Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 108.423 | EURUSD 1.14262 | AUDUSD 0.73749 | NZDUSD 0.68305 | USDCAD 1.28521 | USDCHF 0.97102 | GBPUSD 1.44483 |

LMAX Highs and Lows 5am GMT

                                High | Low

EURUSD               1.14294 | 1.14217

USDJPY                 108.851 | 108.226

GBPUSD               1.44540 | 1.44340

AUDUSD              0.73800 | 0.73305

USDCHF               0.97132 | 0.97025

USDCAD               1.28642 | 1.28495

NZDUSD               0.68348 | 0.68121

EURGBP               0.79159 | 0.79056

EURJPY                 124.331 | 123.702

EURCHF                1.10970 | 1.10872

 

For Today

• EUR: A quiet session for the Euro with the market trading quietly in a very quiet range around the 1.1425 closing levels, Topside light offers through the highs and likely to continue to the 1.1460 areas however, those offers are likely to increase on the move towards the 1.1480-1.1500 levels and a possibility of weak stops on a move through the 1.1530 areas and a possible stronger move higher from there. Downside bids light through the 1.1400 levels however, the move lower is likely to see supportive bids through the 1.1360 levels and the congestion likely to slow any move to the 1.1300 and stronger bids.
• GBP: Cable was a little more active than the Euro but I do mean a little with the market trading around the 1.4440 levels and testing briefly through the 1.4450 levels before drifting and continuing to test into the 1.4430’s with little direct trading and all cross related movement. Topside offers through the 1.4480 areas is likely to be light however, the 1.4500 has not been tested properly over the last few days and could see stronger offers appearing around the level with weak stops likely to put in an appearance on a move through 1.4550 and then increasing offers a possibility dependent on the votes into the London session, Downside bids still look to be reasonably strong on any move towards the 1.4380-70 areas with the supportive 100 DMA a focus for the market however, with a move through the level the technical traders are likely to be quick to chance a deeper move to the downside and the 1.4350 levels is likely to see very weak bids and the 1.4300 level a stronger areas if the BoE decisions are as expected.
• JPY: USDJPY buying from early in Tokyo saw some of yesterday’s weakness recovered through the session with a tight channel higher from the lows into the 108.20 area, the market moved above the 108.80 levels late into the session towards the grey hour to move into London on or around its highs, Topside offers through the 109.20 areas are for the moment likely to increase on a move towards the 109.40-60 levels with those offer increasing as the market approaches the 110.00 levels and possible weakness through that level to the 111.00 areas. Downside bids into the 108.20-00 areas however, a push through there sees weakness appearing on a push towards the congested 107.50 areas and possibly better bids from there to 107.00.
• AUD: The Oz saw a weakening in Consumer inflation expectations and with some banks starting muffled talk of lower interest rates a possibility the market dropped back from the highs around the 0.7380 areas to touch through to 0.7330 before ranging quietly through the session basing off that level. Topside offers weak through to the 74 cent level where the market is likely to show some resistance to any further gains, a move through the level though could see weak stops appearing and the possibility of a quick move to the 0.7450 areas before some light congestion kicks in to protect from any larger moves, downside bids into the 73 cent levels are possibly the largest before the market gives way to ranges from the beginning of the year and possibly stronger bids around 72 cents.

Overnight News

JPY:

Kuroda: Desirable for Currency to Move in Stable Manner

Japanese Bought Net 270.3 Billion Yen Overseas Debt Last Week

Japan Bank Lending Growth Accelerates to 2.2% Y/y in April

One BOJ Member: Should Add Stimulus Without Hesitation If Needed

Japan Posts Its 21st Straight Monthly Current-Account Surplus

Obama Hiroshima Visit May End Japan G-7 Meetings Early: Nikkei

Japan’s Lower House Approves Masai’s Nomination to BOJ Board

Former Kuroda colleague says BOJ to ease in June or July – RTRS

JPY/USD:

Japanese Investors Buy Record Amount of U.S. Treasuries in March

GBP:

U.K. April RICS House Price Index at 41 vs Est. 35

NZD:

English Says NZ to Bring Forward Spending in Budget: Interest.Co

NZD: New Zealand Manufacturing Growth Accelerated in April, PMI Shows

NZD: N.Z. Residential Property Asking Price Rises 2.1% M/M: Trade M

USD/AUD:

Obama, Australia PM Turnbull Discuss Maritime Disputes, TPP

AUD:

RBA to Decide on Card Payment Standards Next Week: Edey

 

Today’s data

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

NZD       Business NZ Manufacturing Index Apr A 56.5 | P 54.7

GBP       RICS House Price Balance Apr A 41.00% | C 38.00% | P 42.00%

JPY         Current Account (JPY) Mar A 1.89T | C 1.90T | P 1.73T | R 1.69T

AUD       Consumer Inflation Expectation May A 3.20% | P 3.60%

JPY         Eco Watchers Survey: Current Apr A 43.5 | C 44.9 | P 45.4

09:00     EUR        Eurozone Industrial Production M/M Mar C 0.10% | P -0.80%

11:00     GBP       BoE Rate Decision C 0.50% | P 0.50%

11:00     GBP       BoE Asset Purchase Target May C 375B | P 375B

11:00     GBP       MPC Official Bank Rate Votes C 0–0—9 | P 0–0–9

11:00     GBP       MPC Asset Purchase Facility Votes C 0–0—9 | P 0–0–9

11:00     GBP       Bank of England Inflation Report

12:30     USD       Import Price Index M/M Apr C 0.60% | P 0.20%

12:30     USD       Initial Jobless Claims (MAY 7) C 277K | P 274K

12:30     CAD       New Housing Price Index M/M Mar C 0.30% | P 0.20%

Harry Hindsight              

• EUR: A quiet opening saw the USD losing ground against most of the pairs over the course of the day, with Euro’s moving off the 1.1370 opening levels and gradually pushing to the 1.1390 in Asia and holding the 1.1380 levels into the London session, the release in London of the UK figures heled start the move higher for the Euro with EURGBP cross buying moving into the market and the Euro rising to the 1.1400 levels as the market moved to the NYK session, weak stops moved in through the level and the market quickly found itself towards the 1.1420 areas before finding sufficient offers to slow the ascent, eventually grinding through those offers the market steadily move to the London close pushing through to the 1.1445 in steady trading before the market started to drift for the rest of session with volumes very light throughout.
• GBP: A little more choppy with expectations for the UK numbers driving the Asian session to some extent and the market lifting off the opening 1.4440 levels to test towards the 1.4470 areas before drifting back to those opening levels into the London session, London were also buyers in front of the numbers and although better than the previous month the numbers failed to hit the consensus and the market quickly reversed to test down to the 1.4400 levels before fresh buying moved into the market, the GBP lost ground against the Euro over the session with the cross again making its way back above the 0.7900 levels as the USD weakened through the day, the Cable initial weakness was limited by that USD weakness over the course of the day and the pair eventually started to push through the opening levels again with the last hour in London seeing the early day traders buying back their shorts and the Cable pushing through the 1.4470 levels to touch towards the 1.4490 areas and the close in London saw the same drift to the close as in the Euro and the USD recapturing much of its losses against Cable.
• JPY: All though the BoJ continues to talk of intervention in the FX markets the market itself is less inclined to push in the same manner as it did with all the talk of further easing which failed to materialize las month, and wo opening around the 109.25-30 areas it gave ground from the 109.40 area highs on the move into the Tokyo session and once the market pushed back through the 109.00 levels with little effort on the support side weak stops and sellers increased to take the market to the 108.50 levels, the market then saw very little movement through the course of the day with USDJPY gradually forced steadily lower through the session in lacklustre trading in the pair and the Cross/JPY doing more work and the market slipping back to hold the 108.40 levels to the close.
• AUD: Consumer confidence saw the market make some headway in early trading with the market testing to the 0.7390 levels and light offers protecting the 74 cent levels, however, the break lower in USDJPY saw the AUDJPY being sold back quiet sharply and the Oz was dragged lower with the move trading back to the 0.7350 levels and then chopping around a little into the London session before testing through to the 0.7335 levels in what felt like a test for weak stops, eventually as with the rest of the market pure USD selling saw the Oz starting a steady rise through the session with a little flurry into early NYK to see the 74 cent level tested as the London market closed and a drift to the close from there.

Yesterday’s premiership results

AUD       Westpac Consumer Confidence May A 8.50% | P -4.00%

AUD       Home Loans Mar A -0.90% | C -1.40% | P 1.50%

JPY         Leading Index Mar (P) A 98.4 | C 96.4 | P 96.8

GBP       Industrial Production M/M Mar A 0.30% | C 0.40% | P -0.30% | R -0.20%

GBP       Industrial Production Y/Y Mar A -0.20% | C -0.40% | P -0.50% | R 0.10%

GBP       Manufacturing Production M/M Mar A 0.10% | C 0.30% | P -1.10% | R -0.90%

GBP       Manufacturing Production Y/Y Mar A -1.90% | C -1.90% | P -1.80% | R -1.60%

GBP       NIESR GDP Estimate Apr A 0.30% | P 0.30% | R 0.40%

USD       Crude Oil Inventories A -3.4M | C 0.1M | P 2.8M

USD       Monthly Budget Statement Apr A 106.5B | C 116.2B | P 156.7B

Good Luck,

Andy

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