Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 125.61 125.55-68 | EURUSD 1.11141 1.1103-20 | AUDUSD 0.76259 0.7611-30 | NZDUSD 0.70474 0.7035-50 | USDCAD 1.24393 1.2430-45 | USDCHF 0.93952 0.9385-00 | GBPUSD 1.52678 1.5255-70 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               125.68 | 125.29

EUR/USD             1.1115 | 1.1082

EUR/JPY               139.60 | 139.06

AUD/USD            0.7642 | 0.7606

NZD/USD             0.7059 | 0.7028

USD/CAD             1.2472 | 1.2422

EUR/CHF              1.0457 | 1.0444

USD/CHF             0.9419 | 0.9399

GBP/USD             1.5274 | 1.5239

EUR/GBP             0.7276 | 0.7267

For today

• EUR: The market opened in line with Friday’s close with nothing to surprise over the weekend, trading lower from the opening the market tested through the 1.1100 levels before struggling quietly through the Tokyo opening holding around the 1.1110 levels, strong EURJPY cross selling again took the Euro to below the 1.1100 levels and through to the 1.1090 levels before slowly rising back to the figure with the market struggling to decide what is the important factor for the market the Greek situation or the good NFP from Friday. Topside offers into the 1.1180-1.1200 levels with the market stronger from the 1.1220 levels onwards and todays numbers focused on the German IP numbers and of course Greece. Downside is likely to see weak stops through the 1.1070 areas and the market opening for a test of the 1.1020-00 levels a push through to the 1.0970 levels will likely open further declines however, today is not strong on data.
• GBP: Quiet start to the week, moving from the opening 1.5270 areas and trading around that level for the most part sliding a little towards the 1.5260 levels as a consequence of GBPJPY selling but generally doing very little. Topside offers around the 1.5350-60 areas are light and a push through again opens a move to test to the 1.5450 areas and better supply. Downside bids into the 1.5200 level seem likely to be stronger however, a strong push through will only likely expose bids into the 1.5150 levels and very little in the way of stops for the moment likely, with a lack of data direction could come from Euro’s and EURGBP movement.
• JPY: The USDJPY moved slightly higher from the opening just below the 125.60 level however, it was only slight and the move into the Tokyo session saw reasonable selling of Cross/JPY with both EURJPY and GBPJPY playing a part in the movement however, the whole session was a little plain with volumes limited by a Oz bank holiday and the market having pushed to the 125.30 levels held for the most part around the 125.40 where it remains heading into the London session. Light bids through the 125.00 levels with weak stops likely through the 124.70-60 areas and a test to the 124.00 open no tier 1 US data and the market is likely to be open to cross/JPY movement over the course of the day. Topside offers into the 125.80 levels and possibly building to stronger supply into 126.00 with option plays a move through the 126.10 could possibly see the option plays swing to demand for the USDJPY and triggering weak stops associated with that area and a push to the 126.50-127.00 levels possible.
• AUD: opening around the 0.7625 levels the market held quietly into the Tokyo session dipping on light carry trade selling into the 0.7610 levels before recovering with the CNY trade balance figures to spike above the 0.7640 level before settling back and drifting into the 0.7610 levels again. Good bids to the downside running from current levels all the way to the 0.7550 levels a push through to test the lows of the year are likely to see continued support and possible option interest into the 75 cent level, through 75 cent could possibly see stops appearing and the market opening for a test over an extended period to 73 cent however, for the moment with little data it is an extended possibility, topside offers into the 0.7650 are light and probably give way to weak stops and the market opening to the light offers into the 0.7680-0.7700 areas with betters stops possibly through 0.7720.

Overnight News

CNY:

China’s May Exports Fall 2.5% Y/y in Dollar; Est. 4.4% fall

USD:

U.S. Rate Normalization May Yield Negative Spill overs: IMF

JPY:

Japan Revised 1Q Annualized GDP Rises 3.9%; Est. +2.8%

Japan April Current-Acct Surplus 1.33t Yen; Est. +1.69t Yen

Kuroda’s Former Ally Ito Sees Little Downside Now for Yen

TRY:

Turkey’s AK Party Loses Parliament Majority in Blow for Erdogan

Today’s data

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

JPY         Current Account (JPY) Apr A 1.27T | C 1.45T | P 2.07T

JPY         GDP Q/Q Q1 (F) A 1.00% | C 0.70% | P 0.60%

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

CNY        Trade Balance May A $59.50B | C $47.00B | P $34.13B

JPY         Eco Watchers Survey: Current May A 54.5 | C 54.2 | P 53.6

06:00     EUR        German Industrial Production M/M Apr C 0.60% | P -0.50%

06:00     EUR        German Trade Balance (EUR) Apr C 18.1B | P 19.3B

08:30     EUR        Eurozone Sentix Investor Confidence Jun C 18.9 | P 19.6

12:15     CAD       Housing Starts May C 187K | P 181.8K

12:30     CAD       Building Permits M/M Apr C 3.40% | P 11.60%

Weekend News

EUR:

ECB’s Nouy Says Greek Banks Are Solvent: Welt am Sonntag
Tsipras, Merkel, Hollande to Meet June 10: Greek Official
JPY/CNY:

Japan, China Say They Will Promote Infrastructure in Asia
JPY:

Foreign Investor Interest in Japan Stocks Rises to 35%: Nikkei
Fuji Heavy Says Overly Weak Yen Isn’t Welcome: Tokyo Shimbun
Japan’s Abe Calls on All Sides to Stick to Ukraine Cease-Fire
GBP:

U.K. Chancellor Osborne to Signal End to `Banker Bashing’: FT
CNY/GBP:

China’s CCECC Considering Balfour Beatty Bid, Sunday Times Says
CNY/IDR/EUR:

China, Indonesia Face Possible Renewal of EU Duties on Sweetener
USD:

Fed Hasn’t Given Valid Reason for Lack of Subpoena Response: FSC
Harry Hindsight

• EUR: The opening in Asia saw the Euro sold back steadily into the opening in Tokyo falling from the 1.1240 levels to test into the 1.1180 areas, from there the market started to steady recover as the weak longs closed out early and left the market, by the time the market moved into the London session it was back to the opening levels and pressing slowly higher with German factory order showing a nice gain over expectations and also a decent revision, the market moved to the 1.1280 levels and light resistance however, volumes were light as you’d expect before the NFP release and having touched the highs drifted back to the 1.1220 levels to hold into the US releases. The number when released showed a healthy gain however, leading into the release the market again went bid and traded into the 1.1280 areas before the USD saw a quick move lower to touch through the 1.1120 levels before finding sufficient support to hold the market however, the selling continued and it broke to the 1.1100-1.1080 area and moved in the range for a couple of hours before the bids disappeared and the market pushed to the 1.1050 levels as weak stops were triggered. The market having absorbed the news and the selling pressure saw a steady rise back to the 1.1120 levels and spending the rest of the session trading around that level into the close.
• GBP: Cable held its own through the Asian session moving around the 1.5360 opening levels through until the grey hour and move into the London session, the move into the grey hours saw the GBP starting to lose out to the Euro as the EURGBP cross pushed from the 0.7300 levels as the Euro moved towards the 1.1280 levels with the cross heading steadily to the 0.7360 levels, the move was not one way and the Cable was the leg to give ground and dipped towards the 1.5300 levels and holding in a 40 pip range into the NFP release, the dip lower saw the market drop quickly to the 1.5240 levels and then more steadily to trade through 1.5200 before recovering over the remainder of the session to trade to the 1.5280 levels recovering the losses against the Euro with the cross dipping back to the 0.7270 levels before holding in a 0.7270-90 range to the close around the mid-point.
• JPY: The USDJPY opened around the 124.40 areas and quietly moved through the Asian session holding around the 124.50 levels for the most part and only pushed through 124.60 as the market moved into the London session pushing to the 124.80 levels and then holding through the London session until the release of the US NFP, unlike the other currencies there was no mistake on the move as the USDJPY moved quickly to the 125.60 levels, eventually touching just above the 125.80 before settling back to trade around the 125.60 to the close.
• AUD: The Oz made steady gains from the opening, dipping initially to the 0.7670’s into the Tokyo session the market quickly moved back to the 0.7690 levels as the market moved through into Tokyo heading quietly through the session to just above the 77 cent levels eventually into the London session and light profit taking pushing the market back below the 77 cent level before rallying slowly into the NYK session to just above 0.7720 levels, NFP saw the market touch above the 0.7730’s before dropping quickly to 0.7640 before running into bids, the market continued dropping however, the bids limited the move and eventually the selling ran out of steam into the strong 76 cent level and the bounce to 0.7660 was all the market could do before settling down to trade around the 0.7620 areas to the close.

Friday’s premiership results

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

JPY         Leading Index Apr (P) A 107.2 | C 107.3 | P 106

EUR        German Factory Orders s.a. M/M Apr A 1.40% | C 0.60% | P 0.90% | R 1.10%

CHF        Foreign Currency Reserves May A 517.5B | P 521.9B | R 522.2B

USD       Change in Non-farm Payrolls May A 280K | C 218K | P 223K | R 221k

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

USD       Average Hourly Earnings M/M May A 0.30% | C 0.20% | P 0.10%

CAD       Net Change in Employment May A 58.9K | C 10.2K | P -19.7K

CAD       Unemployment Rate May A 6.80% | C 6.80% | P 6.80%

Stay lucky

Andy

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