Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 118.923 118.80-85 | EURUSD 1.08059 1.0819-24 | AUDUSD 0.77828 0.7828-33 | NZDUSD 0.76839 0.7718-23 | USDCAD 1.22419 1.2220-30 | USDCHF 0.95224 0.9515-25 | GBPUSD 1.49639 1.4955-60 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.04 | 118.69

EUR/USD             1.0825 | 1.07685

EUR/JPY               128.80 | 127.85

AUD/USD            0.7844 | 0.7793

NZD/USD             0.7720 | 0.7679

USD/CAD             1.2235 | 1.2193

EUR/CHF              1.03005 | 1.02765

USD/CHF             0.9545 | 0.9505

GBP/USD             1.4982 | 1.4936

EUR/GBP             0.7245 | 0.72045

For today

• EUR: A choppy start to the day with the market opening just below the 1.0820 areas and moving steadily to below the 1.0800 level, Tokyo saw early buying of EURJPY taking the market in the Euro’s back towards the highs however, limited liquidity soon saw the market again drift down through the lows and head towards the grey hours testing into the 1.0780’s. Topside offers from above Friday’s highs look likely to continue into the 1.0900 areas with a push through the 1.0930 level having limited weak stops likely to show and then further offerings the closer you move to the 1.1000areas, a push through the 1.1050-70 levels is likely to see the 1.1100 tested however, it’s a long way to go with really no good news unless German PPI can spur things. Downside bids light into the 1.0780 areas before giving way to weak stops and an opening towards the 1.0750 areas, a push through here is likely to meet further support closer to the 1.0720 areas and notwithstanding the PPI numbers likely to contain the market.
• GBP: A quiet session for the Cable with the market moving off its lows around the 1.4950 area to push through the opening levels and test briefly through 1.4980 before drifting for the bulk of the session. Topside offers again appear above the 1.5000 level however, they are likely to be stronger around the 1.5040-60 levels and for the moment economically there has been very little to induce the market to make a strong move with the market having moved up steadily over the past week or so helped by the Euro moves, a push through the 1.5060 level will see weak stops triggered and a test of the 1.5100 not seen since last month and although a short squeeze is less likely a push through the 1.5100 will open up the next big figure with less congestion to worry about. Downside well traversed however, the sentimental levels of 50 and 00 are likely to be stronger points in a weakened downside market.
• JPY: USDJPY again remained in a tight range and while it’s a little lower than Fridays Asian session the market is no different with the market moving from the lows just through 118.80 and never quiet recovering the 119.00 levels. USDJPY remains congested for the moment and a limited break below the 118.50 areas opens up the range to test down into the 117.00 levels where the market broke upwards in February, bids into the 118.20 level are likely to be reasonable as macro players take back parts of their position however, the market will likely have to do a lot of work to push through the 117.00 to open up the downside and a comforting move for the MoF. Topside offers are beginning to get stronger and moving closer to the market after last week’s warnings on where some would like the currency to be, this in mind would suggest the topside is getting more difficult to penetrate but only time will tell with offers likely into the 119.20 areas before weak stops and then another set off offers into the 119.50 areas and strengthening as the market moves higher.
• AUD: The Oz opened higher with announcements over the weekend that the Chinese had lowered the RRR 1% lower (Reserve ration requirement) in an attempt to push a little easing into the market, Oz opened around the 0.7820 area and then drifted back to fill most of the gap on the charts before pushing to above the 0.7820 levels as longs in the carry trade were reset after the weekend and going into the Tokyo session. As you would expect after a few hours the market again started to drift in the Asian session and the market is currently resting around the 78 cent level. Topside offers into the 0.7840-50 areas open the market to congested levels above and into the 79 cent areas, a strong push through the 0.7950 levels will see the market start to open for a test beyond 80 cents however, those offers could prove too much, Downside bids into the 0.7720-00 areas are not so strong however, the larger picture sees buying all the way down from that point with very little in the way of stops and what there are, are likely to be weak stops from fresh longs along the way.

Overnight News

EUR:

ECB’s Noyer Says Greek Euro Exit Would Hit World Economy: Figaro

IMF’s Thomsen Sees Some Progress in Greek Talks: Handelsblatt

CNY:

Shanghai FTZ Targets Yuan Capital Account Convertibility

China to Review Foreign Investments in Military Sectors in FTZs

CNY/TWD:

China Explores Allowing Taiwan Cos. To Join Broker JV in FTZ

NZD:

New Zealand Not Planning New Capital Gains Tax, Key Says

New Zealand CPI Falls for a Second Quarter on Gasoline

New Zealand Services Industry Expanded at Faster Pace in March

JPY:

Japan Issues Tsunami Alert as Quake Hits Between Okinawa, Taiwan

JPY/INR:

Hitachi Committed to India Projects as Modi Pushes Reform Agenda

GBP:

U.K. April House Prices Rise 1.6% M/m, Rightmove Says

Today’s data

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

NZD       CPI Q/Q Q1 A -0.30% | C -0.20% | P -0.20%

NZD       CPI Y/Y Q1 A 0.10% | C 0.20% | P 0.80%

GBP       Rightmove House Prices M/M Apr A 1.60% | P 1.00%

JPY         Tertiary Industry Index M/M Feb A 0.30% | C -0.60% | P 1.40% | R 0.70%

06:00     EUR        German PPI M/M Mar C 0.20% | P 0.10%

06:00     EUR        German PPI Y/Y Mar C -1.60% | P -2.10%

Weekend News

G-20:

Says Volatile Currencies Pose Risk After Dollar Surges

IMF:

World Bank Committee Says Currency Moves, Trade Pose Risks

JPY:

Japan’s Finance Chief Aso Says G-20 Has No Criticism on Weak Yen

IMF Official Says Hard to Predict When BOJ to Meet Price Target

USD/EUR:

Lew Says Progress on Greece Isn’t as Much as Had Been Hoped

EUR:

Draghi Says Urgent Need for Greece to Strike Bailout Deal

Sapin Says Weaker Euro Is ‘Good News’ for European Economy

France’s Sapin Sees No Advance on Greece at IMF Meetings

Greek Govt. Would Mull Snap Elections, If Talks Fail: Deputy PM

ECB’s Noyer Says Emergency Aid to Greek Banks Can’t Last Forever

German Government Plans to Raise Growth Outlook: Reuters

CNY:

China Has Easing Room, Won’t Necessarily Use It: PBOC Governor

China’s Economic Growth Still Within ‘Reasonable Range’: Zhou

PBOC’s Zhou Says Slower Growth More Sustainable, Xinhua Says

China Home Prices Fall in Fewer Cities as Transactions Rise

China Needs New Model for Urbanization: OECD

CNY/NZD/USD:

China Concerned at Report of NZ-U.S. Plan to Spy: Xinhua

Harry Hindsight

• EUR: Asia was curtailed to a narrow range with the market for the most part trading between the 1.0760-80 range with highs and lows only just beyond that range, the move into the grey hours saw the market break lower into the London opening to test the 1.0740 levels before driving back through the highs and continuing to rise through the unchanged CPI numbers to trade above the 1.0840 levels, and then hold in a wider range into the US figures, CPI figures for the US were weaker than expected for the month but better YoY sending the USD higher and the Euro down from above the 1.0840 level to trade just below the previous low, the market from there recovered slowly over the balance of the session but recover it did pushing to the 1.0820 levels into the close. With increasing concerns over the Greek situation and the market believing that there is very little the Greek’s can now do and the talks will continue.
• GBP: Cable like the Euro was quiet through the Asian session testing the 1.4920 level and pushing only a little above the 1.4940 areas, the move into London saw quick strong buying of the Cable and limited selling of the EURGBP cross, Cable initially pushed to the 1.4980 levels before hitting strong offers however, a fall in Jobless claims and a steady employment rate sent the market quickly higher triggering stops through the 1.5000 level and pushing eventually to above the 1.5040 levels, the market continued to test the topside for a couple of hours before the US releases started a rally in the USD’s and the market moved down steadily through NYK, profit taking into the last few hours saw the market recover a little but never making it to the 1.4980 level, EURGBP again touched the 0.7170 levels before recovering to its previous ranges and finished the day a little higher than the opening.
• JPY: A fairly active day with the USDJPY in Asia moving around a little, although the range was reasonably narrow, trading backwards and forwards through the 119.00 level several times through the session to below 118.90 and above the 119.10 levels, movement in Euro’s and GBP saw the market trade down through the 118.80 level from the London opening and continue into pre NYK to push slightly below the 118.60 levels once the European data was out of the way. US releases saw the USD rally and quickly squeezed out the days shorts as the market quickly moved back through the 119.00 levels and push to the mid 119.20’s however, once the highs were made the market started to drift off and the market finished the day a little below the opening levels.
• AUD: The Oz led the way over the day with the initial selling entering the market and unable to push through the 78 cent level we settled back to the 0.7770 levels as carry trade selling moved in before the weekend, the move into the London session saw the Oz again rallying with a general USD sell off and climbing steadily to trade above the 0.7840 level before the NYK session entered the market. US figures saw a resurgent USD and the Oz fell back quickly to the 0.7780 levels and although the market traded down to 0.7760 eventually the market finished only just short of the opening levels.

Friday’s premiership results

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

CHF        Retail Sales (Real) Y/Y Feb A -2.70% | C 0.70% | P -0.30%

EUR        Eurozone Current Account (EUR) Feb A 26.4B | C 27.4B | P 29.4B | R 30.4B

GBP       Jobless Claims Change Mar A -20.7K | C -27.0K | P -31.0K | R -29.1K

GBP       Claimant Count Rate Mar A 2.30% | C 2.30% | P 2.40%

GBP       ILO Unemployment Rate (3M) Feb A 5.60% | C 5.60% | P 5.70%

EUR        Eurozone CPI M/M Mar A 1.10% | C 1.10% | P 0.60%

EUR        Eurozone CPI Y/Y Mar (F) A -0.10% | C -0.10% | P -0.10%

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

USD       CPI M/M Mar A 0.20% | C 0.30% | P 0.20%

USD       CPI Y/Y Mar A -0.10% | C 0.10% | P 0.00%

USD       CPI Core M/M Mar A 0.20% | C 0.20% | P 0.20%

USD       CPI Core Y/Y Mar A 1.80% | C 1.60% | P 1.70%

CAD       CPI M/M Mar A 0.70% | C 0.50% | P 0.90%

CAD       CPI Y/Y Mar A 1.20% | C 1.00% | P 1.00%

CAD       BoC CPI Core M/M Mar A 0.60% | C 0.30% | P 0.60%

CAD       BoC CPI Core Y/Y Mar A 2.40% | C 2.10% | P 2.10%

CAD       Retail Sales M/M Feb a 1.70% | C 0.20% | P -1.70% | R -1.40%

CAD       Retail Sales Less Autos M/M Feb A 2.00% | C 0.50% | P -1.80% | R -1.50%

CAD       International Securities Transactions (CAD) Feb A 9.27B | C 6.00B | P 5.73B | R 5.75B

USD       U. of Michigan Confidence Apr (P) A 95.9 | C 93.7 | P 93

USD       Leading Indicators Mar A 0.20% | C 0.30% | P 0.20%

Stay lucky

Andy

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