Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 120.687 | EURUSD 1.11495 | AUDUSD 0.79142 | NZDUSD 0.73507 | USDCAD 1.22312 | USDCHF 0.93688 | GBPUSD 1.55083 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               120.99 | 120.58

EUR/USD             1.1153 | 1.1122

EUR/JPY               134.72 | 134.37

AUD/USD            0.7935 | 0.7897

NZD/USD             0.7372 | 0.7341

USD/CAD             1.2245 | 1.2217

EUR/CHF              1.0465 | 1.043

USD/CHF             0.9381 | 0.9360

GBP/USD             1.5524 | 1.5495

EUR/GBP             0.7187 | 0.71755

For today

• EUR: So the ramifications of Greece’s unwillingness to comply with the austerity measures introduced at the beginning of the bailout is now seeing other countries looking to buck the trend, with Antonio Costa Portugal’s socialist leader talking about a reversing policy and highlighting divisions widening between the Mediterranean countries and the Northern countries, this is probably the piece that most European governments didn’t want to see and the worst case scenario for them particularly Germany. Today saw the Euro struggling to hold its levels in early trading in Tokyo dipping to the 1.1120 levels as USD’s continued to be the focus of attention for the early Japanese session however, once the market tested those lows buying in both EURJPY and USDJPY helped the market again move to the opening levels around the 1.1150 areas before a sideways movement pinned the market in the 1.1130’s for several hours. Topside offers light into the 1.1180 areas and a push through the 1.1220 areas are likely to see weak stops appearing in the market and a push to the 1.1280 levels open before reaching possibly any meaningful resistance. Downside bids remain into the 1.1100 areas and possibly through into the 1.1080 levels before stops are likely to appear and the market then opens for a test into the 1.1000 levels and likely stronger bids in the areas before the market is likely to be comfortable in a strong USD run again and an opening to the previous 2months ranges.
• GBP: Cable remained in a fairly tight range through the session unable to push to far beyond the 1.5520 levels and unwilling or unable to drop below 1.5500 area with any conviction and for the moment after a quiet session is heading into the London session just above the figure levels. Light bids into the 1.5500 levels with possibly better support from the 1.5450 levels and into the 1.5400, stops to there are probably cleared after yesterday’s test to the 1.5450 area however, a push through the 1.5400 areas is likely to see more interest and stops looking for a break lower and into the 1.5200 areas with little to protect the market. Topside offers are just as thin with 1.5600 likely to have light offers and the bulk of resistance likely centred around the 1.5700 levels.
• JPY: USDJPY moved tightly around the 120.70 levels during the period before Tokyo moved in dipping to the 120.60’s before Tokyo fix saw interest to buy and the market pushing through the level an gradually pushed into the 120.90’s with plenty of two way dealing going through the market however, the market was unable to penetrate the 121.00 level and fell back a little before again running again to similar levels as the market moved to the grey hours and Tokyo lunch. Topside sees offers continuing through the 121.00 levels and those offers increasing into the 121.50 levels with a possibility of stops through the 121.60 level before running into further strong offers as the market pushes for the 122.00 areas last tested in March, a strong push through the level is likely to open up a fresh push for the 124.00-125.00 range not see since 2007 and possible verbal intervention from the BoJ/MoF along the way. Downside bids light into the 120.20 areas unless the yield players move up however, a push through the 119.80-70 levels is likely to see weak stops in the area and a test to the 119.20 levels is possible before strength again appears.
• AUD: A slower day for the Oz moving from the opening around the 0.7915 level the market moved into the Tokyo session testing the 79 cent levels before bouncing back to push into the mid 0.7930’s in strong affirmation of the confidence number however, from then onwards it’s been stuck in a quiet range moving into the London session only just above the opening levels. Bids into the 79 cent level and likely to continue to the 0.7880 areas before a possibility of stops appearing however, the 0.7850 area onwards provides building support through to 78 cents and the USD would possibly need to be doing well for the levels to break easily however, a push lower will open up the prospect of testing the 0.7550 areas in the next few weeks again but not today one suspects. Topside offers light into the 80 cent level with possibility of weak stops through the lelve however sentimental levels will again have offerings building and the push through the 81 cent will see good offers appearing again from the top pickers.

Overnight News                                                                                                                         

JPY:

Japan 1Q 2015 GDP Rises Annualized 2.4%; Est. +1.6%

Japan’s Major Banks Sell Govt. Bonds in Longest Run on Record

AUD:

Australian May Consumer Confidence at 16-Month High after Budget

CNY:

China Housing Sector Bottoming on Better March, Apr Sales: Fitch

Today’s data

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

JPY         GDP Q/Q Q1 (P) A 0.60% | C 0.40% | P 0.40%

JPY         GDP Deflator Y/Y Q1 (P) A 3.40% | C 3.60% | P 2.40%

AUD       Westpac Consumer Confidence May A 6.40% | P -3.20%

06:00     EUR        German PPI M/M Apr C 0.20% | P 0.10%

06:00     EUR        German PPI Y/Y Apr C -1.40% | P -1.70%

08:30     GBP       BoE Minutes

08:30     GBP       MPC Official Bank Rate Votes C 0–0—9 | P 0–0–9

08:30     GBP       MPC Asset Purchase Facility Votes C 0–0—9 | P 0–0–9

09:00     CHF        ZEW (Expectations) May P -23.2

12:30     CAD       Wholesale Sales M/M Mar C 0.30% | P -0.40%

14:30    USD       Crude Oil Inventories P -2.2M

Harry Hindsight              

• EUR: The move through the Asian session saw the Euro holding above the 1.1300 levels for the most part and trading only slightly higher than the opening levels, it tested towards the 1.1280 level on two occasions however, it didn’t break lower until the comments started to appear from several ECB officials on the use of QE and its likelihood to increase, this probably in reference to the 10% rise in the Euro of the past few weeks and the impact this is likely to have on the stuttering recovery in some areas, as the market moved into the London session the commentary increased and the market quickly dropped, as the European numbers hit, a drop in the trade balance for the Eurozone was lower than expected , unchanging inflationary numbers and poor ZEW numbers saw the Euro quickly push to the 1.1240 levels and continue in a steadier fashion to the 1.1160 level before finding sufficient bids to hold the market for a period. The move into the NYK session saw the fall occur again with less pressure but enough to send the market to the 1.1120 levels before hitting a decent line of support and then holding in a tight range from that point on between the lows and 1.1160 eventually narrowing down to trade into the close around the 1.1150 levels.
• GBP: A quiet range through the Asian session saw the Cable touch down through the 1.5640 levels in mid Tokyo before forcing its way back through the opening levels just below the 1.5660 area and into the grey hours testing above those levels, Euro’s quick demise dragged on the Cable with the EURGBP cross dropping from the 0.7230 areas to touch the 0.7150 level before the release of the UK inflationary data, and while the UK media reported the Cable’s move lower to be connected with those numbers the simple fact is the movement had already started in the Euro and Cable was dragged lower, falling from above the 1.5660 levels the market moved to the 1.5580 levels before the release and continued as the inflationary numbers hit, the headline number being the YoY CPI number showing the first drop into negativity since the 1960’s however, taking into account supermarket price wars, falling oil prices (as it is a lagging number) and various other minor factors, it had been highlighted and maybe some of the monthly expectations were a little off mark however, comments from BoE’s Carney balanced the numbers against future expectations and the decline slowed, with the EURGBP back at the starting levels and Cable finding a base into the NYK session having pushed to the 1.5450 levels. The market then rebounded into the NYK session a little and then traded above the 1.5500 levels in a dull session for Cable to the close.
• JPY: The usual Asian session for the USDJPY saw the market move around the 120.00 levels into Tokyo before dropping back to the 119.90 area and taking the rest of the session to push above 120.00 again, the move into the London session again saw the market push from the lows in the 119.80’s to test that 120.00 level and a gradual push through to 120.20 into the NYK session with continual pressure pushing, NYK were quick buyers triggering weak stops through 120.30 saw the market move into the 120.40 levels and struggle for a period before breaking the 120.50 levels and so it continued each 10 pips providing resistance to the move higher until reaching the 120.70 areas and holding for several hours into the close.
• AUD: The Oz had a better range over the Asian session, seeing RBA minutes broadly in line with the previous day’s commentary by Deputy Governor. Lowe however, the market dipped quickly to below the 0.7960 levels before rebounding higher after the knee jerk reaction. The move into the grey hours saw the market move back through the 80 cent level with weak stops triggered before London entered as tentative sellers and a push back towards the lows. The market held in the 0.7970 levels for several hours before NYK entered selling the market off as the USD started to rise as Euro’s and GBP set the USD up for a strong rally, the market eventually settled into a quiet range basing on the 0.7910 level for an extended period into the close.

Yesterday’s premiership results

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%

GBP       CPI M/M Apr A 0.20% | C 0.40% | P 0.20%

GBP       CPI Y/Y Apr A -0.10% | C 0.00% | P 0.00%

GBP       Core CPI Y/Y Apr A 0.80% | C 1.00% | P 1.00%

GBP       RPI M/M Apr A 0.40% | C 0.40% | P 0.20%

GBP       RPI Y/Y Apr A 0.90% | C 0.90% | P 0.90%

GBP       PPI Input M/M Apr A 0.40% | C 0.80% | P 0.30% | R 0.40%

GBP       PPI Input Y/Y Apr A -11.70% | C -11.50% | P -13.00% | R -12.80%

GBP       PPI Output M/M Apr A 0.10% | C 0.20% | P 0.20% | R 0.10%

GBP       PPI Output Y/Y Apr A -1.70% | C -1.60% | P -1.70%

GBP       PPI Output Core M/M Apr A 0.00% | C 0.00% | P 0.00%

GBP       PPI Output Core Y/Y Apr A 0.10% | C 0.10% | P 0.10%

EUR        Eurozone Trade Balance (EUR) Mar A 19.7B | C 22.9B | P 22.0B | R 22.6B

EUR        German ZEW Survey (Economic Sentiment) May A 41.9 | C 48.5 | P 53.3

EUR        German ZEW Survey (Current Situation) May A 65.7 | C 68.8 | P 70.2

EUR        Eurozone ZEW Survey (Economic Sentiment) May A 61.2 | C 62.4 | P 64.8

EUR        Eurozone CPI M/M Apr (F) A 0.20% | C 0.20% | P 1.10%

EUR        Eurozone CPI Y/Y Apr (F) A 0.00% | C 0.00% | P 0.00%

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

USD       Housing Starts Apr A 1.135M | C 1.02M | P 0.93M | R 0.94M

Good Luck,

Andy

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