Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 124.354 | EURUSD 1.1282 | AUDUSD 0.76905 | NZDUSD 0.71417 | USDCAD 1.23354 | USDCHF 0.93093 | GBPUSD 1.53854 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               124.63 | 122.775

EUR/USD             1.1308 | 1.1272

EUR/JPY               140.66 | 138.74

AUD/USD            0.7703 | 0.7636

NZD/USD             0.7158 | 0.7108

USD/CAD             1.2352 | 1.2314

EUR/CHF              1.0514 | 1.0498

USD/CHF             0.9321 | 0.9293

GBP/USD             1.5423 | 1.5371

EUR/GBP             0.7344 | 0.7324

For today

• EUR: Very quiet session with the market drifting around the 1.1280 level into the Tokyo session and then pushing steadily to above the 1.1300 levels as early Tokyo saw EURJPY buying moving into the market, the market peaked at that point and although it traded around the level for a short while soon started a steady decline back to the opening levels. Topside offers into the 1.1320-40 levels are light with the market giving way to light stops on a push through to the 1.1360 levels however, better offers probably stand not too far away and for the moment are likely to protect the 1.1400 areas with those offers likely to increase in any move towards the 1.1480-1.1520 areas. Again another day with a lack of data and the market still waiting for either the Eurogroup or Greeks to blink first. Downside bids light through to the 1.1220 levels were the market sees a little more determination and those bids likely to continue through the level before a possibility of stops appearing, a break through the 1.1150 levels is likely to open up further weakness into the 1.1100 areas and ultimately the stronger 1.1000 levels.
• GBP: Limited action in the Cable rising slowly from the opening levels around the 1.5385 areas to test towards the 1.5400 level before drifting over the course of the session to the 1.5370 area, comments by the BoJ saw some buying in cross/JPY from profit takers as the USDJPY dipped saw Cable push through the 1.5410 levels triggering selling in the EURGBP as the Euro held below 1.1300. Topside has now cleared some weak stops through the 1.5400 areas and is open for a fresh test of the 1.5440 that has been a sticking point over the past 2 or 3 weeks, a strong move through the 1.5450 areas will see light offers into the 1.5500 areas and then a larger opening to the topside as the market moves higher with only limited interest likely until the 1.5650 areas. Downside has bids into the 1.5350 areas with those bids likely to be thin but continuing to the 1.5300 levels and a little strong a push through the level though opens a test of better bids from the 1.5250-00 levels before opening up likely stops through the level and into the 1.5150 areas. Today see’s IP and MP numbers both of which need to be watched for improvements.
• JPY: A very quiet session for the most part with the market holding around the 124.40 levels until the last hour or so to the reports cut off point. Comments by BoJ’s Kuroda saw the market drop quickly from the 124.60 area highs and trade through 123.80 triggering weak stops and continuing to halt only on a push to the 122.80 for a weak bounce into the grey hours. Whether it was timed for the movement of the market into Tokyo lunch remains to be seen, but from a quiet day the market turned into a fairly volatile one. Bids into the 122.80 levels however a push through the 122.70 areas is likely to see light stops and the market moving into a weak area with nothing major suspected until the market moves through the 122.00 bids and into a more congested 120-121 range. Topside is now a little nervous and the sudden movement leaves a hole in the market with weak stops possible on a push back through the 123.50 areas for a test back to the opening levels and possibly further if the momentum is strong enough however, the market from the 124.50 area is likely to be dominated by strong offers on any further tests higher and although the verbal intervention is limited with a once a week speech from a BoJ or MoF official todays commentaries are a little more detailed than the usual “watching FX rates”.
• AUD: All that glitters is not Gold as the saying goes and after a good confidence number from the Business sector yesterday, today’s trading was initially dominated by Consumer confidence numbers, having opened around the 0.7690 levels the market pushed into the Tokyo session rising to just above the 77 cent level before the number hit, and from last month’s strong positive number it reversed completely to a strong negative one and the market dropped quickly to the bids around the 0.7680 levels, with comments from RBA’s Stevens about the option of further cuts if necessary the market continued pushing at those bids and eventually they gave way and the market dropped quickly into the 0.7645 level and slowed on a push through to just below the 0.7640 level, the market  stalled on the downward pressure and looked set to move towards London holding that level, that was until Kuroda spoke, the carry trade dropped quickly and although there was two way flow going through the USDJPY move was quick and deep while the Carry trade hit patches of liquidity and the Oz was forced higher as the AUDJPY struggled having dipped to 95.20 in early trading it found support around the 94.60 areas and the Oz moved back to push above the 77 cent level offsetting some of the USDJPY movement in the AUDJPY. Topside offers remain in the 0.7720 levels and through the level may see weak stops however, the offers quickly move in again and the movement to the 78 cent level is likely to cause problems in a quiet market, if USDJPY were again to set off to the downside though this level will be vulnerable for further movements higher and a push through the 0.7840-50 area will open up a move to 79 cents and possibly better offers. Downside bids into the 0.7650 levels are reasonably strong however, a move through to the 76 cent level will see even stronger bids as the market attempts to pick a bottom with those bids likely to increase as the market dips to the previous lows of the year with option interest likely to be strong towards the 75 cent level before seeing a possible strong reversal for the longs and a stab lower.

Overnight News                                                                                                                         

JPY:

Kuroda Says Hard to See Yen’s Real Effective Rate Falling More

Kuroda: Hard to Say How Much Market Has Priced in Fed Rate Hike

BOJ Sato: 0.1% Excess Reserve Rate Inseparable From Base Target

BOJ’s Sato: Degree of Difficulty in Implementing QQE Is Rising

Japan Social Security Finance Absolutely Severe: MOF’s Miyashita

Japan April Core Machine Orders Rise 3.8% M/m; Est. -2.1%

AUD:

RBA Open to Further Easing if Beneficial to Sustainable Growth

RBA’s Stevens Says Sydney Housing Market Is Acutely Concerning

Western Australia Rating Outlook Lowered to Negative by Moody’s

Australia June Consumer Sentiment Falls Below Pre-Budget Level

Australia ANZ Weekly Consumer Sentiment Falls 1.2% to 112.1

Today’s data

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

JPY         Machine Orders M/M Apr A 3.80% | C -1.70% | P 2.90%

JPY         Domestic CGPI Y/Y May A -2.10% | C -2.20% | P -2.10%

AUD       Westpac Consumer Confidence Jun A -6.90% | P 6.40%

08:30     GBP       Industrial Production M/M Apr C 0.20% | P 0.50%

08:30     GBP       Industrial Production Y/Y Apr P 0.70%

08:30     GBP       Manufacturing Production M/M Apr C 0.10% | P 0.40%

08:30     GBP       Manufacturing Production Y/Y Apr P 1.10%

14:00     GBP       NIESR GDP Estimate May P 0.40%

14:30     USD       Crude Oil Inventories P -1.9M

18:00    USD       Monthly Budget Statement May P -$100.5B

Harry Hindsight                   

• EUR: Asia tested higher after an early dull start moving off the lows around the 1.1280 levels and testing above the 1.1320 levels before spending the rest of the session holding in that areas, early Europeans pushed to the topside looking for stops however, the market was never able to fully breakout and the spike was quickly turned lower with weak longs quickly dropping lower and testing through the 1.1300 levels into the official opening in London, with Greece still continuing to weigh on the market against expectations of interest rate moves in the US saw the Euro slowly drift off through the London session pushing slowly down through the 1.1280 levels and continuing to the 1.1220 levels into the NYK session before seeing any real interest in support of the Euro but sufficient on a quiet day to move the market slowly back to the opening levels around the 1.1280 areas and then very quietly to the close.
• GBP: A quiet session during Asia saw the market opening around the 1.5340 areas and quickly test to the 1.5360 level before moving into the Tokyo session and cross EURGBP buying pressing the GBP lower as the cross moved 20 pips from the opening 0.7350 areas. Cable moved off its lows just through the opening levels and steadily rose back to the highs and into the grey hours. Early trading saw the EURGBP dip back to its starting areas and Cable made its highs for the moment, London were quick sellers of the Cable from then into the early part of the session before the release of the visible trade balance was released showing a better than expected number to turn its fortunes around and hold the market, the market then traded around the 1.5300 areas dipping to the 1.5280 levels and pushing above the 1.5320 levels deep into the NYK session. The lead into the Wholesale inventory numbers in the US saw the USD pushing and Cable traded to its lows only to be disappointed with another rise in the number and Cable moved quickly higher pushing to above the 1.5380 levels and holding in that area to the close. The EURGBP cross having pushed to just below the 0.7390 levels during the early part of London spent the session being forced lower over the course of day and eventually bottomed around the 0.7330 areas for a long run to the close.
• JPY: USDJPY initially tested higher from the opening around the 124.50 levels however, it quickly ran into offers and once the light fixing demand was over with quickly retreated from above the 124.70 levels and down to the 124.40 levels to trade quietly through to the grey hours, Tokyo lunch saw further selling and the market touched down to the 124.20 areas before finding light buying as the Tokyo market headed to its close. A resurgent Euro saw opportunities for the cross/JPY sellers to move in and although the market had tested to the 141.00 levels during Asia those sellers entered the market and the move saw weak stops as the market broke through the 140.20 areas and tumbled to below 140.00 over the course of the early part of London with the cross testing to the 139.40 levels and the largest mover of the day. USDJPY pushed through to below 124.00 and tested briefly below 123.90 before rising back towards the opening 124.40 levels and holding in that area for much of the NYK session with the drama over with.
• AUD: A 70 pip range over the course of the day however, the market was more or less stuck around the 0.7680-0.7700 levels for much of the session, moving from the opening 0.7700 areas to the 0.7680 level in early trading, a good NAB number sent the market higher to make the high for the day above the 0.7720 levels however, this is just one of many confidence numbers and although it represents the business consensus the market rapidly move back through the opening levels and then drifted through the rest of the Asian session, cross/JPY selling moved into the market in early trading and with London opening the Oz again came under pressure as the market tested down to the 0.7650 levels and the start of the large support channel, profit taking from the quick early sellers once the market had decided it couldn’t move through the bids again saw the market testing higher and triggering some weak stops and back through the 77 cent level, while the market moved into the NYK session still mildly choppy it eventually ran out of steam and traded quietly for several hours around the 0.7680 level and then slightly higher for the run to the close.

Yesterday’s premiership results

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

NZD       Manufacturing Activity Q1 -2.80% A -0.70% | P -1.00%

GBP       BRC Retail Sales Monitor Y/Y May A 0.00% | P -2.40%

JPY         Japan Money Stock M2+CD Y/Y May A 4.00% | C 3.60% | P 3.60%

AUD       NAB Business Confidence May A 7 | P 3

CNY        CPI Y/Y May A 1.20% | C 1.30% | P 1.50%

CNY        PPI Y/Y May A -4.50% | C -4.50% | P -4.60%

AUD       Home Loans Apr A 1.00% | C -1.80% | P 1.60% | R 1.50%

JPY         Consumer Confidence May A 41.4 | C 41.9 | P 41.5

CHF        Unemployment Rate May A 3.30% | C 3.30% | P 3.30%

JPY         Machine Tool Orders Y/Y May (P) A 15.00% | P 10.50%

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

CHF        CPI Y/Y May A -1.20% | C -1.30% | P -1.10%

GBP       Visible Trade Balance (Pounds) Apr A -8.6B | C -10.0B | P -10.1B

USD       Wholesale Inventories Apr A 0.40% | C 0.10% | P 0.10%

Good Luck,

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.