Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 119.806 119.60-70 | EURUSD 1.12046 1.1198-1.1200 | AUDUSD 0.79331 0.7947-52 | NZDUSD 0.74906 0.7520-25 | USDCAD 1.20776 1.2076-86 | USDCHF 0.93143 0.9308-23 | GBPUSD 1.54438 1.5443-60 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.94 | 119.40

EUR/USD             1.1206 | 1.1133

EUR/JPY               134.20 | 133.49

AUD/USD            0.7950 | 0.7876

NZD/USD             0.7532 | 0.7375

USD/CAD             1.2129 | 1.2080

EUR/CHF              1.0440 | 1.0409

USD/CHF             0.93475 | 0.9307

GBP/USD             1.5460 | 1.5405

EUR/GBP             0.7256 | 0.7226

For today

• EUR: A quiet opening with the market moving from the opening levels to trade into the Tokyo session holding the 1.1200 areas, news that the German FinMin Schaeuble doesn’t expect a deal to be forth coming and Greece’s cabinet preparing to battle EU creditors as anger mounts in the country left the Euro weakened and the market traded quickly to the 1.1160 levels before holding for a time and then sliding again this time down into the 1.1130’s, the market found some support from the level however, like the 1.1160 level it may be limited. Downside bids from the 1.1120 areas those bids are likely to continue through to the 1.1080 level with stops likely to make an appearance through the 1.1070 levels, a push through this level will open a test to the 1.1000 areas with the bids likely to be a little weaker and further stops likely on a break below 1.0970-60. Topside offers light through the 1.1260 level and then increasing to the 1.1300 and weak stops will open up a fresh attempt to the 1.1400 and the better offers in the market.
  GBP: The election is over with and now the market sits back to think about the real economics of the situation with very little changed from a month ago apart from the coalition is no more and the Conservatives have a majority. Opening around the closing levels the market has drifted through the session moving steadily closer to the 1.5400 levels as the drag of the Euro and the Greek situation weigh on the market. Downside bids are likely to be weak and possibly weakening as the market wakes up to the idea that nothing has changed, light bids into the 1.5350 levels are likely to see weak stops through the level and the market opening to a test to the 1.5250 areas and possibly better bids into the pre-election levels. Topside bids well traversed and the market has only light profit taking into the 1.5450 areas before the market starts to find decent offers into the 1.5500 levels and likely to continue into 1.5520 levels. No expected changes for the BoE.
• JPY: USDJPY moved in a quiet range through the session opening around the 119.70 levels before moving higher from the fixing pushing into the 119.90’s before holding in mid-range towards the London session. Offers to the topside again likely to be reasonably thick to the 120.20 levels and a push through the 120.30 area is likely to see weak stops but nothing major with those offers again starting to build on a push through 120.50 and increasing in front of the 121.00 levels. Downside bids clustered around the 119.20 and through to the 118.60 levels with the likelihood of yield buyers entering the market below 118.50 those bids are likely to increase again if the market can push lower and 118.00 areas is becoming a little bit of a key level with a push through opening the 116.00 areas.
• AUD: The Oz opened only slightly lower and pushed to above the 0.7930 levels with the help of the CNY rate cuts over the weekend. The move into the Tokyo session saw strong AUDJPY selling in the market and the Oz drifted steadily lower to trade into the same ranges as Friday before holding quietly around the 0.7880 levels. Topside offers from the 0.7960 area and into the 80 cent level, a push through the level though doesn’t really do much with offers reappearing from the 0.8030 levels and into the 0.8050 areas however, a test of the levels and a push through 81 cent will open up a test of the 82 cent level. Downside bids through the 0.7850 levels and a push through that level could see possible stops opening the market for a test lower however, 0.7750 through to 0.7700 are likely to provide some reasonable support.

Overnight News

EUR:

IMF Developing Contingency Plans on Possible Greek Default: WSJ

CNY:

China PBOC Still Has Room to Ease After Rate Cut: Sec. Journal

China Should Boost Direct Financing, PBOC’s Lu Says: Xinhua

JPY:

Japan Plans 9.4t Yen Expenditure Cut for Budget Target: Mainichi

Japan Ruling Parties Agree on Bills Expanding Military Role

AUD:

Australia April Business Confidence Unchanged M/m at 3

NZD:

New Zealand Nine-Month Budget Deficit Narrower Than Forecast

Key Says N.Z. ACC Levy Cuts Will Make Future Surpluses Smaller

IDR/EUR:

Indonesia to Resume Trade Talks with EU Next Month: Jakarta Post

Today’s data

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

AUD       NAB Business Confidence Apr A 3 | P 3

11:00     GBP       BoE Rate Decision C 0.50% | P 0.50%

11:00     GBP       BoE Asset Purchase Target C 375B | P 375B

Weekend News

CNY:

China Inflation Misses Estimates, Providing Room for Easing
China Defaults Mount as Coal Company Winsway Misses Payment
China Trade Expected to Improve in 2H: Commerce Ministry
China’s CSRC Said to Guide Funds to Cut Small-Cap Stock Holdings
EUR:

Schaeuble Flags Risk of Default With Greece Stalling
Euro Group Sees ‘Significant Rapprochement’ in Greek Talks: FAS
JPY/USD:

Japan’s Abe Says Nearing Agreement with U.S. on TPP Talks: NHK
JPY:

Japan Finance Ministry Mulls Sale of More JT Shares: Nikkei
GBP:

U.K. Banks May Get GBP4b Windfall from Visa Deal, Sky Reports

Harry Hindsight

• EUR: Early trading saw the Euro dominated by the UK election and movements in the GBP, opening around the 1.1270 areas before dropping back to the 1.1230 levels into the Tokyo opening, a brief respite before again drifting lower into the run to the grey hours as EURGBP selling pressured the Euro. German IP numbers disappointed however the market was already pushing into the supportive areas and the downside was limited by these bids and recovered once the market moved into the London session. Through London the market could not make it back above the 1.1240 levels convincingly and and only the move into the US session saw the market moving again with NFP a little lower than expected and a revision on the previous month leaving the market a little choppy, with the market lifting to the 1.1290 areas before collapsing back to test the 1.1180 levels and reversing again. The market moved between the 1.1280-1.1190 levels for a few hours before the range began to subside and drifting into a tight closing range of 1.1200-10.
• GBP: After weeks of polls telling the public that it was 1 point in favour of one party or the other the release of exit polls late into the Thursday session really put the cat amongst the pigeons. The exit poll release gave the market what it had been waiting for and although the market started to move before the close the rally continued and from the 1.5250 area the market quickly pushed to above the 1.5450 in its initial rally with predictions of the Conservative party likely to reach 323 and just short of the 326 seats needed for a majority. Light offers into the 1.5450 was enough to turn the market after a sharp rise and the move into the Tokyo session saw the market drifting back to the 1.5400 as the first results started to come in.  With the opposition party losing seat after seat and losing votes to several of the minor parties the market again started to rise steadily through the session triggering light stops through the previous high and continuing to the 1.5500 level, a minor setback with again light offers in the way before setting off on a second run to test above the 1.5500 levels and making the highs above 1.5520 before dipping back as the market moved into the grey hours, early buyers appeared into the London opening however, the work had been done and the markets euphoria was spend and with NFP to come Cable started to drift steadily lower and down to the 1.5400 levels and into NYK, EURGBP dropped from the closing 0.7400 levels and quickly moved to test the 0.7280, quietly moving into the Tokyo session the rally in Cable pushed the Euro lower and the cross moved into the 0.7220’s before a quiet rise into the Tokyo session to just above the 0.7300 levels with very little conviction before slipping back to the close. Cable chopped around from the release of the NFP as the release was mixed at best with the new number in the area but the revision causing the market to dip towards the 1.5350, eventually the election news of a Conservative majority with 331 seats helped the market back above the 1.5450 levels into the close.
• JPY: Opening around the 118.70 levels the market initially dipped as GBP strengthened however, the move into Tokyo saw strong GBPJPY cross buying moving in and the USDJPY started to steadily rise pushing against the 120.00 and into the London session, the market eventually pushed through the level but still struggled with resistance continuing higher and although the market pushed above the 120.20 levels it ran out of time and space with NFP quickly subduing the market and a quick drop back to the 119.60 level triggering some weak stops before quietly moving into a close only slightly higher than the opening.
• AUD: A very choppy day for the Oz with early movement caused by the move in GBP and then the release of the CNY trade balance sending the market back through the opening levels of 0.7910 to push against the 0.7930 areas before immediately collapsing on the details and dipping through 0.7865. Having made the lows for the day the market steadily rose in waves into the NYK session with 20-30 pip ranges until the release of the NFP and a quick stab lower replaced by a strong push to make the highs just short of 0.7970 and back again, the market eventually settled into a rise pushing into the close around the 0.7930 for the day.

Friday’s premiership results

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

CNY        Trade Balance Apr A $34.1B | C $34.25B | P $3.08B

CHF        Unemployment Rate Apr A 3.30% | C 3.30% | P 3.20%

EUR        German Industrial Production M/M Mar A -0.50% | C 0.40% | P 0.20%

EUR        German Trade Balance (EUR) Mar A 19.3B | C 20.0B | P 19.7B | R 20.0B

CHF        CPI M/M Apr A -0.20% | C 0.10% | P 0.30%

CHF        CPI Y/Y Apr A -1.10% | C -0.90% | P -0.90%

GBP       Visible Trade Balance (GBP) Mar A -10.1B | C -9.8B | P -10.3B

CAD       Housing Starts Apr A 181.8K | C 187K | P 189.7K | R 189.5K

CAD       Net Change in Employment Apr A -19.5K | C -5K | P 28.7K

CAD       Unemployment Rate Apr A 6.80% | C 6.90% | P 6.80%

USD       Change in Non-farm Payrolls Apr A 223K | C 230K | P 126K | R 85K

USD       Unemployment Rate Apr A 5.40% | C 5.40% | P 5.50%

USD       Average Hourly Earnings M/M Apr A 0.20% | C 0.20% | P 0.30%

USD       Wholesale Inventories Mar A 0.10% | C 0.30% | P 0.30%

Stay lucky

Andy

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