Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 119.868 | EURUSD 1.11852 | AUDUSD 0.79432 | NZDUSD 0.75654 | USDCAD 1.20683 | USDCHF 0.92655 | GBPUSD 1.51827 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.05 | 119.82

EUR/USD             1.1243 | 1.1175

EUR/JPY               134.80 | 134.10

AUD/USD            0.7975 | 0.7918

NZD/USD             0.7566 | 0.7458

USD/CAD             1.2087 | 1.2031

EUR/CHF              1.0391 | 1.0363

USD/CHF             0.9282 | 0.9239

GBP/USD             1.5216 | 1.5166

EUR/GBP             0.7391 | 0.73695

For today

• EUR: Euro’s slowly drifted from the opening around 1.1185 levels pushing through the 1.1880’s before rallying sharply from the release of CNY numbers triggering some weak stops through the 1.1200 level and a push through 1.1220 triggering a second batch to run to the 1.1240 levels before finding sufficient resistance to hold the market. Topside offers from 1.1250 levels are likely to continue to the 1.1300 areas with strong offers and options in play, a push through to the 1.1310-20 areas are likely to see stops appearing and then fresh offers into a congested area from 1.1350 onwards and into 1.1400, those offers are likely to continue. Downside bids light into the 1.1200 levels with a break through the 1.1170 levels likely to see stops triggered and the market opening for a further test towards yesterday’s lows just below the 1.1100 areas.
• GBP: Cable opened around the 1.5180 levels and although the market dipped to the 1.5170 level it had plenty of room to the topside with the 1.5200 level already cleared in the previous session, the move after the CNY numbers saw the market run quickly through to the 1.5210 levels to trade the area before pushing through just before the grey hours. Topside offers into the 1.5220 levels are likely to be light with possible stops through the 1.5230 levels and the ability to again push through the 1.5300 levels with offers light all the way to 1.5400 areas with stops mixed along the way. Downside bids light to the 1.5170 levels and then opening to the 1.5100 level and stronger bids, however, with election day tomorrow the GBP is likely to move on rumours and movement in the Euro and possibly very slowly.
• JPY: USDJPY recovered over the session to touch through the 120.00 levels however, after an opening from the 119.85 levels the 120.05 area highs saw only limited action in the pair before drifting back through the 120.00 areas to hold around the 119.90 levels for most of the session, topside offers are likely to be strong again into the 120.50 areas and those offers continuing through to 121.00 before a mixture of stops are likely to appear with possible short term options in play, a push through the 121.30 levels is likely to see two way flows as the offers battle the buyers however, those offers are likely to continue through to the 122.00 areas last seen at the beginning of March. Downside bids to the 119.70 level with weak stops a possibility and the market opening for a test of the 119.00 with light stops likely in front of the level increasing to the 118.80 levels before seeing stops through the 118.50 areas however, at this point yield buyers are likely to make an appearance and for the moment stand in the way and further bidding to the 118.00 areas.
• AUD: The Oz opened around the 0.7940 levels and drifted lower into the Tokyo session, supply in the AUDJPY towards the 200 dma around 95.55 played a role in limited topside movement of the Oz although it did push to the 0.7970 areas before those carry trade supply limited the movement into the grey hours. Topside offers into the 80 cent level and continuing through in patches to the 0.8050 areas and stronger offers, a push through the area is likely to see 81 cent tested with the possibility of short dated options coming into play and congestion. Downside well traversed and limited bids entering the market over the past 24hrs likely to be concentrated around the 78 cent levels, but generally open.

Overnight News

NZD:

N.Z. Employers Hired at Slower Pace in First Quarter, Kiwi Drops

New Zealand Wage Inflation Slowed in First Quarter

JPY:

Japan Raises Alert for Volcano at Hakone Resort Area

Japan’s Nishimura: Big Exporters Should Pass on Weak-Yen Benefit

Tokyo New Office Rents Rise for 1st Time in 2 Years: Nikkei

USD:

Fed’s Kocherlakota Says Raising Rates in 2015 is ‘Inappropriate’

CNY:

China Don’t Need ‘Strong Stimulus’: People’s Daily Commentary

HSBC China April Services PMI 52.9 vs 52.3 in March

HSBC China April Composite PMI 51.3 vs 51.8 in March

AUD:

Australian March Retail Sales Rose 0.3% M/M; Est. 0.4% Gain

Australia’s March Private New Home Sales Rise 4.4% M/m

GBP:

U.K. April BRC Shop Price Index -1.9% Y/y vs March -2.1% Y/y

Today’s data

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

NZD       Unemployment Rate Q1 A 5.80% | C 5.50% | P 5.70% | R 5.80%

NZD       Employment Change Q/Q Q1 A 0.70% | C 0.70% | P 1.20%

NZD       Labour Cost Private Sector Q/Q Q1 A 0.30% | C 0.40% | P 0.50%

GBP       BRC Shop Price Index Y/Y Apr A -1.90% | C -1.70% | P -2.10%

AUD       Retail Sales M/M Mar A 0.30% | C 0.40% | P 0.70%

CNY        HSBC China Composite PMI Apr A 51.3 | P 51.8

CNY        HSBC China services PMI Apr A 52.9 | P 52.3

08:00     EUR        Eurozone Services PMI Apr (F) C 53.7 | P 53.7

08:30     GBP       Services PMI Apr C 58.5 | P 58.9

08:30     GBP       Markit/CIPS UK Composite PMI Apr C 58.1 | P 58.8

09:00     EUR        Eurozone Retail Sales M/M Mar C -0.70% | P -0.20%

12:15     USD       ADP Employment Change Apr C 190K | P 189K

12:30     USD       Non-Farm Productivity Q1 (P) C                 -1.90% | P -2.20%

12:30     USD       Unit Labour Costs Q1 (P) C 4.10% | P 4.10%

14:00     CAD       Ivey PMI Apr C 50.1 | P 47.9

14:30    USD       Crude Oil Inventories P 1.9M

Harry Hindsight              

• EUR: Asia was a slow drift lower, opening around the 1.1150 areas and dipping into the grey hours to the 1.1130 areas, the move into London saw the market dropping quickly from the 1.1140’s and into the 1.1100 level as concerns over Greece, the market pushed through the level and briefly traded below the 1.1080 levels before finding support from the EC economic forecasts and start a steady recovery. The market moved into the NYK session around the opening levels and although there was a little dip in the market continued to the 1.1200 level before London left, another attempt higher trading just through the 1.1220 levels before the offers again chased the market lower and back to below the 1.1220 levels.
• GBP: Cable opened around the 1.5120 levels and traded in a very narrow range until the market moved into the London session, with increasing movements the market pushed to the 1.5150 level in early trading before gapping lower on the release of the Construction PMI number, which came in worse than expected and although the market touched the 1.5090 level very quickly the kneejerk reaction was quickly over with and the market was back to the range play. EURGBP however, played a supportive part in the market with Euro’s dipping in early London and Cable holding its level the cross dipped to the 0.7315 areas before recovering over the course of the day to the opening levels around 0.7375. USD weakness moved in on the move into the NYK session and Cable moved higher triggering weak stops along the way to touch into the back half of the NYK session pushing the 1.5220 levels before backing away from the level into the close. No real surprise from the election news with things finely balanced and I wouldn’t expect anything till after the election and the horse trading to form a government.
• JPY: Another bank holiday in Tokyo left the market thin on the ground and nowhere to go with offers into the 120.20 sufficient to hold the market in place from the opening 120.10 levels before dipping a little into the grey hours. With USD looking strong from the opening in London USDJPY pushed to the 120.20 level again pushing through to hold 120.30 after a couple of hours the level broke and weak stops and a quick stab to the 120.50 levels and stronger offers, the market quickly rejected the level and the move into NYK saw weak figures released and the USDJPY dropped back quickly to add to the rejection. The market dipped to the 119.70 areas before London left the market and the market stabilized sufficiently to finish only 10 pips from those lows.
• AUD: The Oz rose quietly in the early part of the session with traders closing out positions before the event pushing from the opening 0.7840 to just below 0.7860 before the release. Consensus for 0.25% proved accurate however, having seen the kneejerk reaction to the cut in interest the market moved quickly to sub 78 cents, then came the communique with an omitted sentence from previously released commentaries, “further easing of policy may be appropriate”, this gave the market the impression that this was the last time they are likely to cut and that they will now sit back and rely on the Fed to raise the interest rates in the US to drive the Oz lower however, this maybe a little short sighted on their part and the market took it as so rising just as quickly to push above the 79 cent level pushing towards 0.7920, once the mad rush was over and the market held into the grey hours the market drifted back and held into the London session around the 0.7880 levels, US numbers saw the market again moving to the 0.7920 levels and the market pushed through triggering further stops and a move to the 0.7940 levels and staying there for several hours into the close.

Yesterday’s premiership results

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 | R -1.61B

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

GBP       Construction PMI Apr A 54.2 | C 57.4 | P 57.8

EUR        Eurozone PPI M/M Mar A 0.20% | C 0.30% | P 0.50% | R 0.60%

EUR        Eurozone PPI Y/Y Mar A -2.30% | C -2.30% | P -2.80%

EUR        European Commission Economic Forecasts

CAD       International Merchandise Trade (CAD) Mar A -3.0B | C -0.6B | P -0.98B | R -2.2B

USD       Trade Balance Mar A -51.4B | C -$40.1B | P -$35.4B | R -35.9B

USD       ISM Non-Manufacturing Composite Apr A 57.8 | C 56.2 | P 56.5

Good Luck,

Andy

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