Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 119.183 | EURUSD 1.07369 | AUDUSD 0.77246 | NZDUSD 0.76506 | USDCAD 1.22285 | USDCHF 0.95632 | GBPUSD 1.49069 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.50 | 119.18

EUR/USD             1.0751 | 1.0720

EUR/JPY               128.31 | 128.06

AUD/USD            0.7729 | 0.7683

NZD/USD             0.7665 | 0.7635

USD/CAD             1.2268 | 1.2225

EUR/CHF              1.0275 | 1.0264

USD/CHF             0.9575 | 0.9554

GBP/USD             1.4910 | 1.4881

EUR/GBP             0.7210 | 0.7206
For today

• EUR: Early trading took the market to above the 1.0745 levels however, the market for the moment looks tired with the ranges retracing and sticking to the same areas, the move into the Tokyo session saw the Euro again weaken and steadily move to a low just above the 1.0720 levels and holding around the levels as we drift towards the London session with very little happening in the market. Topside light offers into the 1.0770 levels and likely to continue to the 1.0800 level however, a tired level that it is will see only a slight amount of pressure breaking through the level again and opening only the 1.0850 areas which really needs to break to get the market out of the ever decreasing range play. Downside bids from the 1.0720 level and while the bids to the downside will be dominated by profit taking for the most part the bids are comparable to the topside offers through to 1.0850 less effective than you’d like. A push through the 1.0680-70 areas opens up a deeper move to the 1.0600 areas and he is where the market really needs to push if it is ever going to break through the 1.0500-50 bids and the bottom of the range. But all eyes are on Greece with further commitments in May causing the government to call in funds from the regional areas to prop up their finances.
• GBP: Cable has dipped from the highs just before the opening in Tokyo moving from the 1.4910 areas and sliding through the 1.4900 opening areas to touch into the low 1.4880’s before basing for most of the session off the levels, with the grey hours approaching the market has steadily moved towards the 1.4900 levels however, volumes are light and the market is dominated by the Euro again. Topside offers are thin on the ground until the market starts to push towards the 1.4980-1.5000 levels where the first set of offers move into the market, a move through the level will likely see those offers continuing to build into the 1.5050 areas before a break out is likely to trigger weak stops and a test to the 1.5100 levels. Downside light into the 1.4880 levels for the moment with weak stops likely through the levels before running into a similar pattern of light bids from the 1.4850 areas, then 1.4800 bids are likely to be a little more in depth and stronger.
• JPY: The market in USDJPY edged up over the session having seen a minor dip before Tokyo to the 119.20 areas, the market then moved into Tokyo and buying increased with the market quickly moving back to the opening levels and continuing into the 119.40 areas before giving back some of the gains, the dip was short lived and although the AUDJPY carry trade was broadly responsible for the dip the market again started to push higher through the early part of the session and moved to the 119.50 areas and the awaiting offers. From there the market has stalled around the 119.40 levels and is easing into the grey hours around that level. Light offers likely through the 119.50 levels and building to strong ones from the 119.80 levels onwards, a push through the 120.30 level will likely see some stops involved however, from that point on the congestion of offers will continue to increase if the market has the ability to push higher, light data for the day and the market still trapped with the possibility of further comments.
• AUD: No real change in tone for the RBA minutes most of which were out in the open to some extent after Steven’s comments prior, having held in the 0.7720 areas from the close the market dipped quickly into the Tokyo session as light AUDJPY selling moved in and then held 77 cents into the release and then dipping to the 0.7685 areas in a limited action with the market expecting the exact rhetoric. A push through current bids in the 0.7680 areas will open up the downside 76 cent level however, beyond this is too much to hope for at the moment one suspects as the ranges in all the majors slowly tighten becoming increasingly stale however, if it could break beyond the 0.7550 levels and test the option barriers around 75 cent the market would be very appreciative. Topside offers are present on the move through the 78 cent levels with strong offers increasing into the 0.7840-60 levels before weak stops are likely to be tested and while the market may open up a little it is precisely a little with 79 cent for the moment being an elusive target this month.

Overnight News

AUD:

RBA Says Further Easing May Be Appropriate; Awaiting More Data

RBA Remains ‘Alert’ to Housing Market Imbalances, Minutes Show

Australia ANZ Weekly Sentiment Falls to New 8-Month Low

CNY/USD:

China ‘Uncomfortable’ With U.S. Investment List: Xinhua

CNY/PHP/USD:

China Criticizes U.S., Philippine War Games in South China Sea

USD/CNY:

American Chamber Concerned by Slow Pace of China Reform

USD:

Fed’s Rosengren Says Inflation Goal May be Too Low: FT

JPY/USD:

Amari: U.S.-Japan Trade Talks Made Meaningful Progress

JPY:

Japan Nominates Yukitoshi Funo to Be BOJ Board Member

Japan’s Abe Sends Ritual Offering to Yasukuni Shrine

EUR: No one Is ‘Optimistic’ on Greece, Former ECB Head Trichet Says

TRY:

Turkey’s Babacan Says U.S. Unhappy w/ Dollar, May Act: Hurriyet

Today’s data

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

09:00     EUR        German ZEW (Economic Sentiment) Apr C 55.3 | P 54.8

09:00     EUR        German ZEW (Current Situation) Apr C 56 | P 55.1

09:00     EUR        Eurozone ZEW (Economic Sentiment) Apr C 63.7 | P 62.4

12:30    CAD       Wholesale Sales M/M Feb P -3.10%

Harry Hindsight              

• EUR: A quiet start to the week and dominated for the Euro by the Greek situation, initial buying took the market from the 1.0800 areas and pushed back to the closing levels of Friday before selling truly started to appear, the market slowly dipped through the session and eased back to the 1.0770 heading into the grey hours and managed a brief recovery before again starting a steady decline into the London session as the German PPI numbers failed to please the market, dipping through to the 1.0740 levels from the numbers the market slowed its decent but nonetheless continued the move to just above the 1.0710 levels before stabilizing. The market into NYK saw limited profit taking however, the market was then unable to move back through the 1.0770 levels and drifted back to hold for the most part in the 1.0730-40 areas to the close.
• GBP: Cable for the most part was pulled along with the movement of the Euro, slipping from the highs above the 1.4980 level in early Asia to trade into the grey hours holding the 1.4940 levels, the move into London saw reasonable EURGBP selling moving into the market and the cross moved away from the mid 0.7220’s and dropped back into the mid-morning in London trading below the 0.7190 areas, Cable having pushed to the 1.4980 areas again fell back to the 1.4920 and then drifted in a tight range from that point slowly slipping to the 1.4900 areas and basing off that level for the whole of the NYK session.
• JPY: The weakness seen in the Asian session disappeared once the market moved into the London session and from the opening around the 118.90 area the market moved off the lows in the 118.50’s after steady cross selling pushed the market there to slowly trade higher moving in a tight channel to above the 119.40 with reasonable volumes going through. The market dipped into the close as light profit taking moved in however the market remained comfortably above the 119.00 level.
• AUD: China cut the RRR by 1% in a token effort to ease and the Oz took this as particularly good news and the market opened around the 0.7830 areas before dipping to fill the gap and trading around the 0.7800-20 area for the balance to Asia, with impending RBA minutes to be released the early London players took the opportunity to cut longs and sell into the market, and the market began a reasonably steady decline through the session with less volume than normal to push to the 0.7760 in early NYK, and comments by Stevens late into the London session saw the market move down quickly to the 0.7720 areas and then quiet trading into the close around those areas.

Yesterday’s premiership results

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%

EUR        German PPI M/M Mar A 0.10% | C 0.20% | P 0.10%

EUR        German PPI Y/Y Mar A -1.70% | C -1.60% | P -2.10%

Good Luck,

Andy

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