Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 120.13 | EURUSD 1.05665 | AUDUSD 0.75895 | NZDUSD 0.74479 | USDCAD 1.25942 | USDCHF 0.97789 | GBPUSD 1.46751 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.17 | 119.74

EUR/USD             1.0594 | 1.0546

EUR/JPY               127.015 | 126.43

AUD/USD            0.7624 | 0.7583

NZD/USD             0.7486 | 0.7446

USD/CAD             1.2600 | 1.2571

EUR/CHF              1.03385 | 1.0318

USD/CHF             0.9787 | 0.9758

GBP/USD             1.4692 | 1.4652

EUR/GBP             0.7213 | 0.7195
For today

• EUR: Euro’s hedged higher from the opening around the 1.0565 areas pushing to above 1.0590 however, good EURJPY offers around the 127.00 area easily blunted the rise and the market moved back quickly to the 1.0570 levels, later in the session the market reacted to Hamada’s second round of comments and the market in EURJPY dropped back taking the Euro with it and the market fell back to test the 1.0550 levels before holding. Downside bids from here into the 1.0520 levels are not particularly strong one suspect however, from then onwards option barriers are likely to kick in and only a push through the 1.0480 level is likely to see strong stops appearing in the market, 1.0420 then becomes weak support and the potential to push into the 1.02-1.03 handles opens. Topside offers are beginning to build into the 1.0600 levels with a solid push through the 1.0630 levels likely to hold weak stops and the market sees open ground to the 1.0680 and stronger offers likely from there into 1.0700.
• GBP: Cable pretty much mirrored the Euro’s movements with only slight gains against the Euro, moving from the opening to push above the 1.4690 levels and although the market dropped back from the highs it could not push through the 1.4650 areas, the market for the moment holds the 1.4660 levels and looks to be probably drifting into the London session. While Cable briefly pushed below 1.4600 the downside support seems to be intact for the moment however, election watching and ECB/Greece still dominate the UK and the European area in particular, a push through the 1.4550 levels will expose only light option barriers to the 1.4500 level and exposing the lows of 2010 for the market, and of course where there’s smoke there’s usually fire and the downside opens up for a deeper move, the only upside I would imagine is the EURGBP which for the moment seems strong into the 72p level and limiting for the moment the movement of both Euro and Cable. Topside offers into the 1.4680 levels a push above the 1.4700 opens up the topside however, for the moment I’d be surprised if it can rally to test the 1.4800.
• JPY: The USDJPY opened around the 120.10 areas and drifted slightly higher into the Tokyo opening and the selling started, nothing that showed as particularly strong however, JPY strengthened against most of the other currencies with EURJPY and GBPJPY possibly far more active than the USDJPY in early trading, comments from Hamada, Yen selling is approaching limit, doesn’t think Yen will drop much further, 125 USDJPY would not be justified and reiterating 105 level as being appropriate, sent the crosses lower, and USDJPY dipping to similar levels seen in NYK when the original comments were made. So what now, Koichi Hamada is not one that you usually hear from and is an advisor to Abe, his comments would suggest that the current rates are beginning to cause problems for the Government and so verbal manipulation is the name of the game one would guess that if it was serious enough then other stronger members of MoF and/or BoJ would be out also which is why its been limited in impact. Topside offers light into the 120.20 areas and a push through again opens up a test to the 120.80 areas and stronger offers, through 121.00 the market is likely to see a mixture building with breakout trades running into exporter offers and then solid selling all the way to 122.00. Downside bids into the 119.80 area and likely to see lighter bids from there into 119.50 as there was a clear out of weak stops yesterday, a push through 119.50 opens up the downside and while bids are likely to dominate on a move lower the market is less supportive I would imagine because of these comments and the yield players may hang back away from their usual buying areas on the 118 handle.
• AUD: Strength in the Yen kept the Oz supported as the carry trade remained in play and holding above the 91.00 levels, Oz managed to move off the opening 0.7590 levels to push to through the 0.7625 area before settling back to hold around the 76 cent levels as the JPY became the focus of the day and the commentary of Hamada. The Oz today could well be dominated by the movements in Yen rather than anything else, the ranges from 2006 are in line and a push below this year’s lows opens a test of 75 cents and possibly strong option barriers however, a stronger Yen could alleviate the pressure on the Oz but only if the carry trade remains in line, if the carry trade drops then all bets are off and the Oz is likely to test lower quickly, a push through the 75 cent level will open up a deeper move towards the 73 cent level and areas not seen since 2009. Topside offers are lighter one would suspect over the next big figure with light offers into the 0.7630 areas before opening up for another test of the 0.7670-77 cent level stronger offers are likely to be again in the 0.7740 areas going back to 0.7760 before a mixture of stops are likely to appear.

Overnight News

CNY:

China May See Progress in Global Yuan Use: Sec. Journal

China May Remove QFII, RQFII Quotas This Year: Sec. Journal

JPY:

Yen’s Decline Is Approaching Its Limit, Says Abe Adviser Hamada

Japan Estimates Potential AIIB Membership Would Cost $3 Billion

JPY/MXN:

Toyota to Announce $1b Central Mexican Plant on Apr. 15: Reuters

AUD:

Australia March Business Confidence Rises 3 Pts M/m to 3

Australia ANZ Weekly Consumer Sentiment Rises 0.1% to 109.8

NZD:

N.Z. Posts Fastest House Price Inflation since Nov 2013

GBP:

U.K. LFL March Retail Sales Up 3.2 Y/y, BRC Says

Today’s data

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

GBP       BRC Sales Monitor Y/Y Mar A 3.20% | P 0.20%

AUD       NAB Business Confidence Mar A 3 | P 0

08:30     GBP       CPI M/M Mar C 0.20% | P 0.30%

08:30     GBP       CPI Y/Y Mar C 0.00% | P 0.00%

08:30     GBP       Core CPI Y/Y Mar C 0.20% | P 1.20%

08:30     GBP       RPI M/M Mar C 0.30% | P 0.50%

08:30     GBP       RPI Y/Y Mar C 1.00% | P 1.00%

08:30     GBP       PPI M/M Mar C -0.50% | P 0.20%

08:30     GBP       PPI Y/Y Mar C -13.50% | P -13.50%

08:30     GBP       PPI Output M/M Mar C 0.20% | P 0.20%

08:30     GBP       PPI Output Y/Y Mar C -1.80% | P -1.80%

08:30     GBP       PPI Output Core M/M Mar C 0.10% | P 0.10%

08:30     GBP       PPI Output Core Y/Y Mar C 0.20% | P 0.20%

08:30     GBP       DCLG UK House Prices Y/Y Feb C 8.70% | P 8.40%

09:00     EUR        Eurozone Industrial Production M/M Feb C 0.30% | P -0.10%

12:30     USD       Advance Retail Sales Mar C 1.00% | P -0.60%

12:30     USD       Retail Sales Less Autos Mar C 0.70% | P -0.10%

12:30     USD       PPI M/M Mar C 0.20% | P -0.50%

12:30     USD       PPI Y/Y Mar C -0.90% | P -0.60%

12:30     USD       PPI Core M/M Mar C 0.10% | P -0.50%

12:30     USD       PPI Core Y/Y Mar C 1.00% | P 1.00%

14:00     USD       Business Inventories Feb C 0.30% | P 0.00%

Harry Hindsight              

• EUR: Greece continues to dominate the Euro and after a steady session moving from the 1.0595 opening to just below 1.0620 the market struggled to make any ground, Chinese numbers impacted the whole market sending the Euro to below 1.0590 for the first time. The market moved into the grey hours with light buying taking the Euro from the 1.0580 level and back towards the highs, rumours in Europe, comments by various people and commentary from the banks sent the Euro quickly down and through the lows, weak stops through the 1.0600 level saw the market quickly hit 1.0570 and then steady pressure continued to take the Euro down through the previous year’s lows to touch the 1.0520 levels, early NYK and option barriers turned the market and pushed the market back steadily as the buyers moved in and profit taking was the name of the game through into early NYK and running the market back to the 1.0600 levels before slowing its pace and drifting in the 1.0570-80 levels to the close.
• GBP: The run into Tokyo saw the market move slightly higher from the 1.4630 levels to 1.4650 before the Chinese numbers hit and the Asian market saw strong selling as USD’s moved across the board, Cable slowed to it decent into the grey hours before triggering stops through the 1.4600 levels however, once the stops were run and the papers had done their damage with stories from what Labour will do to kill the economy and how the Tories will take it from babes mouths and so on, you get the picture the sensible market players returned to the market and moved the market in line with what we know of the economics rather than hearsay, the move into NYK saw the market moving steadily through the 1.4650 levels and the steady rise continued to touch above the 1.4680 level and a steady gain for the day. The grey hours dip in Cable was more based on a good push in the EURGBP to above the 0.7270 levels and then down over the next few hours to the 0.7210-00 level where the market went out.
• JPY: USDJPY traded lower in early trading with cross selling early into the session in Tokyo before finding support around the 120.10 levels and starting a steady climb over the session to push into the grey hours topping around the 120.50 levels. London opening saw the market break the 120.80 level before running into strong offers. The failure of the market to push through the level saw it sit back a little and then comments from cabinet office special advisor Hamada about purchasing power parity would correctly put the USDJPY at 105 saw the market drop quickly back with the early buyers tripping over each other to cut positions and the market dropped quickly to trigger weak stops through the 120 level and trade to the 119.70 areas and then a bounce back above 120, the bounce touched above the 120.40 level before settling back to trade around the previous light supportive 120.10 into the close.
• AUD: Oz opened quietly however, there was a little nervous selling into the Tokyo session dipping to the 0.7655 areas and hold 0.7660 from the opening 0.7675 level, the release of shocking trade balance numbers sent the Oz quickly to the 76 cent level and although the market held for the most part pushing just through the 0.7590 level the London session saw fresh selling and the market dropped to the 0.7560 levels dipping into the mid 50’s before slowly rising back to 0.7590 into the NYK session and too the close.

Yesterday’s premiership results

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

JPY         Japan Money Stock M2+CD Y/Y Mar A 3.60% | C 3.60% | P 3.50%

JPY         Machine Orders M/M Feb A -0.40% | C -2.30% | P -1.70%

JPY         Domestic CGPI M/M Mar A 0.30% | C -0.20% | P 0.00% | R -0.10%

CNY        Trade Balance (USD) Mar A 3.1B | C 45.4B | P 60.6B

CNY        Exports Y/Y Mar A -15% | C 12%  | P 48.30%

CNY       Imports Y/Y Mar A -12.70% | C -11.70% | P -20.50%

USD       Federal Budget Balance A -52.9B | C -43.1B | P -192.3B

Good Luck,

Andy

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