Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 119.981 | EURUSD 1.13148 | AUDUSD 0.79904 | NZDUSD 0.73828 | USDCAD 1.21599 | USDCHF 0.92631 | GBPUSD 1.56535 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.04 | 119.86

EUR/USD             1.1326 | 1.1285

EUR/JPY               135.825 | 135.42

AUD/USD            0.8001 | 0.7956

NZD/USD             0.7432 | 0.7360

USD/CAD             1.2171 | 1.2131

EUR/CHF              1.04865 | 1.0460

USD/CHF             0.9272 | 0.92585

GBP/USD             1.5664 | 1.5632

EUR/GBP             0.7228 | 0.7218

For today

• EUR: Euro’s moved slightly higher from the opening into Tokyo however, with the current uncertainties surrounding Greece, increasing Yield spreads, the market started to drift lower from above the 1.1320 areas and the release of the RBA minutes was sufficient to see the Euro quickly move through the 1.1300 levels and a push to just below the 1.1290’s. Topside light offers into the 1.1350-60 areas with better offers building into the 1.1400 areas a move through the 1.1460 area will see limited light stops before better offers towards the 1.1500 areas, Downside bids into the congested 1.1250 areas increasing into the 1.1220 areas and the figure areas, a push through is still limited with bids again into the 1.1150 levels and a similar pattern until the market pushes through the 1.1100 areas and an opening to the downside and weaker levels.
• GBP: Cable was unable to move independently moving slightly higher from the opening to push above the 1.5660 levels before the RBA minutes saw the USD strengthen for a period with the Cable dipping down into the low 1.5630’s before returning back to the opening levels. Downside bids are likely to be thin into the 1.5600 levels with likely stops through the level to open up a deeper move to the 1.5500 and possibly better bids through the level. Topside offers into the 1.5700 levels are a little stronger and the market is now congested above the level however, with a decent day of inflationary data to come the market looks a little more bullish and a likely return to positive inflation if only minor.
• JPY: The USDJPY again traded in a very tight range with the market dipping away from the 120.00 level on the Tokyo opening and pushing through the 119.90 levels for a brief period before regaining its losses and pushing a little further through 120.00 however, the action was limited with strong two way trading in the areas. Topside offers through the 120.00 and probably to the 120.30 before any sign of weakness however, the offers quickly reappear on a push to the 120.50 levels and increase in size into the 120.80 areas. Downside bids remain strong into the 119.50 levels opening only slightly to the 119.20 level and continuing through to the 118.60 levels were yield plays are likely to materialize.
• AUD: The market moved off the closing levels pushing to the 80 cent level before weak longs started to cut out and cover into the RBA minutes, with the commentary a little more dovish and reiterating the comments from Lowe yesterday with “lack of guidance does not limit scope for future rate move”, Oz dropped quickly to the 0.7960 levels before running out of steam and finding willing buyers to take the market higher and back to the opening levels. Topside sees light congestion all the way through the 80 cent level and into the 0.8150 areas however, while likely to be continual it is not likely to be particularly strong once the 0.8050 level is cleared until 0.8150 and a strong mind set appears to 82 cent. Downside bids to the 0.7950 areas are likely to be light and this gives way to an opening to test the 79 cent levels and stronger bids, a push through the level will likely see light stops and test into strong bids from 0.7850 levels.

 

Overnight News                                                                                                                         

JPY:

Nomura Pushes Back BOJ Easing Call to April 2016 From Oct. 2015

AUD:

RBA: Lack of Guidance Doesn’t Limit Scope for Future Rate Move

EUR:

Greece Will Not Default, Finance Minister Varoufakis Says

ECB Wouldn’t Cut ELA If Greece Misses IMF Payment: Handelsblatt

CNY:

China Banks Sold Net 92.1b Yuan of Forex for Clients in April

China Policy Shift Prioritizes Growth Over Debt Problem: Fitch

AUD:

Australia ANZ Weekly Consumer Sentiment Rises 3.6% to 114.6

NZD:

New Zealand Two-Year Inflation Expectations Rise to 1.85%

N.Z. Producer Prices Drop for Fourth Consecutive Quarter

N.Z. Job Ads Fall a Second Month as Employment Growth Slows: ANZ

Today’s data

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

NZD       PPI Inputs Q/Q Q1 A -1.10% | C -0.60% | P -0.40%

NZD       PPI Outputs Q/Q Q1 A -0.90% | C 0.10% | P -0.10%

AUD       Conference Board Leading Index Mar A -0.10% | P 0.50%

NZD       RBNZ 2-Year Inflation Expectation Q2 A 1.90% | P 1.80%

08:30     GBP       CPI M/M Apr C 0.40% | P 0.20%

08:30     GBP       CPI Y/Y Apr C 0.00% | P 0.00%

08:30     GBP       Core CPI Y/Y Apr C 1.00% | P 1.00%

08:30     GBP       RPI M/M Apr C 0.40% | P 0.20%

08:30     GBP       RPI Y/Y Apr C 0.90% | P 0.90%

08:30     GBP       PPI Input M/M Apr C 0.80% | P 0.30%

08:30     GBP       PPI Input Y/Y Apr C -11.50% | P -13.00%

08:30     GBP       PPI Output M/M Apr C 0.20% | P 0.20%

08:30     GBP       PPI Output Y/Y Apr C -1.60% | P -1.70%

08:30     GBP       PPI Output Core M/M Apr C 0.00% | P 0.00%

08:30     GBP       PPI Output Core Y/Y Apr C 0.10% | P 0.10%

09:00     EUR        Eurozone Trade Balance (EUR) Mar C 22.9B | P 22.0B

09:00     EUR        German ZEW Survey (Economic Sentiment) May C 48.5 | P 53.3

09:00     EUR        German ZEW Survey (Current Situation) May C 68.8 | P 70.2

09:00     EUR        Eurozone ZEW Survey (Economic Sentiment) May C 62.4 | P 64.8

09:00    EUR       Eurozone CPI M/M Apr (F) C 0.20% | P 1.10%

09:00     EUR        Eurozone CPI Y/Y Apr (F) C 0.00% | P 0.00%

09:00     EUR        Eurozone CPI – Core Y/Y Apr (F) C 0.60% | P 0.60%

12:30     USD       Housing Starts Apr C 1.02M | P 0.93M

12:30    USD       Building Permits Apr C 1.06M | P 1.04M

Harry Hindsight              

• EUR: Quiet but weak trading for the Euro saw the market dip lower and trade to the 1.1420’s from the opening in the 1.1450 areas, the market pushed a little higher into the grey hours before dropping off into the London opening as yield spread widened between Europe and US leading to a weakening in the Euro. The market pushed into the 1.1380 levels and then struggled through the early part of the session. The move into the NYK session saw the USD starting to rally and the Euro lost ground against both the USD and GBP dropping down to the 1.1340 into light support and finally back down into the 1.1300 levels before holding for the close.
• GBP: Cable dipped lower from the opening having initially traded slightly higher through the 1.5740 levels before dropping to the 1.5710 areas and then holding the 1.5720 levels into the London session, real money selling was seen early in the session dropping down to the 1.5660 areas and this point the EURGBP cross held roughly in the 0.7270 levels into the NYK session before the Euro dropped quickly and cable held around the 1.5680 areas with a 20 pip range either side, the market eventually touched lower trading to the 1.5640 levels before holding just above the 1.5650 into the close.
• JPY: The opening around the 119.35 levels saw the market move into Tokyo and leaping quickly to the 119.70 areas before spending an extended time trading around the 119.60-75 areas until into the NYK session, the USDJPY then pushed steadily higher and over the course of the day pushed to the 120.00 areas and finished holding the level but never quiet breaking out. EURJPY cross dropped back from the 137.00 levels unable to break through the level and this allowed the relative slow push through the 120.00 areas.
• AUD: Having opened around the 0.8040 level the market found movement into the Tokyo session with Deputy Governor Lowe’s commentary, quickly touching above the 0.8050 before collapsing back to the 0.8010 level as he suggested that rates could be eased further if the FX rate became problematic, the market recovered as the comments were veiled and most likely just a verbal commentary, the recovery was limited though and the market could not make it back to the original levels before moving to the London session, and the follow through pushed the market to below the 80 cent levels, from that point the market pushed into the 0.7980 levels before running out of steam to end the day only just off the lows.

Yesterday’s premiership results

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

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

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

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

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

CHF        Retail Sales (Real) Y/Y Mar A -2.80% | C -2.00% | P -2.70%

USD       NAHB Housing Market Index May A 54 | C 57 | P 56

Good Luck,

Andy

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