Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 118.993 | EURUSD 1.07614 | AUDUSD 0.78034 | NZDUSD 0.76768 | USDCAD 1.21885 | USDCHF 0.95594 | GBPUSD 1.49344 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.14 | 118.89

EUR/USD             1.07865 | 1.0754

EUR/JPY               128.35 | 128.045

AUD/USD            0.7805 | 0.7770

NZD/USD             0.7674 | 0.7646

USD/CAD             1.2205 | 1.2179

EUR/CHF              1.03065 | 1.0289

USD/CHF             0.9570 | 0.9550

GBP/USD             1.4947 | 1.4919

EUR/GBP             0.72155 | 0.72055
For today

• EUR: The market was a little quieter today with less going through however, a similar pattern with EURJPY buying dominating early in the Tokyo session and USDJPY selling, with Euro’s opening just above the 1.0760 levels it remained in the area before testing through the 1.0780 levels from the Tokyo fixing onwards, before again drifting back once the demand ran out and the markets normalized, with no data to speak of the market was unable to move out of the quiet range and hangs in the 1.0770 areas as the market runs to the grey hours. Topside light offers through the 1.0800 levels and becoming stronger through to the 1.0820 areas a push through 1.0830 will likely see some weak stops however, offers are likely to move in again around the 1.0850 levels and strengthening further into 1.0900, a good push through the level and the market again opens to a test to the 1.1000-30 areas with untested offers likely around the 1.1040-50, Downside is well traversed and probably holds little in surprise with Japanese Yield buyers and USD liquidators possibly looking for any move towards the 1.0700 areas, light bids into the 1.0750 areas before giving way to only slightly better bids around the 1.0720 and a push through the 1.0680-70 areas will see minor stops triggered and a limited move if the buyers appear. With Fed officials expressing concern over the weak economic data the USD’s now being seen as a little over priced however, while the data has been on the weak side the past few weeks, this however, would not be the first time that commentaries have been used to weaken one currency or the other.
• GBP: A very quiet day for Cable with the market opening around the 1.4940 level and dipping towards the 1.4920 level in early trading only to recover and head for the 1.4950 level on light trading, it for the most part tagged along with the Euro move and found little independent action. From the highs the market has since drifted and holds around the 1.4930 levels going into the grey hours. Topside offers from the 1.4950 level increase the closer you move towards the 1.5000 level this being the key level to a move higher and opening a test of the 1.5100 level on a push through. Downside bids are a little sparse with congestion in the current area opening up to light support around the 1.4850 areas, a move through the level will see similar light support into 1.4800 and then possibly strong bids as you approach the 1.4750 levels, weak stops are likely to be below each of the sentimental levels however, for the moment the market is being supported by the weakness in EURGBP and the current movement of Euro’s in particular.
• JPY: The range has been fairly tight however, the market remains a little choppy as cross JPY does more work than the USDJPY with the market opening around the 119.00 levels and trading in a tight range until the fix in Tokyo and a push to the 118.90 levels, this was then reversed over a considerable time and although it only got to just above the 119.10 level spent the rest of the session drifting back to the 119.00 levels and holding around the figure. Topside offers seem to be building above the 119.40 levels and the market struggles to refocus after the comments earlier in the week, even through that level one suspects that the market will struggle into the 119.80 level and stronger offers making an appearance to the 120.20 areas. Downside bids for the moment are likely to be down to the 118.70 level and then the likelihood of stops appear in the market and a test of the 118.50 level which is possibly a strong level, a push through here though opens up a deeper move with bids light until approaching the 117.50 areas where last month the Yield players favoured.
• AUD: The Oz after spectacular gains over the past couple of days ran out of steam today moving from the opening levels around the 78 cent level the market has drifted into the Tokyo session and dipped to the 0.7770 areas with light AUDJPY selling impacting the market along the way as retail clears positions moving into the weekend and potential for comments about Greece, UK, Iron and several other side factors that could indirectly impact the market. Light bids into the 0.7740 areas probably extend to the 0.7720 areas before weak stops make an appearance, a break here will see the Oz extending through the 77c level and moving and moving into a lightly congested area with a mixture expected, and 0.7650 likely hold better bids and more stops behind the level opening the way to the 0.7600-0.7550 that has dominated the market for the moment. Topside offers light until the market moves to the 0.7850 areas and stronger resistance is likely through to 79 cents, the figure will provide the next pivotal point having not been to the areas for over a month and short term sellers looking to range play the level.

Overnight News

JPY:

Japan’s Amari: Welcomes U.S. Progress on Fast-Track Trade Bill

Aso: Told G-20 Meeting That Japan Economy on Recovery Trend

Japan Lower House Committee to Receive BOJ Nomination on 21 Apr

Japan consumer confidence improves 4th straight month in March – RTRS

CNY/HKD:

Chinese Investors Turn Net Sellers of HKEx through Connect

CNY:

China Sets Yuan Reference Rate at Strongest Level since Feb. 6

China Says Foreign Nations Can Invest in Silk Road Plan: Xinhua

GBP:

Lagarde: Forecasts in U.K. Election Year Err on Side of Caution

Today’s data

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

JPY         Consumer Confidence Index Mar A 41.7 | C 41.4 | P 40.7

07:15     CHF        Retail Sales (Real) Y/Y Feb C 0.70% | P -0.30%

08:00     EUR        Eurozone Current Account (EUR) Feb C 27.4B | P 29.4B

08:30     GBP       Jobless Claims Change Mar C -27.0K | P -31.0K

08:30     GBP       Claimant Count Rate Mar C 2.30% | P 2.40%

08:30     GBP       ILO Unemployment Rate (3M) Feb C 5.60% | P 5.70%

09:00     EUR        Eurozone CPI M/M Mar C 0.60% | P 0.60%

09:00     EUR        Eurozone CPI Y/Y Mar (F) C -0.10% | P -0.10%

09:00     EUR        Eurozone CPI – Core Y/Y Mar (F) C 0.60% | P 0.60%

12:30     USD       CPI M/M Mar C 0.30% | P 0.20%

12:30     USD       CPI Y/Y Mar C 0.10% | P 0.00%

12:30     USD       CPI Core M/M Mar C 0.20% | P 0.20%

12:30     USD       CPI Core Y/Y Mar C 1.60% | P 1.70%

12:30     CAD       CPI M/M Mar C 0.50% | P 0.90%

12:30     CAD       CPI Y/Y Mar C 1.00% | P 1.00%

12:30     CAD       BoC CPI Core M/M Mar C 0.30% | P 0.60%

12:30     CAD       BoC CPI Core Y/Y Mar C 2.10% | P 2.10%

12:30     CAD       Retail Sales M/M Feb C 0.20% | P -1.70%

12:30     CAD       Retail Sales Less Autos M/M Feb C 0.50% | P -1.80%

12:30     CAD       International Securities Transactions (CAD) Feb P 5.73B

14:00     USD       U. of Michigan Confidence Apr (P) C 93.7 | P 93

14:00    USD       Leading Indicators Mar C 0.30% | P 0.20%

Harry Hindsight              

• EUR: A quiet start to the session saw the Euro lift quickly into the Tokyo fixing period as EURJPY demand met USDJPY supply and a squeeze in the Euro to push the market from the 1.0680 levels and into the 1.0745 areas before drifting off over the rest of the Asian session, The move lower then continued into the early London session pushed into the 1.0620’s before stabilizing. With ECB out of the way and the market already speculating when QE will taper and the rates rise, only two months in and the rumours start after firm assurance that Sept 2016 at least, that’s according to Draghi. So USD goes on the backfoot as rate rises are seen to have moved back and the Euro comes to the fore, or so they say, as long as the Euro is unable to break the downside USD longs will continue to lighten and the Euros will move back to the 1.10 areas, and so remain in this 1.05/1.10 level which one imagines suits the ECB and not the Fed. So macro funds were again quick to buy as the market stalled and the Euro moved steadily back to the highs and a big figure move, minor movement around the US numbers saw a little action before moving into the late part of the session and further USD liquidation and another squeeze towards the 1.0820 levels before dropping back once the flow was done with and finishing around the 1.0760 levels.
• GBP: Opening around the 1.4840 it doesn’t seem like a few days ago that the media and some of the analysts out there were discussing the demise of the 1.4000 level and Cable becoming the poor cousin to everyone, couldn’t have been talking about their own market surely guess they’ve now moved back into their own special place in a corner. As stated above the longer the market remains stuck in a limited range the more the long term traders will cover parts of their positions, and so the GBP didn’t lose ground over the session as the Euro rallied maintaining broadly the EURGBP 0.7200 areas, rising from the opening 1.4850 level the market pushed higher with the fixing in Tokyo to push through the level but as with the Euro drifted into the London session holding 1.4820’s movement in the Euro helped the market through the 1.4900 area and although the market settled down to a range around the 1.4910 areas again late in the session pushed to above 1.4960  to set the highs and keeping in line with movements in the Euro, and while the movements were orderly the volumes were fairly pleasing in the market and testament to good two way flows throughout the moves.
• JPY: Not a massive range for the USDJPY however, the choppy session throughout the day attracted plenty of interest, the market opened around the 119.10 levels with the move into the Tokyo session seeing USDJPY sold in the face of EURJPY buying so although the USDJPY dropped it was limited dipping to the 118.80 and meeting supportive bids while the JPY selling against the Euro matched off against the JPY buying in USD. Bottom tested and the market swung back to push high through the 119.00 level and steadily into the grey hours to 119.30, additional early buying in London made the highs around the 119.45’s before the sellers again reappeared and so it continued through the days with several more moves to top and bottom but contained within the range. The day was finished only just below the opening with again good volumes seen throughout the day.
• AUD: A quiet start to the session before the release of good inflationary expectations and employment numbers, the first number sent the market from the opening 0.7680 areas to the 0.7720 level and held in the area until another good set of employment numbers quickly set the market moving again and this time pushed to the 0.7780 levels before drifting through the remainder of the session with the frenzy over with and 0.7740 key level well and truly broken, the drift into the London session again saw that 0.7740 level tested however, it held and the market started to slowly rally over the course of the session struggling for several hours to push through the 78 cent level but eventually doing so with only a couple of hours to spare before the close, briefly touching above the 0.7820 levels the market then drifted to the close around the figure areas.

Yesterday’s premiership results

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

NZD       Business Performance of Manufacturing Index Mar A 54.5 | P 55.9 | R 56.1

GBP       RICS House Price Balance Mar A 21% | C 15% | P 14% | R 15%

AUD       Consumer Inflation Expectation Apr A 3.40% | P 3.20%

AUD       Employment Change Mar A 37.7K | C 15.0K | P 15.6K | R 42K

AUD       Unemployment Rate Mar A 6.10% | C 6.30% | P 6.30%

CHF        Producer & Import Prices M/M Mar A 0.20% | C 0.10% | P -1.40%

CHF        Producer & Import Prices Y/Y Mar A -3.40% | P -3.60%

USD       Housing Starts Mar A 0.93M | C 1.05M | P 0.90M | R 0.91m

USD       Building Permits Mar a 104M | C 1.08M | P 1.09M | R 1.10M

USD       Initial Jobless Claims (APR 11) A 294K | C 284K | P 281K | R 282K

USD       Philadelphia Fed. Survey Apr A 7.5 | C 5 | P 5

Good Luck,

Andy

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