Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 109.032 | EURUSD 1.13193 | AUDUSD 0.72894 | NZDUSD 0.67905 | USDCAD 1.28951 | USDCHF 0.9777 | GBPUSD 1.44004 |

LMAX Highs and Lows 5am GMT

                                High | Low

EURUSD               1.13259 | 1.13130

USDJPY                 109.112 | 108.884

GBPUSD               1.44953 | 1.43973

AUDUSD              0.73667 | 0.72825

USDCHF               0.97816 | 0.97719

USDCAD               1.29116 | 1.28451

NZDUSD               0.68405 | 0.67790

EURGBP               0.78606 | 0.78085

EURJPY                 123.463 | 123.240

EURCHF                1.10701 | 1.10637

 

For Today

• EUR: A quiet session for the Euro as the market drifted around the 1.1320 levels with the range contained for the most part in a 10 pip range around those areas with most of the action in the EURGBP cross. Topside offers likely to be into the 1.1340-60 areas and then likely to increase in size as the market moves towards the 1.1400 areas with weak stops likely to be light through the level and stronger offers on a move through the 1.1450 areas. Downside bids through to the 1.1280 areas however, stops are likely to increase on any move through that level and the downside reasonably weak on any move through the 1.1270 areas with limited bids through to the 1.1240 areas, and the market opening to a deeper move on any move through 1.1200.
• GBP: The market opened quietly however, a Daily Telegraph article on a recent poll showing a clear indication with 55% showing a remain in EU against 40% for Brexit saw the Cable quickly rise in the Tokyo session and testing quickly from those opening levels around the 1.4400 areas to above the 1.4460 levels initially, the market continued to gain ground through the session with the market seeing early Middle Eastern buyers moving into the market and extending those highs towards the 1.4500 levels with the market just failing to push the final little and slipping back to hold into the grey hour. Topside offers into the 1.4500 levels with those offers likely to be light if the market moves through with possibly the offers into the 1.4550 areas stronger but possibly evaporating as the poll appears on everyone’s desk, downside bids likely to be a little stronger into the 1.4450 areas and opening the market to the 1.4400 weak bids with stops then appearing through the level for a quick move to the 1.4350 areas and this will possibly depend on the inflationary data into the London session. Those inflationary numbers coupled with the Poll have more potential to the upside one would imagine.
• JPY: A quiet session with the market holding for the most part around the 109.00 areas and the market limited by cross trade action against the GBP and Oz. Topside offers likely to be light through to the 109.50 areas before the market see’s stronger offers from there on and into the 110.00 with a push through will see only weak offers through to the 111.00 areas and the market opening up for a move higher. Downside bids light through to the 108.50 levels with the market likely to see weak stops on a move towards the 108.00 areas and better bids around the level, a push through the 107.70 areas will likely see only token support and the market dipping into the 107.20 area bids.
• AUD: Opening around the 07290 levels the market drifted quietly into the Tokyo session around the level however, the release of the RBA minutes while showing that the cut was needed any future moves are now less determined and there is no commitments at the moment for the future, so a very neutral set of minutes and the Oz reacted quickly to the news and moved quickly through the 73 cent level to test to the 0.7350 areas before slowly pushing to its highs in the 0.7365 area, of course the movement was then tempered by sufficient offers to force the market into a steady drift between the two levels and into the grey hours, Topside offers are likely light towards the 0.7380 areas with the slight possibility of weak stops in that area before stronger technical offers into 74 cent however a break through the level is likely to see further buying materialise as the market opens to the 0.7450 areas and only light congestion from there to 75 cents, Downside bids are likely to be building into the 73 cent levels with congestion then continuing into the 0.7250 areas and the topside of the 72-70 cent range from the beginning of the year providing the support.

Overnight News

AUD:

RBA Discussed Cutting Rate May 3 or Awaiting More Information

JPY:

Aso: G-7 Finance Ministers to Discuss FX as Needed at Summit

Most Japan Cos. See USD/JPY at 110 in Fiscal 2016: Nikkei Survey

Japan’s Real GDP Likely Grew 0.28% in 1Q, Nikkei Says

Japan’s Suga: Banks will benefit from BOJ’s negative rates

USD/JPY:

Japanese Flows Into Long-Term Securities in U.S. Reach Record

SGD:

Singapore April Non-Oil Domestic Exports -7.9% Y/y; Est. -8.4%

NZD:

New Zealand 2-Year Inflation Expectations Hold Near 22-Year Low

CNY/KRW:

China to Select Korean Market Makers for Yuan-Won Trading: Daily

Today’s data

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

AUD       RBA Minutes May

NZD       RBNZ 2-Year Inflation Expectation Q2 A 1.60% | P 1.63%

JPY         Industrial Production M/M Mar (F) A 3.80% | C 3.60% | P 3.60%

07:15     CHF        Producer & Import Prices M/M Apr C 0.10% | P 0.00%

07:15     CHF        Producer & Import Prices Y/Y Apr P -4.70%

08:30     GBP       CPI M/M Apr P 0.40%

08:30     GBP       CPI Y/Y Apr C 0.50% | P 0.50%

08:30     GBP       Core CPI Y/Y Apr C 1.50% | P 1.50%

08:30     GBP       RPI M/M Apr P 0.40%

08:30     GBP       RPI Y/Y Apr C 1.60% | P 1.60%

08:30     GBP       PPI Input M/M Apr C 1.10% | P 2.00%

08:30     GBP       PPI Input Y/Y Apr P -6.50%

08:30     GBP       PPI Output M/M Apr C 0.20% | P 0.30%

08:30     GBP       PPI Output Y/Y Apr P -0.90%

08:30     GBP       PPI Output Core M/M Apr P 0.10%

08:30     GBP       PPI Output Core Y/Y Apr P 0.20%

08:30     GBP       DCLG UK House Prices Y/Y Mar C 7.90% | P 7.60%

09:00     EUR        Eurozone Trade Balance (EUR) Mar C 23.1B | P 20.2B

12:30     CAD       Manufacturing Shipments M/M Mar C -0.70% | P -3.30%

12:30     USD       Housing Starts Apr C 1.12M | P 1.09M

12:30     USD       Building Permits Apr C 1.13M | P 1.09M

12:30     USD       CPI M/M Apr (C) C 0.40% | P 0.10%

12:30     USD       CPI Y/Y Apr C 1.00% | P 0.90%

12:30     USD       CPI Core M/M Apr C 0.20% | P 0.10%

12:30     USD       CPI Core Y/Y Apr P 2.20%

13:15     USD       Industrial Production Apr C 0.30% | P -0.60%

13:15     USD       Capacity Utilization Apr C 75.00% | P 74.80%

Harry Hindsight              

• EUR: A quiet session through the day with little data on the day, Euro’s was limited to just 40 pips through to the close with the market initially moving off its opening levels to test towards the 1.1320 areas before ranging through to the London session holding around the 1.1310 areas before testing through the early London session to the 1.1330 levels, NYK saw limited movements to push the highs to above 1.1340 however, the lack of volume and interest saw the market then drifting to the 1.1320 areas for the close.
• GBP: Cable saw a little bit more movement but it was still a limited day for the USD overall and the market drifted through the Asian session pushing from the opening around the 1.4350 levels to test towards the 1.4370 areas into the London period, some movement around the opening left the market struggling for traction and drifting to post lows through the 1.4340 levels the market started a steady recovery with light selling in the EURGBP helping Cable to test through the 1.4400 levels and into the 1.4410 areas before drifting around the figure area into the close.
• JPY: As with the rest of the market limited movement with the USDJPY moving up during the early part of the Asian session from the lows in the pre-Tokyo session around the 108.50 to gradually push to the 109.00 areas, the market was unable to break the level initially and settled back a little into the London session, the market continued holding the 108.70 level through to the NYK session and lifted slowly through to the close to push and hold above the 109.00 areas and unable to break 109.10 levels.
• AUD: Opening slightly lower the market held the 0.7260 areas and tested initially to the 0.7250 areas before seeing light AUDJPY buying to test through to the 0.7290 levels and moving through to the into the London session pushing against the 73 cent levels and then holding in a very narrow range through to the close having failed to move through 0.7310 areas.

Yesterday’s premiership results

GBP       Rightmove House Prices M/M May A 0.40% | P 1.30%

JPY         Domestic Corporate Goods Price Index Y/Y Apr A -4.20% | C -3.70% | P -3.80%

JPY         Machine Tool Orders Y/Y Apr A -26.40% | P -21.20%

USD       Empire State Manufacturing Index May A -9 | C 7 | P 9.56

USD       NAHB Housing Market Index May A 58 | C 59 | P 58

USD       Net Long-term TIC Flows Mar A 78.1B | C 36.5B | P 72.0B

Good Luck,

Andy

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