Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close Wellington open

USDJPY 123.875 122.785-80 | EURUSD 1.11693 1.1035-40 | AUDUSD 0.76574 0.7627-30 | NZDUSD 0.68381 0.6795-0.6805 | USDCAD 1.23207 1.2340-45 | USDCHF 0.93347 0.92305-90 | GBPUSD 1.5749 1.5653-1.5700 |

 

Interbank Ranges as of 6am London time

Highs    Lows

USD/JPY               123.195 | 122.11

EUR/USD             1.1045 | 1.0955

EUR/JPY               135.975 | 133.80

AUD/USD            0.7694 | 0.7587

NZD/USD             0.6868 | 0.6786

USD/CAD             1.2358 | 1.2323

EUR/CHF              1.0390 | 1.0315

USD/CHF             0.9435 | 0.9364

GBP/USD             1.5730 | 1.5645

EUR/GBP             0.7060 | 0.69885

For today

• EUR: Greece overshadowed the PBOC cuts for the RRR and the policy rate with both being cut 25bp however, Greece was the main news, with the largest piece being the fact that the Greeks are going to have a referendum on the 5^th July, which is several days after the deadline to pay the IMF the news saw the Euro opening much lower, opening around the 1.1000 areas and trading widely from the area it continued trading lower pushing below the pre-market levels of 1.0995 and pushing through the 1.0960 level a couple of times before bouncing back to the 1.1000 level, the strongest mover seemed to be the EURJPY with the cross opening some 300 pips lower than its close dragging on the USDJPY leg as well as the Euro, once the Tokyo fix was out of the way the market seemed to get a second wind with a small short squeeze to the 1.1020 areas and then struggling between that level and the 1.1000 levels for the rest of the session with good volumes going through. Topside offers into the 1.1140 levels are likely to be light with possible weak stops around the 1.1080 areas the topside does have the potential for a short squeeze with the market possibly looking to fill the gap on the charts however, for the moment it would probably be short lived without solid proof of a deal between the two parties, and for the moment a long way off. Downside bids into the 1.0950-1.0900 areas are possibly reasonably strong with profit taking a potential however a push through for the moment sees only light bids into the 1.0800 areas and the possibility of deeper moves.
• GBP: Cable opened lower as you would expect however, the EURGBP seems to have been the larger catalyst for the moves with the market having finished around the 0.7090 levels its opening around the 0.7010 areas saw the market pushing quickly below 0.7000 to the 0.6990 levels and bouncing off that level into the Tokyo session, Cable opened around the 1.5680 areas before rising into the Tokyo session and closing much of the gap on the charts to trade to the 1.5730 levels before dipping back to the 1.5700 levels and a steady rise back to the 1.5710-20 areas for the move into the grey hours, as would be expected the Greek weekend news was to blame for the moves however, safe haven flows in the EURGBP kept the Cable within touching distance of Friday’s ranges.
• JPY: EURJPY selling pre-market saw the USDJPY opening around the 122.60 levels and dipping to the 122.15 area over the course of the pre-Tokyo session before returning to the opening levels for the Tokyo opening, the EURJPY selling continued for an hour or so with early selling pushing the cross to below the 134.00 levels having closed above the 138 on Friday, the move into Tokyo saw the market bounce a little with a mini short squeeze to the 135.50 areas where the cross trade around for the bulk of the session, USDJPY eventually bounced with that short squeeze pushing to the 123.00 levels and eventually moving to 123.20 areas before slipping back to below 123.00 to hold around the 122.90 as the market approaches the grey hours, volume was brisk and one has to wonder whether they were all EURJPY longs cutting or hedging from yield holders covering some of their risk, Topside offers light into the 123.20 levels and a possibility of stronger offers now around the 123.40 areas and then weak stops on a push through and the market open for a renewed push to the 123.80-124.00 levels before stronger offers again appear into the 124.40 areas and then the 125.00 levels.
• AUD: The Oz opened around the 0.7620 areas and initially suffered the same fate as the rest of the market with the drag of the Euro and cross selling involved taking the Oz to the 0.7590 levels and then the buying started pushing quickly before the Tokyo session to fill the gap before steadily rising through 0.7650 over the session to push to the 0.7680 area and spiking to 0.7690 before settling back to hold just above the closing on Friday. Topside light offers into the 77 cent levels open to possibly weak stops through the level before running into stronger offers into the 0.7740-60 areas light stops are a possibility through those levels however 78 cent is likely to have similar style offers and stronger to 0.7840-50. Downside bids more or less cleared to the 76 level with better bids immediately below that level with stronger bids the further down you go with the 0.7530 area lows for the year particularly strong moving into the possibility of option plays around the 75 cent level.

Overnight News

CNY:

China shares drop after an early rise after the rate cuts

JPY:

Japan’s Aso doesn’t see major local market disruptions on Greek turmoil

BoJ not considering emergency fund injection over Greece, Yet

EM:

Greece default fears hit emerging market FX

EUR:

Greece confirms banks to close until July 6^th

Today’s data

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

JPY         Retail Trade Y/Y May A 3.00% | C 2.40% | P 5.00% | R 4.90%

JPY         Industrial Production M/M May (P) A -2.20% | C -0.70% | P 1.20%

08:30     GBP       Mortgage Approvals May C 68.5K | P 68.1K

08:30     GBP       M4 Money Supply M/M May C 0.50% | P 0.40%

09:00     EUR        Eurozone Economic Confidence Jun C 103.6 | P 103.8

09:00     EUR        Eurozone Business Climate Indicator Jun C 0.25 | P 0.28

09:00     EUR        Eurozone Industrial Confidence Jun C -3 | P -3

09:00     EUR        Eurozone Services Confidence Jun C 8.1 | P 7.8

09:00     EUR        Eurozone Consumer Confidence Jun (F) C -5.6 | P -5.6

12:00     EUR        German CPI M/M Jun (P) C 0.20% | P 0.10%

12:00     EUR        German CPI Y/Y Jun (P) C 0.50% | P 0.70%

12:30     CAD       Industrial Product Price M/M May P -0.90%

12:30     CAD       Raw Materials Price Index M/M May P 3.80%

14:00     USD       Pending Home Sales M/M May C 1.20% | P 3.40%

Weekend News

EUR:

Euro Chiefs Seek Damage Control as Greece Heads to Referendum
Greeks Line Up at Banks and Drain ATMs as Tsipras Calls Vote
Draghi Can’t Avoid Spotlight With Greek Destiny in ECB Hands
Dijsselbloem: to Take Necessary Measures After Expiration
Greece Will Need To Adopt Bank-Protection Measures: Eurogroup
IMF Won’t Help Greece If June 30 Payment Not Made, Lagarde Says
Lagarde Says Proposals Will Be No Longer Valid by Referendum
Greek Deputy Foreign Minister Says Banks to Be Open Monday
Greek Bourse May Not Trade Mon If ELA Not Extended: Sec Official
Euro-Area Leaders Mull Tuesday Meeting on Greece: EU Official
Greece Is Hoping for a Better Deal, Interior Minister Says
CNY:

China Cuts Interest Rates to a Record Low After Stocks Slump
PBOC Researcher Says Cuts Essential to Stabilize Economy: Xinhua
China May Industrial Companies’ Profits Rise 0.6% Y/y
SAFE to Test Capital Account Convertibility in Shanghai FTZ
JPY:

Japan Mulls Cutting Employment Insurance Next FY: Nikkei
JPY/RUB:

Japanese PM Abe and Russia’s Putin Plan November Meet: Yomiuri

Harry Hindsight

• EUR: A quiet session through from Asia until into the NYK session with the market moving off the 1.1205 areas dipping in early Tokyo to trade along the 1.1180 levels before recovering and trading gently higher through the London session to press the 1.1220 areas before drifting into the NYK session holding the opening levels, a good Michigan confidence number saw the market drop quickly through the lows to touch into the 1.1160 levels before bouncing back however, the market then became very nervous of the weekend news to come and selling again moved into the market testing again through the recent lows to push below the 1.1140 areas and test the level till the end of the London session, the close saw the market gradually move back to the 1.1160 areas and close just short of the 1.1180 levels.
• GBP: Cable was a little more choppy however, the range was limited for the most part, moving from the opening 1.5750 levels the move through Asia was limited at best with the market moving around the 1.5740 levels until the grey hours, quick selling took the market down to the 1.5720 levels before bouncing off the level to trade quickly initially to above 1.5740 and then carried through to move into the mid 1.5760’s as the market saw light but consistent buying, the market then drifted into the NYK session down to the 1.5710 in a steady move and again saw decent buying and repeating the previous move before finishing the day more or less unchanged. Later part of the NYK session saw strong EURGBP selling moving in taking the market again through the 0.7100 levels trading quickly to the 0.7080 levels as safe haven flows in NYK settled into the market.
• JPY: USDJPY saw early selling from the 123.60 areas as the EURJPY came under pressure during Tokyo and the market testing towards the 123.20 areas before holding for a good proportion of the day around the 123.40 levels, NYK were stronger buyers of the pair and the market gradually pushed above the 123.80 level and into the waiting offers, and while the market was not particularly active the volumes were much improved from the Asian session and the market closed above the 123.80 in a reasonably strong market.
• AUD: As the USD stretched it’s muscles in Asia the Oz drifted from the opening just below 0.7740 flirting with the topside through into Tokyo the market started to drift steadily lower, the move into the grey hours saw light selling into the London open and the move into the NYK session saw the market testing the 0.7690 levels. NYK were better sellers of the Oz and the market tested down through the 0.7650 levels with light stops running the market to the lows just above 0.7630 and then a gradual rise back above 0.7650 in a long run to the close.

Friday’s premiership results

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

NZD       Trade Balance (NZD) May A 350M | C -50M | P 123M | R 183M

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

JPY         Household Spending Y/Y May A 4.80% | C 3.70% | P -1.30%

JPY         National CPI Core Y/Y May A 0.10% | C 0.00% | P 0.30%

JPY         Tokyo CPI Core Y/Y Jun A 0.10% | C 0.10% | P 0.20%

EUR        Eurozone M3 Y/Y May A 5.00% | C 5.40% | P 5.30%

USD       U. of Michigan Confidence Jun (F) A 96.1 | C 94.6 | P 94.6

Stay lucky

Andy

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