Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 119.371 | EURUSD 1.1223 | AUDUSD 0.79052 | NZDUSD 0.76293 | USDCAD 1.20737 | USDCHF 0.93238 | GBPUSD 1.53526 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.75 | 119.38

EUR/USD             1.1225 | 1.1204

EUR/JPY               134.20 | 133.91

AUD/USD            0.7919 | 0.7874

NZD/USD             0.7625 | 0.7570

USD/CAD             1.2102 | 1.2064

EUR/CHF              1.0473 | 1.0463

USD/CHF             0.9344 | 0.9320

GBP/USD             1.5359 | 1.5338

EUR/GBP             0.73085 | 0.7302

For today

• EUR: With a bank holiday upon the market with May day being celebrated around the globe the market has drifted from the opening levels to test below the 1.1210 areas however, very little seems to be impacting the market and even though there were plenty of data releases, including Chinese PMI numbers and Oz PPI numbers, these were generally ignored with China, HK and several local markets closed and moving into the whole of the European area closed the market is not likely to improve much until the NYK session begins, topside offers from the 1.1270 levels are likely to be a strong level with the market opening up to the Feb/Mar congestion and providing probably a deeper level of containment before opening the levels beyond 1.1400-1.1500, with fundamentals again in control of the market and less thought being given to the QE any further moves higher are likely to see concerns within the market of what little recovery we have seen within the Eurozone being smothered by the stronger Euro.  Downside bids light into the 1.1200 levels with stops likely through the 1.1170 areas and nothing overly strong until a push through to the 1.1080 area where better support is likely for the moment however, all this is possibly for another day and a tight range throughout is expected unless ISM surprises in NYK.
• GBP: Cable had a similar range moving from the openings above the 1.5350 levels the market held deep into the session before coming under pressure and dropping to hold the 1.5340 areas as the market moved towards the grey hours. Light bids into the 1.5300 levels opens up weak stops through the level and slightly stronger support into the 1.5250 areas however, the break higher has limited the support for the moment to the downside with the focus now on the 1.5500 key level for any attempt to test into the 1.5600/1.5800 range from the end of 2014.
• JPY: USDJPY opened around the 119.40 levels and traded quietly into Tokyo moving to test the 119.50 levels, with a drop in cash earnings numbers the market again moved steadily higher to test towards the 119.70 before running out of space and the start of the stronger offers, with little interest in the market the market has since started to drift as it moves towards a limited London session. Topside offers into the highs and likely to continue through the 120.00 level with possible stops through 120.30 quickly meeting offers on a move through to the 120.50 areas and then likely to see greater supply in the market to the 120.80 levels. Downside bids light through the 119.00 levels however, the stronger bids move into the market as it approaches the 118.50 areas being key to the downside for the moment, any movement through the area though is likely to attract the attention of the yield buyers and will possibly stall before moving much further.
• AUD: As with the rest of the market a quiet session heading into another quiet session, opening above the 0.7910 area the market slowly drifted lower moving through the 79 cent level and dipping lightly through the 0.7880 levels with AUDJPY holding around the 94.40 levels as the USDJPY rose causing the Oz to drift lower. Topside offers into the 0.7980 levels from short term players and stronger offers on a move through the 0.8020 levels with light stops mixed in, a push to the 0.8080 will see stronger offers through to the 81 cent level and then an opening for a greater move through that level but not for today one suspects, Downside bids light through to the 0.7860 levels before the chance of weak stops appear, for the moment AUDJPY is likely to dominate the market so direction should be taken from moves in the USDJPY.

Overnight News

JPY:

BOJ: Japan’s Trend Inflation Lifted After 2% Target, QQE Started

Japanese Bought Net 185.3 Billion Yen Overseas Debt Last Week

Japan’s March Core Consumer Prices Rise 2.2% Y/Y: Est. +2%

Japan March Unemployment Rate at 3.4%; Est. 3.5%

Markit/JMMA Japan April Manufacturing PMI 49.9 vs 50.3 in March

CNY:

China April Manufacturing PMI 50.1; Est. 50.0

China Manufacturing Industry Still Faces Downward Pressure: NBS

China April Non-Manufacturing PMI at 53.4; March 53.7

NZD:

English Says RBNZ May Change View Again If CPI Stays Low

New Zealand 2014/15 Budget Deficit Will Exceed Forecast: English

New Zealand House-Price Inflation Accelerates to 12-Month High

AUD:

Australia April Manufacturing Index Rises 1.8 Pts M/m to 48.0

Australian 1Q Producer Prices Rise 0.5% Q/Q

Today’s data

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

JPY         National CPI Core Y/Y Mar A 2.20% | C 2.00% | P 2.00%

JPY         Tokyo CPI Core Y/Y Apr A 0.40% | C 0.50% | P 2.20%

JPY         Jobless Rate Mar A 3.40% | C 3.50% | P 3.50%

JPY         Household Spending Y/Y Mar A -10.60% | C -11.70% | P -2.90%

CNY        Manufacturing PMI Apr A 50.1 | C 50 | P 50.1

CNY        Non-manufacturing PMI Apr A 53.4 | P 53.7

JPY         Labour Cash Earnings Y/Y Mar A 0.10% | C 0.40% | P 0.50% | R 0.10%

AUD       PPI Q/Q Q1 A 0.50% | C 0.20% | P 0.10%

AUD       PPI Y/Y Q1 A 0.70% | P 1.10%

08:30     GBP       Mortgage Approvals Mar C 63K | P 61.8K

08:30     GBP       M4 Money Supply M/M Mar C 0.10% | P -0.20%

08:30     GBP       PMI Manufacturing Apr C 54.6 | P 54.4

14:00     USD       Construction Spending M/M Mar C 0.50% | P -0.10%

14:00     USD       ISM Manufacturing Apr C 52 | P 51.5

14:00     USD       ISM Prices Paid Apr C 41.5 | P 39

14:00    USD       U. of Michigan Confidence Apr (F) C 96 | P 95.9

Harry Hindsight              

• EUR: A quiet Asian session saw the Euro hold in the 1.1120 areas for much of the session before beginning to drop into the grey hours to move to the 1.1080 levels and finding support, German employment numbers helped the Euro rally from the lows, as the ECB monthly bulletin was released and USD longs again exited the markets as focus shifts Euro’s pushed through the 1.1140 levels with weak stops being triggered and a quick rise through the 1.1200 levels to peak above the 1.1250 level. The market then settled back from that point drifting back into the mid 1.1160 levels initially before the US numbers triggered a small rally, now while the European numbers were nothing special and employment decreased again US numbers while mixed with good initial claims being made meaningless with the PCE numbers and personal numbers uninspiring and a steady USD selloff through the session continued this time over an extended period and taking the market to above the 1.1260’s before drifting into a close around the 1.1220 areas.
• GBP: After a steady decline through Asia the Cable rallied into the London session dragged along more by the Euro than anything particular however, having again pushed towards yesterday’s highs the market failed again and traded back to the lows around the 1.5420, Euro’s continuing rise through the session the cross played more part in the demise of the GBP into the NYK session with the cross rising from the 0.7200 level to 0.7260 in the early move before seeing the cross continue higher to push towards the 0.7340 areas as the Euro continued and pressing the GBP lower with Cable pushing through the opening levels around the 1.5430 and triggering light stops through 1.5420 and through to 1.5380, the market eventually stabilized late in the session holding the 1.5320 areas and eventually closing round the 1.5350 areas. Much has been made about the upcoming elections and the differences between the parties and their policies, from a layman’s view there is very little difference with all side promising the earth  and very little likely to materialise after the fact, but then I was born a cynic as so to some extent was the market with less than no notice being paid by the market to what ifs.
• JPY: The USDJPY weakened over the course of the Asian session dropping a little from the opening around the 119.00 areas to the 118.50 levels into the grey hours, London were quick buyers to bring the market back to those opening areas and the market then ranged in the 118.80-119.00 levels until the release of the US data, unlike other readers of the market the USDJPY went bid on the initial claims numbers and never looked back quickly pushing into the resistance around the 119.50 levels before continuing and testing the stronger levels above the 119.80 level before failing and falling back to the 119.40 areas into the close.
• AUD: The Oz was in steady decline from the opening peaking in the early part of the Tokyo session to the opening 0.8020 areas before sliding through the grey hours and trading in a tight channel to the 0.7870 areas, this would in some way explain the rise in USDJPY as support in the AUDJPY carry trade although the cross drifted steadily lower from the 95.40 highs to 94.00 support and halting the Oz’s drift lower, the market picked up slightly however, with little local support the market went out quietly holding around the 0.7920 areas.

Yesterday’s premiership results

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

NZD       RBNZ Rate Decision A 3.50% | C 3.50% | P 3.50%

NZD       Building Permits M/M Mar A 11.00% | P -6.30% | R -6.50%

GBP       GfK Consumer Confidence Apr A 4 | C 5 | P 4

JPY         Industrial Production M/M Mar (P) A -0.30% | C -3.40% | P -3.10%

AUD       Import Price Index Q/Q Q1 A -0.20% | C 1.10% | P 0.90%

JPY         Housing Starts Y/Y Mar A 0.70% | C -1.80% | P -3.10%

CHF        KOF Leading Indicator Apr A 89.5 | C 91.7 | C 90.8 | P 90.9

EUR        German Unemployment Change Apr A -8K | C -14K | P -15K

EUR        German Unemployment Rate Apr A 6.40% | P 6.40%

EUR        Eurozone Unemployment Rate Mar A 11.30% | C 11.20% | P 11.30%

EUR        Eurozone CPI Estimate Y/Y Apr A 0.00% | C 0.00% | P -0.10%

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

CAD       GDP M/M Feb A 0.00% | C -0.20% | P -0.10%

USD       Initial Jobless Claims (APR 25) A 262K | C 297K | P 294K | R 296K

USD       Employment Cost Index Q1 A 0.70% | C 0.60% | P 0.60%

USD       Personal Income Mar A 0.00% | C 0.20% | P 0.40%

USD       Personal Spending Mar A 0.40% | C 0.50% | P 0.10% | R 0.20%

USD       PCE Deflator M/M Mar A 0.20% | C 0.20% | P 0.20%

USD       PCE Core Y/Y Mar A 1.30% | C 1.40% | P 1.40% | R 1.30%

USD       Chicago PMI Apr A 52.3 | C 49.5 | P 46.3

Good Luck,

Andy

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