Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 111.958 | EURUSD 1.12407 | AUDUSD 0.75777 | NZDUSD 0.67616 | USDCAD 1.31007 | USDCHF 0.96988 | GBPUSD 1.43689 |

LMAX Highs and Lows 6am

                                High | Low

EURUSD               1.12598 | 1.12296

USDJPY                 112.216 | 111.838

GBPUSD               1.43935 | 1.43654

AUDUSD              0.76101 | 0.75682

USDCHF               0.97101 | 0.96912

USDCAD               1.31014 | 1.30608

NZDUSD               0.67753 | 0.67569

EURGBP               0.78308 | 0.78149

EURJPY                 126.171 | 125.740

EURCHF                109.135 | 1.08968

 

For Today

EUR; Just for a change the Euro was quiet again, with volumes only just above the Tokyo holidays numbers as I type this however, given the plethora of data today that probably shouldn’t be a surprise, moving from the opening around the 1.1240 areas the market moved into the Tokyo session testing to the 1.1230 areas, the move into Tokyo saw the USD generally losing ground as the market adjusted after the bank holiday in Tokyo, and testing steadily through the session to the 1.1260 levels before running out of steam and into the various lunch periods in Asia and drifting towards the grey hours hold just below the 1.1250 levels. Topside offers are likely to be light through to the 1.1300 levels to slightly stronger through as the market again tries to test through to the 1.1320 from there though the level has held the 1.1350 areas over the end of last week and short term offers are likely to be at there strongest, the fact that the short term market is likely to be short will likely create stops through the level to some extent and the size would be important if momentum were to build after the numbers with the likelihood of stronger stops moving in through the 1.1400-20 areas and opening a larger move. Downside bids light through to limited bids into the 1.1200, the market has played the areas below over the last couple of weeks so it would be no surprise if negative numbers saw the market collapsing through the level and weak stops appearing with only limited support into the 1.1150 areas and through to 1.1100.

GBP: Inflationary data is likely  to dominate the market today and while the market watch’s the current government running to patch up the blow delivered by Ian Duncan Smith the numbers are expected to show higher inflation moving through the market while I doubt this myself the consensus is generally good for the GBP however, the risk obviously is for disappointment, the market opened around the 1.4375 areas and although its steadily rallied through the session the movement has been negligible moving from the lows just through the lows to test into the mid 1.4380’s centring around the 1.4380 level for most of the session, EURGBP cross again cross made limited mots to above the 0.7830 areas, Topside offers  light through the 1.4400 levels with the market not likely to run into anything major until it gets closer to the 1.4500 areas, from this point it is likely to rely on the data with some of those offers possibly moving if the consensus is correct and there is any upward pressure in inflation, with the level likely to see stops appearing through the 1.4515-20 levels and the move through to 1.4600 open, Downside and disappointment, with a strong push through the downside 1.4300-1.4250 seeing a mixture likely to only cause choppy action before opening the market lower to the 1.4150 areas, better bids are not likely till the 1.4100 and by then any disappointment will be appeased.

JPY: USDJPY made early gains pushing from an opening around the 111.90 areas pushing quickly through the 112.00 levels and pushing into the Tokyo opening to the 112.20 areas before running into offers to dent the ardour of the market and reversing the move and pushing below the opening levels forcing out the original buyers, the market on lesser volume managed to recover however, it was lacklustre into the JPY PMI numbers and although the numbers disappointed the market was unable to find any traction again drifting back and now less determined, buyers continued to appear on the declines though and the market managed to generally hold above the 112.00 levels into the grey hours. Topside offers into the 112.20 are likely to be lighter than they were and a break through the level will likely see only light weak stops and the better offers moving in through the 112.40 levels with those offers likely to be every 10 pips and building into the 112.80 areas through the 113.00 levels the market is likely to open a little with the better resistance removed however, the move towards the 113.40-60 levels will possibly see further offerings coming to market. Downside bids through the 111.60 levels are likely to be smaller however, the market is likely to find these bids in plentiful numbers and increasing as the market pushes back the 111.00 areas with the market likely to be willing to buy into any weakness through the level.

AUD: With the market again buzzing with moans about Central Banks and government officials stimulating market movements scrutiny again fell on the Oz as the US repeated concerns about the 2015 FX statements, and as the market suspects of previous absorption of Oz buying by the central bank to weaken the currency however, last year is more than likely a consequence of the deep Asian problems appearing as a result of in the CNY economy, today though saw a better rally through the session having dipped a little from the opening around the 0.7580 areas to the 0.7570 levels the dip coincided with the better buyers appearing in the AUDJPY carry and the market moved off those 0.7570 lows to push to the 76 cent levels and nervous trading in the area before the market jumped higher testing to the 0.7610 before slowing and holding quietly through to the grey hours, Topside offers likely to be in patches 0.7620 starts the day with the market then likely to struggle through the 0.7640 areas and 0.7660, however, the better offers once through those slowing levels will be into the 0.7680 areas and only a strong break here with see the 77 cent threatened and limited congestion to the 0.7880 areas. Downside bids light through the 0.7450 areas with some better support into the 74 cent levels and likely in front of stops opening up a slightly deeper move, again though having moved through Asia the numbers in Europe and the UK likely to have only limited import.

Overnight News

JPY:

Japan May Delay Tax Hike If Revenues Fall, Yomiuri Cites Suga

Norihiro Takahashi to Replace Mitani as GPIF President

Global Funds Bought the Most JGBs since October Last Month: JSDA

Japan Mulls Tax Breaks to Grow Property Investment Market: Nikkei

Japan Govt. Suspends Casino Task Force Operations, Yomiuri Says

Nikkei Japan March Flash Manufacturing PMI 49.1 vs 50.1 in Feb.

Japan Jan. All Activity Index Rises 2% M/m; Est. +1.9%

Japan’s Lower House Confirms Sakurai’s Appointment to BOJ Board

ASEAN:

Moody’s Sees ASEAN Growth Outlook Diverging in 2016, 2017

EUR/GBP:

`Brexit’ May Lead to Downgrades and Slower Economy, Moody’s Says

CNY:

IMF Says It Hasn’t Asked for Additional Information From China

Lagarde Says China Has Tools to Stimulate Demand: Business News

NZD:

S&P Affirms New Zealand Credit Ratings, Outlook Remains Stable

USD/AUD:

U.S. Says It Voiced Concern in 2015 on Australia FX Statements

AUD:

RBA’s Stevens: Australia Adjusting Well to Commodity Volatility

Australian 4Q House Prices Rose 0.2% Q/Q; Est. Unchanged

Australia ANZ Weekly Consumer Confidence Falls 0.3% to 116

EUR:

IFO Head Sinn Calls for Curbs on ECB Powers, Handelsblatt Says

Today’s data

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

AUD       House Price Index Q/Q Q4 A 0.20% | C 0.10% | P 2.00%

JPY         PMI Manufacturing Mar (P) A 49.1 | C 50.6 | P 50.1

JPY         All Industry Activity Index M/M Jan A 2.00% | C 1.90% | P -0.90%

07:00     CHF        Trade Balance (CHF) Feb C 2.88B | P 3.51B

08:00     EUR        France Manufacturing PMI Mar (P) C 50.2 | P 50.2

08:00     EUR        France Services PMI Mar (P) C 49.5 | P 49.2

08:30     EUR        Germany Manufacturing PMI Mar (P) C 50.9 | P 50.5

08:30     EUR        Germany Services PMI Mar (P) C 55.1 | P 55.3

09:00     EUR        Eurozone Manufacturing PMI Mar (P) C 51.4 | P 51.2

09:00     EUR        Eurozone Services PMI Mar (P) C 53.5 | P 53.3

09:00     EUR        German IFO – Business Climate Mar C 105.9 | P 105.7

09:00     EUR        German IFO – Current Assessment Mar C 112.6 | P 112.9

09:00     EUR        German IFO – Expectations Mar C 99.5 | P 98.8

09:30     GBP       CPI M/M Feb C 0.40% | P -0.80%

09:30     GBP       CPI Y/Y Feb C 0.30% | P 0.30%

09:30     GBP       Core CPI Y/Y Feb C 1.20% | P 1.20%

09:30     GBP       RPI M/M Feb C 0.40% | P -0.70%

09:30     GBP       RPI Y/Y Feb C 1.30% | P 1.30%

09:30     GBP       PPI Input M/M Feb C 0.40% | P -0.70%

09:30     GBP       PPI Input Y/Y Feb C -7.40% | P -7.60%

09:30     GBP       PPI Output M/M Feb C 0.00% | P -0.10%

09:30     GBP       PPI Output Y/Y Feb C -1.20% | P -1.00%

09:30     GBP       PPI Output Core M/M Feb C 0.10% | P 0.10%

09:30     GBP       PPI Output Core Y/Y Feb C 0.10% | P 0.00%

09:30     GBP       Public Sector Net Borrowing (GBP) Feb C 5.4B | P -11.8B

10:00     EUR        German ZEW (Economic Sentiment) Mar C 5.9 | P 1

10:00     EUR        German ZEW (Current Situation) Mar C 53 | P 52.3

10:00     EUR        Eurozone ZEW (Economic Sentiment) Mar C 8.6 | P 13.6

13:00     USD       House Price Index M/M Jan C 0.50% | P 0.40%

Harry Hindsight              

• EUR; A quiet start to the day with the market opening a little lower from Fridays close, moving off the 1.1270 level the market move steadily to the 1.1285 areas into the Tokyo holiday session, the early gains though started to drain away as the early buyers disappeared and the drag of GBP started a steady fall into the grey hours with the market moving through the opening levels, early Europeans continued the move with the market following the move in GBP and into the London session drifting ever lower in steady selling, and the early lows set towards the 1.1235 levels, the market then held around the 1.1250 level with only the Eurozone current account to come with only a slight change to the actual number the revision for Jan saw the market move quickly higher and back to the opening levels before pausing and rallying eventually towards the 1.1285 levels, the move into the NYK though saw a steady drift as the USD started to push higher across the board and the Euro slowly moved through to the London close testing through to just below the previous low, movement off the level this time was sluggish and pushed to the 1.1250 however, the tone was set for the remainder of the session with volumes slowing the market drifted onto a close just off the days lows.
• GBP: News over the weekend hat Ian Duncan Smith a cabinet minister in the government had resigned saw Cable weak from the opening with a low opening around the 1.4460 and drifting into the Tokyo holiday session pushing slowly lower into the grey hours around the 1.4420 levels, grey hours selling saw early Europeans selling on a secondary reaction to the news limited though it was it was sufficient to push the market close to the limited sentimental level and London opening couldn’t wait to push the market through and straight into the 1.4370 levels, the Cable never truly recovered its losses and tests back above the 1.4400 levels were limited and less convincing each time, with the Cable eventually dipping to through the 1.4370 levels into the NYK session and trading in an ever decreasing range to the close just above the 1.4370 area. EURGBP was no better for the GBP with the market starting its move higher from the opening around the 0.7795 area with those moves eventually extending to a test to the 0.7835 area into early NYK, the market did settle back as limited profit taking by the day traders moved in on the London close however, having dipped to the 0.7815-20 levels the market remained there for the balance of the session.
• JPY: Opening around the 111.60 levels the early part of the session saw steady selling through the crosses, particularly GBPJPY with the USDJPY testing through into the Holidaying Tokyo session pushing at the 111.20 levels before support appeared from resting orders, the market then recovered to close to the opening levels as the quiet session saw grey hours trading focused elsewhere, USDJPY struggled through the London session with little direction however, the move into the NYK session saw USD buying moving in as GBP continued to weaken, USDJPY pushed to the 111.80 areas in early NYK and although it struggled to break cleanly through the limited offers the later part of the day once London had left saw the pair pushing quiet into a close testing towards the 112.00.
• AUD: Mixed day for the Oz with the news that the budget has been moved by a week and the market speculating on an early call for elections saw the market drop from the steady decline from the opening 0.7595 areas and touching 0.7575 before ranging through the day and into London, the official opening in London saw the market jumping through the opening level to trigger the weak short in a mini squeeze to the 0.7625 levels holding into the areas through to the NYK session and a renewal of the downward trend, not reaching the previous lows the market moved down in steady steps to range in the 0.7580-95 areas through to finish just below the levels into the close.

Yesterday’s premiership results

NZD       Westpac NZ Consumer Confidence Q1 A 109.6 | P 110.7

GBP       Rightmove House Prices M/M Mar A 1.30% | P 2.90%

EUR        Eurozone Current Account (EUR) Jan A 25.4B | C 26.3B | P 25.5B | R 28.6B

GBP       CBI Trends Total Orders Mar A -14 | C -13 | P -17

USD       Existing Home Sales Feb A 5.08M | C 5.32M | P 5.47M

Good Luck,

Andy

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