s Logistics Centre in Germany: Maeil

NZD:

English Says ‘Less Likely’ N.Z. Will Post 2014-15 Budget Surplus

New Zealand’s Eight-Month Budget Deficit Narrower Than Forecast

AUD:

Australia Feb. Home-Loan Approvals Rise 1.2% M/M; Est. 3% Gain

Today’s data

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

CNY        CPI Y/Y Mar A 1.40% | C 1.30% | P 1.40%

CNY        PPI Y/Y Mar A -4.60% | C -4.70% | P -4.80%

AUD       Home Loans Feb A 1.20% | C 3.10% | P -3.50% | -1.70%

05:45     CHF        Unemployment Rate Mar C 3.20% | P 3.20%

08:30     GBP       Industrial Production M/M Feb C 0.30% | P -0.10%

08:30     GBP       Industrial Production Y/Y Feb C 0.30% | P 1.30%

08:30     GBP       Manufacturing Production M/M Feb C 0.40% | P -0.50%

08:30     GBP       Manufacturing Production Y/Y Feb C 1.30% | P 1.90%

12:15     CAD       Housing Starts Mar C 175.0K | P 156.3K

12:30     CAD       Net Change in Employment Mar  C 0.0K | P -1.0K

12:30     CAD       Unemployment Rate Mar C 6.80% | P 6.80%

12:30     USD       Import Price Index M/M Mar C -0.40% | P 0.40%

18:00     USD       Monthly Budget Statement Mar C -43.2B | P -192.3B

Harry Hindsight              

• EUR: Asia was slow going with the market opening around the 1.0780 levels and held the level into the Tokyo session, fixing saw the market dip as EURJPY selling moved in and the market dropped to the 1.0760 levels before holding steady and pushing back to the 1.0780 levels into the grey hours. Slightly better IP numbers against a little weaker trade balance left the market dipping a little into the 1.0750 areas before pushing back to the opening levels into the London open before dropping back again and the market sat on the 1.0740 levels for several hours, news that Greece will be able to make the payments to the IMF helped the Euro off the lows and back to the opening levels but only until the NYK session was underway. Yields improved in the US and again the USD started to strengthen added to which cross selling of the Euro kicked in and the Euro steadily fell back pushing through the 1.0720 easily but initially stalling at the 1.0680 level before triggering light stops and moving even more slowly to the 1.0640 level and more respectable support, good EURUSD selling was seen from short term types and the market saw good buying of options in strikes lower down from the current market levels, the day finished on a slow shallow rise into the 1.0660 levels.
• GBP: Cable opened around the 1.4860 areas and struggled through the Asian session unable to push above the 1.4880 level and dips below 1.4860 and remaining in the tight range into the London session, a weaker visible trade deficit sent the market initially lower and the Cable pushed down through the 1.4800 easily and traded on this initial selloff to the 1.4780 areas, EURGBP selling then moved into the market and GBP saw a brief reprieve as Cable moved back through the 1.4840 areas however, as soon as NYK moved in the selling returned to the market with USD’s bid through the session and a tight channel formed with the market slipping through 1.4700 briefly before moving only slightly higher into the close.
• JPY: USDJPY opened quietly opening around the 120.15 level and moving into the Tokyo session holding before fixing demand took the market to above the 120.30 levels, from then on the market ranged in a 120.20-40 range for the most part moving into the London session with no real direction until the cross EURJPY selling strengthened the JPY and forced USDJPY to just below 119.90, and into the NYK session where USD became king and the rise was steady but increasing the range for the day pushing through the 120.70 level and then holding the 120.60 levels into the close.
• AUD: The Oz dipped in early trading as economics of the situation dictated early trading however, having traded from the opening 0.7680 level to the 0.7660 area the market quickly reversed the early cross selling and the buying took the market to the 77 cent levels, from that point the market was reasonably quiet through into the London session trading between the opening and 77 cents for a few hours however EURAUD selling moved into the market and the AUD was forced higher and to the 0.7740 levels again before finding strong resistance, the market held the level for several hours before the USD ascendency kicked in and the USD’s sent the Oz lower and back to the opening levels to just close off that level.

Yesterday’s premiership results

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

EUR        German Industrial Production M/M Feb A 0.20% | C 0.10% | P 0.60% | R -0.40%

EUR        German Trade Balance (EUR) Feb A 19.7B | C 20.3B | P 19.7B | R 19.6B

JPY         Machine Tool Orders Y/Y Mar (P) A 14.60% | P 28.90%

GBP       Visible Trade Balance (GBP) Feb A -10.3B | C -9.1B | P -8.4B | R -9.2B

GBP       BoE Rate Decision A 0.50% | C 0.50% | P 0.50%

GBP       BoE Asset Purchase Target Apr A 375B | C 375B | P 375B

CAD       Building Permits M/M Feb A -0.90% | C 5.10% | P -12.90%

CAD       New Housing Price Index M/M Feb A 0.20% | C 0.10% | P -0.10%

USD       Initial Jobless Claims (APR 4) A 281K | C 281K | P 268K | R 267K

USD       Wholesale Inventories Feb A 0.30% | C 0.10% | P 0.30% | R 0.40%

Good Luck,

Andy

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