Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 119.308 119.25-35 | EURUSD 1.14475 1.1445-55 | AUDUSD 0.80356 0.8020-30 | NZDUSD 0.74742 0.7430-40 | USDCAD 1.20147 1.2008-18 | USDCHF 0.91594 0.9155-65 | GBPUSD 1.57249 1.5725-35 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               119.765 | 119.27

EUR/USD             1.1450 | 1.1419

EUR/JPY               136.815 | 136.55

AUD/USD            0.8053 | 0.8005

NZD/USD             0.7459 | 0.7417

USD/CAD             1.2048 | 1.2005

EUR/CHF              1.0499 | 1.0477

USD/CHF             0.91885 | 0.9157

GBP/USD             1.5745 | 1.5706

EUR/GBP             0.72765 | 0.7269

For today

AUD:

Lowe Says RBA Treading Fine Line between Consumption, Imbalances

Lowe Wants Focus on RBA Decision When Rates Cut, Not on Guidance

Hockey: U.S. Interest-Rate Rise Delay Triggering A$ Volatility

JPY:

BOJ’s Maeda Says Economy Has Continued Moderate Recovery Trend

Abe’s Constitutional Change Drive Weakened by Osaka Vote: Nikkei

Japan March Core Machine Orders Rise 2.9% M/m; Est. +1.5%

Ex-BOJ Deputy Iwata Expects More Delay in Timing of BOJ Target

CNY:

Net FDI in China Financial Institutions $1.4b in 1Q, SAFE Says

CNY/IDR:

Chinese Companies Commit $16.7b Investment into Indonesia

USD/KRW:

Kerry Calls for Ramping Up Pressure on North Korea over Nukes

CHF:

SNB’s Zurbruegg Doesn’t See 1930s-Style Deflationary Spiral: BZ

SNB’s Zurbruegg: Doesn’t Now See Rise in Capital Buffer: TDG

GBP:

U.K. May House Prices Fall 0.1% M/m, Rightmove Says

NZD:

Key Expects N.Z. Property Tax Measures to Complement RBNZ Steps

N.Z. Property Investor Lending Surged 46% in March, RBNZ Says

New Zealand Services Industry Expanded at Slower Pace in April

New Zealand Forecasts 2016 Tourist Spending Will Rise 4.8%

N.Z. Will Need 36,000 More Tourism Workers by 2025, NZIER Says

Overnight News

• EUR: The market moved quietly lower from the opening around the 1.1450 levels and slowly drifted to the 1.1420 levels into the Tokyo session before holding off the lows, the USDJPY drifted slightly from its highs with the EURJPY still holding the 136.80 levels with possibility of exporter offers in the areas thus allowing the Euro to move towards the 1.1430 levels. Political machinations over Greece with the reputation of the Eurozone, against another round of lending, a standoff with Greece not willing to implement any further austerity measures and the Euro group still fighting against any further rescue plans unless they do. For the moment much of the movement in the Euro has been down to the weakness in numbers in the US as the USD rose the impact told on those numbers and the record USD longs over the past few weeks have fallen away, and the Euro is at the point of possibly breaking higher with weak technical areas once the market pushes through the 1.1550-70 areas however, the market is still running into strong offers through the 1.1450 levels and likely to increase into the 1.1480 areas and through the figure area, weak stops are likely through the 1.1520 levels however, these are likely to be lost in the clutter. Downside bids are likely to be light into the 1.1420-1.1380 areas before giving way to weak stops, into the 1.1320 levels are likely to see stronger bids appearing with a push to the 1.1280-50 level likely to see some congestion before opening to further losses.
• GBP: Cable managed only light gains into the Tokyo session before drifting from the 1.5745 levels to move down to trade below the 1.5710 areas into mid-session before making a slight recovery to the 1.5730 areas. Downside bids into the 1.5700 are likely to be limited however, a push through the 1.5650 areas will likely see the market opening and a test through 1.5600 will see very little support to hold the market until the 1.5500 areas and possibly stronger bids. Topside offer into the 1.5780-1.5800 levels with the market unable to push beyond the 1.5820 areas, a penetration through the level will likely see the market open for a test higher and moving towards the 1.60-1.62 range with only minor levels through to those levels. However, there is very little on the data front today and the markets are likely to be quiet unless European situation moves in any particular direction.
• JPY: USDJPY moved from the opening in line with Friday’s close and into the Tokyo session eventually saw the market rising quickly through the 119.50 levels with light stops triggered and a push to 119.70 before running out of steam, EURJPY offers then appeared again around the 136.80 levels and USDJPY was forced a little lower and into the 119.60’s for the move towards London. Topside offers from the 119.80 level and at the moment added to which 136.80 level offers in the EURJPY are holding the market however, a push to the 120.20-30 areas still remains difficult unless both 120.00 and the EURJPY levels were to break at the same time, through the 120.30 areas weak stops are likely before running into further offers into the 120.50 areas and then again becoming stronger as the market moves towards the 121.00 level. Downside bids into the 119.20-118.60 levels have contained the market from a few weeks and one would suspect interest by the yield players to continue into and through those levels. So a push down through those levels opens up the market for a deeper test however, I’ve said all this before and we remain pinned in the 118.60-122.00 range.
• AUD: The opening saw the Oz unchanged and moving slowly higher into the Tokyo session to touch above the 0.8050 levels before commentary from RBA’s deputy Governor Lowe who commented on the possibility of lower rates if needed and a lower interest FX rate would help economic transition, this led the Oz to quickly move from those highs in a move to just below the 0.8010 levels before running out of steam, even then there was little in the way of a bounce and the initial selling was not particularly strong and the market spent the remainder of the session moving around the 0.8020 areas. Topside offers are likely to be back in the 0.8880 levels through to the 81 cent levels with weak stops possible through the figure level for a test to the 0.8130 levels and then stronger offers. Downside bids into the 80 cent level with longer term buyers likely to be in the areas for the moment, a push through the 0.7960 level will likely see better stops appearing in the market and a test to the 79 cent level and congestion over the next 50 pips below there.

Today’s data

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

23:01     GBP       Rightmove House Prices M/M May A -0.10% | P 1.60%

23:50     JPY         Machine Orders M/M Mar A 2.90% | C 1.50% | P -0.40% | R -1.40%

4:30        JPY         Industrial Production M/M Mar (F) A -0.80% | C -0.30% | P -0.30%

4:30        JPY         Tertiary Industry Index M/M Mar A -1.00% | C -0.50% | P 0.30% | R 0.40%

7:15        CHF        Retail Sales (Real) Y/Y Mar C -2.00% | P -2.70%

14:00     USD       NAHB Housing Market Index May C 57 | P 56

Weekend News

EUR:

ECB’s Mersch Says Greek Situation Is Approaching ‘End Game’
Tsipras Had Told Lenders Greece Wouldn’t Pay IMF: Kathimerini
Greece will not make June IMF Payments without Aid Deal: Channel 4
Mersch Sees Inflation Rate around Zero until autumn: 100.7 Radio
Greece Long-Term Ratings Affirmed at CCC by Fitch
NZD:

N.Z. Government Follows RBNZ with Measures to Quell Housing Boom
CNY:

China Ready to Free Deposit Rates, China News Cites PBOC’s Lu
China’s Holdings of Treasuries Rise for First Time Since August
China Chemical Leak Kills Eight as Industrial Safety Woes Mount
USD:

Raid on Islamic State Illustrates Reach and Limits of U.S. Power
U.S. Concerned With Pace, Scope of China Reclamation in Sea
CHF:

Switzerland Has to Live With Strong Currency, Eco Min Tells FAZ
JPY:

Tokyo to Sell Dollar Debt on TSE’s Pro-Bond Market: Nikkei
GBP:

Osborne to Set out U.K. Budget Detailing Tory Plans on July 8

Harry Hindsight

• EUR: The Euro traded quietly over the course of the Asian session, opening just above the 1.1400 levels with the market drifted slightly through the figure level before returning back to just below the 1.1420 levels and quietly ranging through the session until the grey hours, strong selling sent the Euro’s lower with fixed income dominating the European session and the Euro’s unable to break through the 1.1420 level it dipped steadily back to the 1.1360 levels triggering weak stops through the 1.1380 levels, the market held the 1.1350 levels into the NYK session before again breaking lower before the NYK opening in a final reversal of some long USD positions. Poor numbers in the US again with a drop in IP saw the market in the Euro rise quickly higher and Michigan numbers finished off with the market pushing through the 1.1460 levels briefly in a steadier move towards the close.
• GBP: A quiet session the Cable for the most part moving from the opening 1.5775 levels and although dipping into the Tokyo session through the 1.5760 managed to touch above the 1.5780 levels to set the limited range, the move into London saw Cable start to drift initially dragged lower by the Euro with EURGBP moving to the 0.7210 levels in limited action until the NYK session kicked in. The move into pre NYK had seen some light buying before the US numbers hit and the market moved quickly to push briefly above the 1.5800 levels before collapsing back as EURGBP buying kicked into the late session with the push above the 1.1450 levels and EURGBP pushing 0.7280 into the close, Cable dropped steadily in a tight channel and back to finish the day just above the day’s lows.
• JPY: The USDJPY opened around the 119.20 levels and moved slowly into the Tokyo market before rising through the 119.30 levels with demand during the Tokyo fix , triggering minor stops on the way to again range quietly through to the grey hours, the move higher was more to do with the Euro movement as the EURJPY cross had tried repeatedly to push above the 136.40 areas and the movement of the Euro lower allowed the USDJPY to continue moving higher. USDJPY managed to start rallying again into the 119.90’s and then holding in the area unable to break 120 and then the NYK opening and the poor set of numbers, the fall was fairly quick and the move back through the 119.70 levels triggered weak stops and the market dipped back to the opening levels before ranging to the close into the 119.30-40 areas.
• AUD: A quiet opening led into the Tokyo session with stops making an appearance and the market dropping down to the 0.8050 levels off the highs around 0.8090. The market held the lows into the London session with some light selling through the 0.8050 levels during the grey hours before recovering and then dropping in a steady move through to the NYK session to trade to just below the 0.8000 levels. The US numbers saw the market in Oz rising again however although it made a quick gain to the 0.8060 levels it struggled once the buying was absorbed and the market drifted to a close in the 0.8040 areas.

Friday’s premiership results

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

JPY         Domestic CGPI Y/Y Apr A -2.10% | C -2.10% | P 0.70%

JPY         Consumer Confidence Index Apr A 41.5 | C 41.9 | P 41.7

CHF        Producer & Import Prices M/M Apr A -2.10% | C -0.10% | P 0.20%

CHF        Producer & Import Prices Y/Y Apr A -5.20% | P -3.40%

GBP       Construction Output M/M Mar A 3.90% | C 4.10% | P -0.90% | R -0.30%

CAD       Manufacturing Shipments M/M Mar A 2.90% | C 1.20% | P -1.70% | R -2.20%

CAD       Intl Securities Transactions (CAD) Mar A 22.47B | C 7.23B | P 9.27B | R 9.35B

USD       Empire State Manufacturing May A 3.1 | C 5.1 | P -1.19

USD       Industrial Production Apr A -0.30% | C 0.10% | P -0.60% | R -0.30%

USD       Capacity Utilization Apr A 78.20% | C 78.40% | P 78.40% | R 78.60%

USD       U. of Michigan Confidence May (P) A 88.6 | C 96.5 | P 95.9

USD       Net Long-term TIC Flows Mar A $17.6B | P $20.9B

Stay lucky

Andy

Any opinions, news, research, analyses, prices or other information contained on this Blog, whether by LMAX, its employees, partners or contributors, does not constitute investment advice nor has it been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the material contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. Whilst information provided on this Blog may help with your investment research you must consider carefully whether you should make (or refrain from making) investment or other decisions based on what you see without doing further research on the investments you are interested in. Participating in this Blog cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you. LMAX has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

LMAX will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the material produced in this Blog was obtained from sources deemed to be reliable, LMAX does not provide any guarantees about the reliability of such sources.

Consequently any person acting on it does so entirely at his or her own risk.

If you currently hold an account with LMAX for the purposes of trading FX and CFD’s, you are encouraged to use a different Username and Password to access the Blog or any other online systems. The Blog is a place to learn, discuss and share information and ideas with Blog followers. It is not a place to slander, use unacceptable language or to promote LMAX or any other FX, Spread Betting and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.