Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 119.667 | EURUSD 1.07355 | AUDUSD 0.77102 | NZDUSD 0.76621 | USDCAD 1.22805 | USDCHF 0.9551 | GBPUSD 1.49266 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.79 | 119.52

EUR/USD             1.0742 | 1.0716

EUR/JPY               128.53 | 128.29

AUD/USD            0.7774 | 0.7706

NZD/USD             0.7687 | 0.7658

USD/CAD             1.2287 | 1.2255

EUR/CHF              1.0258 | 1.0241

USD/CHF             0.9562 | 0.95435

GBP/USD             1.4945 | 1.4915

EUR/GBP             0.71965 | 0.71835
For today

• EUR: Another quiet day in Asia, Euro’s drifted sideways into Tokyo before dropping from the 1.0740 levels to the 1.0730 and then slowly to the 1.0720 areas before trading through into the grey hours between the 1.0720-30 levels, limited action considering the movement in Oz and a better than expected trade balance in Japan. Light bids into the 1.0660-50 areas give way to stronger bids moving in around the 1.0600 level and downwards, a strong push through the 1.0540 levels is likely to see light stops before option barrier bids into the 1.0500 and then opening up a larger move down with sentimental levels becoming the dominant focus, Greece will continue to weigh on the market with the situation likely to be unchanging for the Greeks whatever, they do and only a gesture from the Eurozone a way out however, this involves propping up the initial lenders and several countries banks or Grexit and ensuing defaults and hyperinflation for a reintroduced Drachma as costs of servicing increase beyond their ability to print money. Topside offers sees light offers into the 1.0750 areas and continuing and increasing in size into the 1.0800 areas, a mixture beyond the 1.0820 levels is likely to see offers again becoming dominant into the 1.0850 areas and only then does the market open a little with light offers until the market starts to move above the 1.0900 level.
• GBP: Cable opened around the 1.4930 levels and although the market dipped through the 1.4920’s into the Tokyo session the market steadied and returned to push above the opening and hold around that area for the move towards the grey hours. Topside offers into the 1.4970-1.5000 levels with short term players willing to fade a move for the moment, with the economic data apart from employment showing a little sign of weakness and uncertainty over the upcoming elections providing limited weakness, a push through the 1.5000 levels will see weak stops and an opening for another test of the 1.5100 levels however, today holds no surprises one would guess. Downside is still vulnerable to the European/Greek situation with light bids into the 1.4920 levels and opening to better bids around the 1.4850 levels, light stops behind and light bids are suspected into the 1.4800 level and then the market opens up with really nothing spectacular until the market starts to move to the 1.4700 areas and bids just below and running weakly to 1.4600 and better bids.
• JPY: A very quiet session for the USDJPY trading from the opening 119.70 levels the market moved higher into the Tokyo session to push above the 119.75 levels and into light waiting offers and then a quiet drift from then on, the market eventually dropped back to the 119.55 levels as it moved towards the grey hours, Topside offers from the 119.80 level and through to 120.00 with likely weak stops through the levels but offers likely to continue dominating the market, a push through the 120.30 will again see light stops however, from 120.50 onwards the market is likely to see stronger offers start to appear and continuing to the 121.00 areas. Downside bids look light through to 119.20 where they are likely to increase a little, a push through the level only sees 118.80 bids appear and likely to continue to the 118.50 areas before opening the downside a little, again talk of large funds looking for yield is likely to be supportive along the way and as official commentary has dried up for the moment one would have to say that the comments from last week were probably not sanctioned.
• AUD: The Oz started the day little different to the other currencies with little impacting the market and a steady market trading around the 0.7715 opening levels and only once the CPI numbers were released did we see any movement, and while the release was realistically in line with expectations, like the UK numbers the detail saw the YoY trimmed number showing a slight increase and that was all it needed for the Oz to jump from the 0.7720 areas to push briefly through the 0.7770 areas, having made its way there the market then traded sideways within the 0.7760-70 range into the grey hours. Current levels sees offers into the 0.7820-30 areas with strength into the 0.7840 level, a strong push through will likely see stops making an appearance through the 0.7860 area and an opening to test into the next set of offers from 0.7880-0.7900 levels. Downside bids are light into the 0.7720 areas with weak stops on a push through the 77 cents level, 0.7680 is likely to see only minor support and opening for a test below the 76 cents levels again and those lows beyond 0.7530.

Overnight News

JPY:

BOJ Considering Cut to Fiscal 2015 Inflation Forecast: Nikkei

Japan’s Trade Balance Swings to First Surplus Since 2012

Japan’s LNG Imports Rise in FY2014 to Record, MoF Says

Japan’s Ruling LDP to Compile Recommendation on AIIB on June 3

Abe Says Japan’s Post war Policy Based on Deep Remorse Over WWII

JPY/CNY:

Abe Shakes Hands with Xi Ahead of Potential Meeting in Jakarta

USD/JPY:

Obama, Abe May Bless TPP Talks Next Week: Japan Ambassador Sasae

AUD:

Australian 1Q Trimmed Mean CPI Rose 0.6% Q/Q; Est. 0.6% Gain

EUR:

Greek Capital Controls ‘Not a Working Assumption’: ECB’s Coeure

CNY:

China’s 100bps RRR Cut Marks Step-Up in Monetary Easing: Fitch

PBOC Adviser Sees Room to Further Cut Reserve Ratios: Gov.cn

China March Leading Economic Index Rises 0.2% M/m to 317.8

CNY/TWD:

China Regulator Studies Shanghai-Taiwan Stock Link: Eco. Daily

CAD:

Canadian Budget Is Compatible With Aaa Rating, Moody’s Says

NZD:

New Zealand March Online Skilled Job Vacancies Rise 0.2% M/M

Today’s data

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

JPY         Trade Balance (JPY) Mar A 0.0T | C -0.41T | P -0.64T | R -0.57T

AUD       Westpac Leading Index M/M Mar A -0.30 | P 0.30% | R 0.10%

AUD       CPI Q/Q Q1 A 0.20% | C 0.20% | P 0.20%

AUD       CPI Y/Y Q1 A 1.30% | C 1.30% | P 1.70%

AUD       CPI RBA Trimmed Mean Q/Q Q1  A 0.60% | C 0.60% | P 0.70%

AUD       CPI RBA Trimmed Mean Y/Y Q1 A 2.30% | C 2.20% | P 2.20%

08:30     GBP       BoE Minutes

08:30     GBP       MPC Official Bank Rate Votes C 0–0—9 | P 0–0–9

08:30     GBP       MPC Asset Purchase Facility Votes C 0–0—9 | P 0–0–9

09:00     CHF        ZEW (Expectations) Apr P -37.9

13:00     USD       House Price Index M/M Feb C 0.60% | P 0.30%

14:00     USD       Existing Home Sales Mar C 5.04M | P 4.88M

14:00     EUR        Eurozone Consumer Confidence Apr (A) C -3 | P -3.7

14:30    USD       Crude Oil Inventories P 1.3M

Harry Hindsight              

• EUR: Asia was moderately quiet with the market moving from the 1.0740 area and dipping to at low just above 1.0720 before moving quietly into the grey hours, the period saw increasing selling as early Europeans sold the Euro’s on the back of the Greek situation and the market tested to the 1.0660 levels before finding some limited bids and early London players moving into the market, equity related buying of the Euro saw the pair steadily move back above the 1.0700 into the NYK session with mixed ZEW numbers having very little impact on the market, a quick move into the NYK session saw a minor short squeeze and the Euro quickly move to the 1.0740 levels and then squeeze again to 1.0760 before the offers began to hold as USD longs again took back some of their positions, Euros spiked into the close of London and the market touched through the 1.0780 level before slipping quietly back to the opening levels and no change on the day.
• GBP: Cable followed the Euro for the most part opening around the 1.4900 levels before slipping slowly lower through Asia to push into the 1.4860 levels as the market moved into the grey hours, the market held the levels moving into the London session, a steady rise from the lows lead into the NYK session and quick move higher to push through the 1.4930 levels and finally spiking to above 1.4970 and into the offers, the time ran out on the buying and the market drifted lower once the London session left for the day and Cable settled down to trade around the 1.4930 areas and a quiet close.
• JPY: With the market dominated by the Euro and the Greek situation USDJPY continued to rise through the session slowly, opening around the 119.25 levels the market initially dipped into the Tokyo opening and make lows just below the 119.20 areas and then began a steady rise through Asia to the 119.50 areas and limited offers, the push into the grey hours and the London opening saw those offers quickly taken out and the market pushing to the 119.80 level and a stronger level, although the market saw 119.30 again having failed the topside the NYK session saw a repeat move and attempt at the 119.80-120.00 levels to fail for the second time, again the market rejected the level and the second move up would appear to have less impetus than the first and the rejection only saw the market move just below 119.50 and then slowly rising to finish the day around the 119.70 levels.
• AUD: RBA minutes and the dovish commentary from Steven’s saw the AUD dip back from the opening 0.7720 levels with initial selling from weak longs taking the market to the 77 cent levels and then on the commentary back to the 0.7680’s before holding through the balance of Asia and into the London session, the fact that the market already knew what was due to be said saw London steadily buying through the session into NYK and the market moving back to the 0.7750 levels before slipping back as London walked out. The market then traded quietly into the close pretty much unchanged on the day.

Yesterday’s premiership results

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

EUR        German ZEW (Economic Sentiment) Apr A 53.3 | C 55.3 | P 54.8

EUR        German ZEW (Current Situation) Apr A 70.2 | C 56 | P 55.1

EUR        Eurozone ZEW (Economic Sentiment) Apr A 64.8 | C 63.7 | P 62.4

CAD       Wholesale Sales M/M Feb A -0.40% | P -3.10% | R -2.90%

Good Luck,

Andy

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