Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 109.542 | EURUSD 1.11872 | AUDUSD 0.72568 | NZDUSD 0.68188 | USDCAD 1.30784 | USDCHF 0.98816 | GBPUSD 1.44142 |

LMAX Highs and Lows 5am GMT

                                High | Low

EURUSD               1.12140 | 1.11874

USDJPY                 109.577 | 108.818

GBPUSD               1.44419 | 1.44045

AUDUSD              0.72696 | 0.72283

USDCHF               0.98890 | 0.98669

USDCAD               1.30838 | 1.30625

NZDUSD               0.68343 | 0.68075

EURGBP               0.77759 | 0.77561

EURJPY                 122.542 | 121.974

EURCHF                1.10671 | 1.10488

 

For Today

• EUR: USD weakness seemed to be the name of the game today led by the USDJPY, Euro’s slowly pushed to the 1.1200 levels before finally pushing through to the 1.1210 levels and light offers to hold the market through to the grey hour, Topside offers likely to continue into the 1.1220-40 areas with the possibility of weak stops on a move through that level before the offers reappear into the 1.1260 areas with the likelihood of strong offers appearing again through the 1.1280 areas and congestion beyond that, Downside bids light through to the 1.1150 areas and the possibility of some limited buying however, the downside through that level with those bids likely to increase on any move towards the 1.1100 areas, a break through the level in any strength will possibly open the downside to further pressure with the 1.1000 levels key to the ranges of last year.
• GBP: Cable saw light buying through the session with the market trending a little higher as light GBPJPY buying moved into the session with profit taking seeming to be appearing through the session and the Cable pushing gradually up to the 1.4440 levels from the openings below 1.4420. Topside offers are fairly week to the 1.4500 levels with some limited resistance into the level however, there is a small chance of a short squeeze if the market where to push through the level and the fickle pollsters published another dull piece, however, for the moment if there is a break through the 1.4500 levels the market would open the market to a very weak topside and the potential to the 1.4600 levels with stronger offers in that area.
• JPY: Quiet into the close and through into the Tokyo session before renewed selling moved into the market as the JPY buying continued on the back of the delay of the sales tax, whether this is likely to do anything for Abenomics remains to be seen and one would assume that just the delay means there is serious concerns that were coming to the end, moving from the opening around the 109.60-50 levels the market dipped to the 109.30 areas before dipping quickly to the figure area and meeting some light profit taking in the GBPJPY to hold the market above the 108.90 levels and a slow recovery into the grey hour to the 109.20 levels. Topside offers likely to be weak to the 110.00 levels with the possibility of only minor offers on a move to the area, through the level could see some weak stops and the market opening through the 110.20 for a larger move, Downside bids into the 108.80 levels still are possibly the stronger areas however, even through the level there is congestion continuing to the 108.50 areas before the market opens to the ranges from early last month.
• AUD: The Oz drifted in early trading with the market moving off the opening 0.7255 areas falling back to the 0.7240 areas with some weak selling in the carry trade impacting the early part of the session, a better than expected Trade Balance number saw the market quickly rally to the 0.7270 areas before dropping back again as the market digested a worse than expected retail sales number and the fall back carrying through to the 0.7230 areas before the market stabilized and started to make headway towards the 0.7240 areas into the grey hour. Topside offers light through to the 0.7280 areas and the offers then increasing as the market moves against the 73 cent level rejected yesterday, and with nothing independent to really affect the market the US numbers are likely to be the focus at that point and a strong push through the 73 cent level will see only a short distance before further offers are likely to appear to slow any move, Downside bids light through the 72 cent levels with possibility of weak stops on the move and the market then opening to test the 0.7150 areas and stronger bids making an appearance, and continuing through the downside.

Overnight News

JPY:

Sato Calls for More Flexible Asset Buys and Price Target

Sato: Must Reform BOJ Policy Framework to Longer-Term Initiative

Sato: Sees JGB Market Vulnerability Similar to Before 2003 Shock

Japanese Sold Net 549.4 Billion Yen Overseas Debt Last Week

Japan Finance Ministry to Promote Sato as Top Bureaucrat: Sankei

CNY:

China Is Pushing Panda Bond Mechanism Reforms: PBOC’s Pan

AUD:

Australian April Retail Sales Rose 0.2% M/M; Est. 0.3% Gain

NZD:

N.Z. to Require Councils to Provide Enough Land for Housing

Today’s data

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

JPY         Monetary Base Y/Y May A 25.50% | C 27.20% | P 26.80%

AUD       Trade Balance (AUD) Apr A -1.58B | C -2.11B | P -2.16B | R -1.97B

AUD       Retail Sales M/M Apr A 0.20% | C 0.30% | P 0.40%

JPY         Consumer Confidence May A 40.9 | C 40.4 | P 40.8

08:30     GBP       Construction PMI May C 52.1 | P 52

09:00     EUR        Eurozone PPI M/M Apr C 0.10% | P 0.30%

09:00     EUR        Eurozone PPI Y/Y Apr C -4.10% | P -4.20%

11:30     USD       Challenger Job Cuts Y/Y May P 5.80%

11:45     EUR        ECB Rate Decision C 0.00% | P 0.00%

12:15     USD       ADP Employment Change May C 178K | P 156K

12:30     USD       Initial Jobless Claims (MAY 28) C 271K | P 268K

14:30     USD       Natural Gas Storage P 71B

15:00    USD       Crude Oil Inventories P -4.2M

Harry Hindsight              

• EUR: A quiet start to the day for the Euro, moving slowly lower from the opening 1.1130 levels testing down into the mid-teens and holding through to the London session before slowly recovering, the release of PMI numbers seemed to appease the market although the numbers were mixed, EURGBP buying saw the Euro rising and the Cable bottoming out through the session however, the Euro moved from the release to above the 1.1150 levels and continued a steady climb higher through to the NYK session to test the 1.1180 areas and the limited offers held through to the end of the day with the market becoming a little choppy in the NYK session and then slowly testing above the 1.1190 levels towards the close.
• GBP: Cross selling dominated the Asian market with GBPJPY selling featuring through the session taking the market away from the 1.4500 levels to trade to the 1.4480 area before holding above the 1.4490 through to the London session, early selling in London saw the Cable test to the 1.4460 levels before the release of the European numbers and the steady rise of EURGBP through session and the Cable slipping slowly lower through the session to test the 1.4400 levels into the end of London and holding the 1.4410 areas to the close. Brexit polls continue to weigh on Cable add to which the strength of Yen having again failed above the 111 handle for the second month.
• JPY: Opening around the 110.70-80 areas the market traded quietly through the early part of Asia before dropping back quickly as the market moved into the grey hour before London opening, to trade to the 109.80 level and hold through until mid-morning, the move through the level eventually saw minor weak stops triggered as the movement in GBPJPY escalated and the USDJPY traded steadily lower through to the NYK session testing towards the 109.00 levels, the move into the NYK session saw limited USD buying however, the steady move to the 109.70 area eventually ran out of steam and the market remained static to the close holding the 109.50 areas.
• AUD: Having opened around the 0.7230 levels the move into the Tokyo session saw the market move quickly to the 0.7250 levels on expectations of a better GDP number holding the level until the level to the release and then quickly climbing to the 0.7290 areas before failing the 73 cent level and dropping back steadily throughout the rest of the day, the move into the NYK session saw weak stops on the move back through the 0.7250 levels and the market trading down to the opening levels with little independent movement during the session and slowly rising to finish the day around the 0.7250 areas.

Yesterday’s premiership results

NZD       Terms of Trade Index Q/Q Q1 A 4.40% | C 0.90% | P -2.00%

GBP       BRC Shop Price Index Y/Y May A -1.80% | P -1.70%

JPY         Capital Spending Q1 A 4.20% | C 3.10% | P 8.50%

CNY        Manufacturing PMI May A 50.1 | C 50 | P 50.1

CNY        Non-manufacturing PMI May A 53.1 | P                53.5

AUD       GDP Q/Q Q1 A 1.10% | C 0.60% | P 0.60% | P 0.70%

AUD       GDP Y/Y Q1 A 3.10% | C 2.80% | P 3.00%

CNY        Caixin PMI Manufacturing May A 49.2 | C 49.3 | P 49.4

CHF        GDP Q/Q Q1 A 0.10% | C 0.30% | P 0.40%

CHF        Retail Sales (Real) Y/Y Apr A -1.90% | C -0.80% | P -1.30% | R -1.60%

CHF        SVME PMI May A 55.8 | C 54.2 | P 54.7

EUR        Italy Manufacturing PMI May A 52.4 | C 53.5 | P 53.9

EUR        France Manufacturing PMI May (F) A 48.4 | C 48.3 | P 48.3

EUR        Germany Manufacturing PMI May (F) A 52.1 | C 52.4 | P 52.4

EUR        Eurozone Manufacturing PMI May (F) A 51.5 | C 51.5 | P 51.5

GBP       Mortgage Approvals Apr A 66K | C 68K | P 71.4K | P 70K

GBP       M4 Money Supply M/M Apr A -0.10% | C 0.20% | P -0.40%

GBP       PMI Manufacturing May A 50.1 | C 49.6 | P 49.2 | R 49.4

USD       ISM Manufacturing May A 51.3 | C 50.6 | P 50.8

USD       ISM Prices Paid May A 63.5 | C 58 | P 59

USD       Construction Spending M/M Apr A -1.80% | C 0.50% | P 0.30%

USD       Federal Reserve Beige Book

Good Luck,

Andy

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