Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 120.127 | EURUSD 1.11474 | AUDUSD 0.7838 | NZDUSD 0.7531 | USDCAD 1.2093 | USDCHF 0.93338 | GBPUSD 1.51207 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.20 | 120.09

EUR/USD             1.1151 | 1.1124

EUR/JPY               133.96 | 133.615

AUD/USD            0.7910 | 0.7787

NZD/USD             0.7555 | 0.7522

USD/CAD             1.2122 | 1.2089

EUR/CHF              1.0419 | 1.0407

USD/CHF             0.9362 | 0.9335

GBP/USD             1.5125 | 1.5113

EUR/GBP             0.73725 | 0.7361

For today

• EUR: A steady weakening in a thinned out market with Tokyo still in holiday mode, dipping from the opening 1.1150’s and easing through to the low 1.1130’s as the market adjusts for the expected RBA 0.25% cut. The release was expected and had very little impact on the Euro with EURAUD buying swiftly turning the other way. Topside offers into the 1.1220 areas a likely to be light before seeing weak stops through the 1.1230 areas, the market then opens up to the 1.1280 and strong offers with suspected option plays involved, of import is increasing concerns of a Greek bankruptcy with the IMF now possibly withholding a portion of liquidity from Athens if debt write offs are not forthcoming from the Eurozone, who of course want the Greeks to start cutting back there spending. Downside around current levels 1.1120 and into the figure levels before a mixture just below, a push through the 1.1070 level will see likely stops and the market opening for a test to the 1.1000 levels and better bids.
• GBP: Cable continues to hold quietly around the 1.5120 levels barely moving through the Asian session and towards the RBA announcement and the grey hours. Cable continued to drift after the release of the RBA commentary and rate cut, Topside offers light into the 1.5200 levels and the market again opening to the 1.5300 areas and slightly better offers, with election polls finely balancing the two main parties, discussions either formal or informal with others may not start until after the election and a scramble to horse trade into Downing street. Downside has light bids into the 1.5100 levels with possible weak stops through the level and short term technical sellers to a stronger 1.5000 areas, through that level the market is likely to find limited but deeper bids appearing and a slower move to the 1.4900 level if it were to accelerate.
• JPY: With Tokyo out for the day the action has been very limited moving from the opening 120.15 areas the market traded 5 pips either side of the opening in a very quiet market. The movement in the Oz caused limited reaction with the USDJPY quickly spiking to 120.20 areas before dropping back to just below the 120.10 areas to widen the range for the day. Topside offers above the 120.20 levels are limited with no Tokyo around however; one would suspect resting offers in the market with a break through the 120.30 area likely to see some weak stops but offers likely to continue to the 120.80 stronger levels, even a push through these levels will see further offerings continuing. Downside light bids into the 120.20 levels and likely to continue down to the 119.80 levels a push through the 119.60 area will likely see a return to the 119.00 levels and the ranges from the back end of April.
• AUD: The Oz traded quietly from the opening holding around the 0.7840, dipping a little on the back of worsening trade balance numbers but unable to push through the 0.7830 level as those with positions started to square up before the RBA release pushing into the mid 0.7855 areas. The RBA cut was expected and the market quickly reacted dropping down to below the 78 cent level in a quick move before immediately bounce as the commentary was released however, the statement failed to include the usual “further easing of policy may be appropriate” with this missing the market took the easing as a watered down measurement and the market quickly pushed to above the 0.7880 levels and continued at a slower rate to push above the 0.7910 levels into the grey hours. Topside offers in the current areas however a push through the 0.7920 levels again opens the 80 cent level for a test with offers increasing through that level and into 0.8050-60 areas and even stronger offers into 81 cent, which are likely to include option plays. Downside bids into the 78 cents are cleared with congestion below that level and continuing into the 77 cents, with 0.7750 likely to be reasonably strong likely to slow a falling market with 77 cents possibly stronger.

Overnight News

AUD:

RBA’s Stevens Cuts Benchmark Interest Rate to 2% (Full Text)

Fitch: RBA Rate Cut Raises Need for Macro-prudential Reponse

Australia’s March Trade Deficit A$1.32b Est. A$1b Deficit

Australia ANZ Weekly Consumer Sentiment Falls 2.8% to 108.7

Australia April Services Index Falls 0.5 Pt M/m to 49.7

USD:

Yellen Says U.S. Justice Dept. Investigating 2012 FOMC Leak

Treasury Reiterates Advice to Puerto Rico Isn’t Intervention

CNY:

China May Raise Stamp Tax in 3Q, Brokerage Says: Sec. Times

China Breaches 10% of Global Market Cap as H.K. Overtakes Japan

NZD:

Auckland April House Sales Jump 32% Y/Y: Barfoot

RUB:

Russia May Start Using Ruble Oil Price for Budgeting: Vedomosti

Today’s data

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

AUD       Trade Balance (AUD) Mar A -1.32B | C -0.98B | P -1.26B

AUD       RBA Rate Decision A 2.00% | C 2.00% | P 2.25%

08:30     GBP       Construction PMI Apr C 57.4 | P 57.8

09:00     EUR        Eurozone PPI M/M Mar C 0.30% | P 0.50%

09:00     EUR        Eurozone PPI Y/Y Mar C -2.30% | P -2.80%

09:00     EUR        European Commission Economic Forecasts

12:30     CAD       International Merchandise Trade (CAD) Mar C -0.6B | P -0.98B

12:30     USD       Trade Balance Mar C -$40.1B | P -$35.4B

14:00    USD       ISM Non-Manufacturing Composite Apr C 56.2 | P 56.5

Harry Hindsight              

• EUR: A quiet Asian session with Tokyo out for the day the market moved of the opening 1.1200 areas and dipping briefly to below the 1.1180’s before holding in the 1.1190 areas, the move into the grey hours and a UK bank holiday saw the market rallying to just above the 1.1220 to make the high for the day, Eurozone PMI numbers looked ok on the face of it however, the individual numbers did show significant weakening in several countries which sent the market lower from those highs triggering weak stops through the 1.1180 level and continuing the move into pre-NYK and better liquidity pushing back out of the 1.1120’s and moving higher with only Factory orders in the US to guide the market, the market touched briefly above the 1.1180 levels again before drifting back lower and holding around the 1.1140 levels into the close.
• GBP: With a UK bank holiday the market through the day was particularly quiet. Opening around the 1.5140 levels the market initially move to the 1.5160 level and then generally stuck to that area into the European period, Cable fell back a little as the Euro rallied however, from that point on the Cable was at the mercy of the movement in the Euro and although the EURGBP dropped away from the 0.7400 areas dropping to the 0.7350 areas as the Euro dipped back the Cable did follow to dip just below the 1.5100 levels and the lows of the day. Cable moved quietly for the most part having hit the lows to trade in a narrowing range into the close around 1.5120.
• JPY: With Tokyo and the UK with Bank holidays the market was unable to move out of a tight range, dipping from above the 120.20 levels the market gradually dropped to the 120.00 levels and holding into the London session with limited action, the market rallied back from that point to make highs above the 120.25 and that was the range with the market moving in a 120.05-25 areas for the most part to close in 120.15 areas.
• AUD: With limited movement in USDJPY the market and the market in general the Oz did very little, opening around the 0.7840 levels the market dipped on the release of weakening inflationary numbers to test into the 78 cent level before recovering once the second dip lower was over and the CNY manufacturing PMI numbers had been absorbed. The market then moved through the day moving steadily back to the opening levels and pushing lightly through to trade the 0.7840-50 levels to the close.

Yesterday’s premiership results

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

AUD       TD Securities Inflation M/M Apr A 0.30% | P 0.40%

NZD       ANZ Commodity Price Apr A -7.40% | P 4.60%

AUD       Building Approvals M/M Mar A 2.80% | C -1.50% | P -3.20% | R -1.60%

CNY        HSBC China Manufacturing PMI Apr (F) A 48.9 | C 49.4 | P 49.2

CHF        SVME-PMI Apr A 47.9 | C 48.2 | P 47.9

EUR        Eurozone Manufacturing PMI Apr (F) A 52 | C 51.9 | P 51.9

EUR        Eurozone Sentix Investor Confidence May A 19.6 | C 19.1 | P 20

USD       Factory Orders M/M Mar A 2.10% | C 2.10% | P 0.20% | R -0.10%

Good Luck,

Andy

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