Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 123.401 123.30-50 | EURUSD 1.12686 1.1227-30 | AUDUSD 0.77321 0.7715-35 | NZDUSD 0.69886 0.6970-95 | USDCAD 1.23149 1.2301-24 | USDCHF 0.92893 0.9256-0.9307 | GBPUSD 1.55631 1.5554-74 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               123.56 | 123.10

EUR/USD             1.1238 | 1.1195

EUR/JPY               138.60 | 138.11

AUD/USD            0.7756 | 0.7710

NZD/USD             0.6999 | 0.6960

USD/CAD             1.2337 | 1.2301

EUR/CHF              1.04605 | 1.0422

USD/CHF             0.93395 | 0.9281

GBP/USD             1.5581 | 1.5530

EUR/GBP             0.72195 | 0.7205

For today

• EUR: The news that yet another marathon meeting between the Greeks and its creditors tailed to reach any agreement left the market opening lower than Fridays close and trading from the opening around the 1.1220 levels and limited support for several hours deep into the Tokyo session before the market gave ground and traded through the 1.1200 level, the market recovered a little gradually over the balance of the session and again pushed to the 1.1220 areas for a reasonably quiet session given the pressure building for an agreement to be made. Topside offers into the 1.1280-1.1300 levels are likely to be light with weak stops through the levels but further topside offers moving in very quickly into the 1.1350 levels, and better offers likely towards the 1.1400 areas. Downside bids light into the 1.1180 area however, no real stops are suspected until beyond bids running from the 1.1150 level and into 1.1100, these are likely to disappear with any poor news on the Greek front and open up a test through the 1.1000 areas however, with only the Eurozone trade balance due in Europe this type of move is only fixed to the Greek situation.
• GBP: Cable opened only slightly lower than Fridays close and held the 1.5560 levels for the early part of the session only falling once the Euro dipped down, dropping to the 1.5530’s before recovering only slightly to above the 1.5540 levels. Topside offers are suspected to be light through 1.5600 areas with the market likely to be open for a test to the stronger 1.5700 areas however, the Cable for the moment is likely to be dominated by the Euro in early trading and at the mercy of the IP numbers in the US later in the day. Downside bids light through the 1.5500 areas, weak stops are a possibility through the level and a move to the 1.5450 areas will see little support until that area, a push through there will see better bids into the 1.5400 levels however, again the market is likely to be dominated to what is happening in Europe and the EURGBP cross.
• JPY: With EURJPY cross opening lower with the Euro leg the USDJPY also initially followed suit with the USDIPY testing the 123.20 levels in early trading before slowly moving to the 123.30 level into Tokyo. A slow day given the early poor opening the market moved steadily higher with the Tokyo fix helping the market to test into the mid 123.50’s into the mid part of the session before stalling and settling back to trade around the 123.40 areas. Topside offers into the 123.80 levels and likely to go back to 124.00 before the offers start to lighten; weak stops through the level are likely to lead to a test into the 124.20-40 areas before offers again start to appear and those offers are likely to be in depth and running to the 125.00 level. Downside bids through the 123.00 level are likely to see only tiny amounts of stops with the better bids then moving in on any move towards the 122.60-50 areas, even a break here will probably see strong bidding from the 122.20 areas onwards however, there is a possibility of better stops on a breakdown through the 122.50 areas.
• AUD: The Oz opened higher with the EURAUD cross sold aggressively in the pre-market period and the market moving off from the opening 0.7750 areas as a consequence, the market then reverted to form as the USD took hold and normal economics started to see the Oz move from those opening highs to push back down into the 0.7710-20 areas where the market heads into the grey hours. Topside offers light through the 0.7750 levels and then begin to strengthen as the market pushes towards the 0.7780-0.7800 levels even through the 78 cent level the offers are likely to remain with weak stops possibly making an appearance above the 0.7820-30 areas before more resistance starts to appear. Downside light bids into the 0.7700 areas however, once the market pushes through the level stronger bids start to appear on any push to the 0.7650 levels.

Overnight News

EUR:

Greece Enters Fateful Week after Brussels Talks End Fruitlessly

Greece to Wait for Creditors to Become More Realistic: Tsipras

Varoufakis Calls for Greek Debt Cut in Interview with Bild

JPY/KRW:

Japan Defence Ministry Official’s Visit to S. Korea Delayed

CNY:

IMF Discusses SDR Technical Issues in China Visit

JPY:

Japan’s Govt. Plans to Develop Downtown Tokyo Office Building

GBP:

U.K. June House Prices Rise 3% M/m, Rightmove Says

NZD:

New Zealand Services Industry Expanded at Faster Pace in May

New Zealand to Join Asian Infrastructure Investment Bank

Today’s data

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

GBP       Rightmove House Prices M/M Jun A 3.00% | P -0.10%

07:15     CHF        Producer & Import Prices M/M May C 0.10% | P -2.10%

07:15     CHF        Producer & Import Prices Y/Y May C -5.10% | P -5.20%

07:15     CHF        Retail Sales (Real) Y/Y Apr P -2.80%

09:00     EUR        Eurozone Trade Balance (EUR) Apr C 19.0B | P 19.7B

12:30     CAD       Manufacturing Shipments M/M Apr C -0.50% | P 2.90%

12:30     USD       Empire State Manufacturing Jun C 6 | P 3.09

13:15     USD       Industrial Production May C 0.20% | P -0.30%

13:15     USD       Capacity Utilization May C 78.30% | P 78.20%

14:00     USD       NAHB Housing Market Index Jun C 56 | P 54

Weekend News

EUR:

Greece’s Last-Ditch Talks Aim at Deal Before June 15 Market Open
EU’s Juncker Says Greek Bailout Talks Will Continue Sunday: DPA
Praet Says ECB Wants Greece to Remain in Euro: Der Standard
IMF Spiked Juncker Compromise Offer to Greece, FAS Reports
Greece Will Reach Agreement With Creditors Soon, Minister Says
CNY:

China’s Stock Market Value Exceeds $10 Trillion for First Time
China Bans Stock Brokers From Facilitating Fund Borrowing: CSRC
CNY/TWD:

China to Lift Entry-Permit Policy for Taiwan, Xinhua Reports
JPY/USD:

Japan Hopes U.S. House Will Approve TPP Fast-Track, Amari Says
JPY:

Japanese Companies Seem to Be Increasing Capital Spending: Suga
Japan Drops Plan to Sell Off JT Shares to Fund Recovery: Nikkei
Japan Health Ministry Reports Cyber Attacks at 3 Organizations
RUB:

Putin Discussed Natgas Link With Erdogan, to Meet Gazprom CEO
AUD:

Murray Says Regulators on Notice for Potential Housing Problem
USD:

Hillary Clinton Talks Economy, Her Story, at First Campaign Rally
CHF:

Ex-SNB’s Blattner Sees No 1930s-Style Deflationary Risks: T-A

Harry Hindsight

• EUR: A reasonably quiet session through the Asian session saw the Euro drift a little higher from the opening only to fall back with the release of an article in the German Bild newspaper reporting of the German government preparing for a Greek default, the market dropped from the 1.1260 levels to fall quickly through the opening 1.1240 to eventually touching into the 1.1220 supportive levels into the grey hours and through into London, never quiet recovering with light buying setting the range around the 1.1220-40 into the Eurozone IP numbers the market gain dropped quickly as the number came in weak than consensus with a negative revision to the previous month also, the market pushed through the bids and dropped quickly to the 1.1150 levels before running out of steam and spent several hours trading back to the previous levels above the 1.1220 areas. A small short squeeze as the market moved through the NYK session with again optimism or those not willing to keep positions over a weekend of Greek/Eurogroup discussions left the market a little vulnerable to the move and the push through the 1.1240 levels saw the market trigger weak stops on a move to the 1.1280 levels with the market spiking to just short of the 1.1300 area before settling back to finish the day a little better off than when it started.
• GBP: Cable traded quietly through much of the day with the market slipping from the 1.5520 level opening only slightly before running towards the London session holding the 1.5510-1.5500 levels, the drag of the Euro on the IP numbers sent the market quickly to the 1.5470 levels however, EURGBP cross selling with the cross dipping from the 0.7240 levels to touch below 0.7200 on the IP release before seeing a steady recovery to the 0.7250 over the course of the day, Cable rallied from the lows after several hours moving in the 1.5480-1.5520 levels pushing quickly through to the 1.5580 levels with a brief spike to above 1.5590 before settling back to trade quietly around the 1.5560 levels.
• JPY: USDJPY remained fairly mooted testing initially through the 123.60 levels from the opening 123.40 area before dipping back towards the London opening to push into the 123.30 levels, London were strong buyers and the market pushed back higher from the opening to trade for several hours into the 123.80 areas until the market saw selling of the USD into the end of the London session and a test of the 123.20 levels for the first time however, with a lack of strong numbers and or numbers in general the market eventually pushed back towards the opening levels for the close.
• AUD: A reasonably tight day for the Oz with the market taking a back seat to the European situation, moving from the opening 0.7755 levels the market slowly moved lower over the course of the Asian session to push into the 0.7740 levels before holding and trading quietly through to the early part of Europe and another steady drift lower to push into the London session pressing the 0.7730 levels, strong selling into the London sessions saw the Oz dip to the 0.7680 levels with concerns about the economic future for Oz was the main focus and although the market then ranged around the 77 cent levels into the NYK session it wasn’t until towards the end of the London session that the market started to recover its losses and headed back to test above the 0.7750 levels and close to those opening areas however, it was unable to do anymore and dipped slightly lower to finish the day just below the opening levels.

Friday’s premiership results

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

NZD       Business NZ Manufacturing Index May A 51.5 | P 51.8 | R 51.7

JPY         Industrial Production M/M Apr (F) A 1.20% | C 1.00% | P 1.00%

JPY         Tertiary Industry Index M/M Apr A -0.20% | C 0.40% | P -1.00%

GBP       Construction Output M/M Apr A -0.80% | C 0.10% | P 3.90% | R 1.40%

EUR        Eurozone Industrial Production M/M Apr A 0.10% | C 0.40% | P -0.30% | R -0.40%

USD       PPI M/M May A 0.50% | C 0.40% | P -0.40%

USD       PPI Y/Y May A -1.10% | C -1.10% | P -1.30%

USD       PPI Core M/M May A 0.10% | C 0.10% | P -0.20%

USD       PPI Core Y/Y May A 0.60% | C 0.70% | P 0.80%

USD       U. of Michigan Confidence Jun (P) A 94.6 | C 91.5 | P 90.7

Stay lucky

Andy

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