Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 106.539 | EURUSD 1.13672 | AUDUSD 0.73665 | NZDUSD 0.69548 | USDCAD 1.29385 | USDCHF 0.97576 | GBPUSD 1.45154 |

 

LMAX Ranges 6am London time

Highs    Lows

EURUSD               1.13736 | 1.13363

USDJPY                 107.190 | 106.363

GBPUSD               1.44700 | 1.43517

USDCHF               0.97751 | 0.97560

AUDUSD              0.73767 | 0.73153
USDCAD               1.29733 | 1.29417

NZDUSD               0.69491 | 0.69124

EURCHF                1.10971 | 1.10770

EURGBP               0.79053 | 0.78520

EURJPY                 121.570 | 120.786

For today

• EUR: Opening unchanged in the Asian session the market drifted through the session from the 1.1370 areas to test down to the 1.1340 levels, with the market dragged a little by the Cable movement. Topside offers through the 1.1380 areas with weak stops likely to appear on a break above the 1.1430 levels and stronger stops on a move through 1.1460 and a test of the weaker 1.1500 areas, Downside bids light through to the 1.1300 areas with possibly better bids beginning to shape around the 1.1240-60 areas however, with the strong move from Friday the market breaking the level could see longs quickly disappearing as the market tests back to the previous range centred around the 1.1150 levels however, with very little data we would have to wait for later in the week.
• GBP: With the pre-market looking to open unchanged when the bell did go the market found itself around the 1.4460 level some 60 pips from the close and looking particularly vulnerable, early pre Tokyo saw the market edging to the 1.4480 areas before strong selling appeared and the Cable quickly pushed to the 1.4360 levels before finding sufficient support to stop the selling, the market did move back to the 1.4400 levels and holding just below those levels through to the grey hour, Topside offers light through the 1.4400 levels with those light offers likely to continue to the 1.4440 areas, with very few stops likely until the 1.4480 areas the market is likely to see very little between there and its current levels and a push through to fill the gap on the charts would see the stronger 1.4500-20 areas tested before running out of steam, downside bids to the 1.4350 areas likely to see weak stops through the levels and the market testing the 1.4300 areas and stronger bids into a light data day.
• JPY: A low opening saw the market test the 106.40 levels before starting a steady recovery through the session with no data and minimal news for the USDJPY to push to the 107.20 levels and then trade lightly around the 107.00 levels into the grey hour, topside offers are likely to be light through the 107. Handle and only around the 107.80-108.00 is there any suspected offers and a push through will likely cause a short squeeze higher on the break back above the 108.00 levels and there are possibly better offers appearing through the 108.50 areas and towards 108.80. Downside bids light through the 107.00 areas with the possibility of some very weak stops on a move towards the 106.50 areas, however, stronger bids then appear on any attempt to push the 106.00 levels with stops likely to be building below the 105.80 areas for a deeper move lower.
• AUD: Opening around the closing areas the market slowly traded lower through the Tokyo session from the opening above 0.7360 to test lightly to the 0.7320 levels before holding there and moving into the London session quietly just off those lows, downside light bids into the 0.7300 areas with weak stops likely through the level and an opening to stronger bids into the 0.7260-40 areas and further congestion through to 0.7200 areas. Topside offers through to the 0.7380-0.7400 area where the amounts are likely to increase as you move closer to the figure area, weak stops on a move through the level are likely to be quickly absorbed with further offers appearing on a move to the 0.7440-60 levels.

Overnight News                                                                  

USD/CNY:

China Must Become ‘More Adept’ at Policy Communication, Lew Says

Lew: U.S., China Will Discuss Ways to Promote Balanced Growth

CNY/USD:

China, U.S. Should Have More Dialogues in Macro Eco Issues: Xi

China, U.S. Should Limit Disagreements: People’s Daily

JPY:

Japan MOF’s Asakawa Says Watching Foreign Exchange Moves: Nikkei

Suga Says Currency Stability Is Extremely Important; Watching FX

Abe Says Delaying Sales Tax Increase Will Speed Up Abenomics

Abe’s LDP Party Signals Dramatic Shift on BOJ in Election Pledge

USD:

Kerry: Supports Peaceful Resolution of South-China Sea Dispute

HKD:

H.K.’s Tsang Sees Initial Signs of Economic Stabilization in 2Q

AUD:

Australia May Melbourne Inst. Inflation Gauge Falls 0.2% M/m

Australia ANZ May Job Advertisements Rise 2.4% M/m

Today’s data

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

AUD       TD Securities Inflation M/M May A -0.20% | P 0.10%

6:00        EUR        German Factory Orders M/M Apr C -0.50% | P 1.90%

8:10        EUR        Eurozone Retail PMI May P 47.9

8:30        EUR        Eurozone Sentix Investor Confidence Jun C 7.1 | P 6.2

14:00     USD       Labour Market Conditions Index Change May P -0.9

Weekend News

USD/CNY:

Lew: U.S., China ‘Made Great Progress’ on Exchange Rate Talks
China Could Find It Faces ‘Great Wall’ of Isolation: Carter
Carter Says Any China Action in Shoal Would Be ‘Provocative’
Kerry Warns China Over Air Defence Zone for Sth China Sea: Reuters
USD:

Fed’s Mester Says Gradual Upward Pace of Rate Is Appropriate
Fed’s Mester Says Don’t Make Financial Stability Third Fed Goal
Win or Lose, Trump Won’t Dent U.S. Business in Asia, Says Wagar
Sanders Says Clinton Can’t Claim Democratic Win on Tuesday
CNY:

PBOC Official Sees Monetary Policy ‘Manoeuvre Space;’ Sina.Com
China Will Not Accept S. China Sea Arbitration Ruling: Sun
Asia-Pacific Region Faces Common Security Challenges: Sun
CNY/JPY:

China Urges Japan Not to Intervene in S. China Sea Issue: Xinhua
JPY:

LDP’s Inada Says Abe May Still Be PM for 2019 Tax Hike
JPY/GBP:

Asahi Explores $7.3b Bid for SABMiller Beers, Sunday Times Says
CHF:

Further SNB Rate Cut ‘Possible,’ Vice President Tells Basler
EUR:

Greece’s ND Party Has 7.5 Points Lead in Alco Poll: Proto Thema
Italy’s Government Could Cut Personal Income Tax in 2017: Padoan
Finland’s Debt Ratings Cut at Moody’s on Weak Economic Growth
CAD:

Inflation Goals Aren’t Enough to Avoid ‘Trouble,’ Poloz Says

Harry Hindsight

• EUR: A very quiet day through to the NFP with the market holding the 1.1140 downside areas having flirted with the 1.1160 areas early in Tokyo and through to the London session, US numbers saw a very low NFP number despite the dip in unemployment and a lower trade balance than expected and USD collapsed and the Euro pushed quickly through to the 1.1260 levels before running into some resistance however, although there was a brief pause the market continued to push through the levels with weak stops through the 1.1320 levels seeing the market push to the 1.1350 levels before slowing and trading slowly through to finish the day around the 1.1370 areas. The NFP number now brings into question the previous view of a rate hike in the short term with current polls indicating the chances reduced to 27%.
• GBP: A slightly wider range for the Cable through the early part of the session with the market dipping from the opening above 1.4420 to test the 1.4400 levels before recovering as the market made its way through the Asian session and into the London period testing above the 1.4440 levels and back to the 1.4400 areas as the market moved towards NYK, NFP saw the market trade quickly to the 1.4500 levels before pausing and testing further to the 1.4580 areas before meeting stiffer resistance and falling gradually back to the 1.4500 levels into the closing period into the London session the market then settled down to slow trading through to the end of the day around the 1.4520 levels. GBP also lost ground against the Euro with Brexit still hanging over the market and the Euro pushing through the 0.7800 levels and testing to a close above the 0.7830 areas.
• JPY: USDJPY made a brief foray above the 109.00 levels through the Asian session moving off the 108.80 areas after testing slightly below, the move towards the grey hour saw the market puahing through the 108.80 levels having failed the topside and weak position holders covered and then gradually moved through London slowly rising from the lows to test the 109.00 levels again, the NFP number had the USD in full flight and the drop was quickly through the 108.00 level triggering weak stops and continuing through the next couple of hours to test through 107.00 and further stops triggered as the market pushed into the ranges from earlier in the year, the long run to the end of the session saw the market drifting ever lower to the 106.50 areas before finding some limited bids for the close just off those lows.
• AUD: The Oz opened around the 0.7230 areas and made slow but steady gains through the Asian session to push above the 0.7260 in the move into the London session, the market dipped back as the market moved into NYK, USD collapse saw the market moving off the 0.7240 levels to test quickly to the 0.7340 areas and then stalling deep into the session before again starting to rise to the close around the 0.7370 areas.

Friday’s premiership results

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

JPY         Labour Cash Earnings Y/Y Apr A 0.30% | C 0.90% | P 1.40% | R 1.50%

CNY        Caixin PMI Services May A 51.2 | C 52 | P 51.8

EUR        Italy Services PMI May A 49.8 | C 52.3 | R 52.1

EUR        France Services PMI May (F) A 51.6 | C 51.8 | P 51.8

EUR        Germany Services PMI May (F) A 55.2 | C 55.2 | P 55.2

EUR        Eurozone Services PMI May (F) A 53.3 | C 53.1 | P 53.1

GBP       Services PMI May A 53.5 | C 52.3 | P 52.3

EUR        Eurozone Retail Sales M/M Apr A 0.00% | C 0.40% | P -0.50% | R -0.60%

CAD       Labour Productivity Q/Q Q1 A 0.40% | C 0.40% | P 0.10%

CAD       Trade Balance (CAD) Apr A -2.9B | C -2.6B | P -3.4B | R -3.2B

USD       Change in Non-farm Payrolls May A 38K | C 170K | P 160K | R 123K

USD       Unemployment Rate May A 4.70% | C 5.00% | P 5.00%

USD       Average Hourly Earnings M/M May A 0.20% | C 0.20% | P 0.30%

USD       Trade Balance Apr A -37.4B | C -41.9B | P -40.4B

USD       ISM Non-Manufacturing Composite May A 52.9 | C 55.5 | P 55.7

USD       Factory Orders Apr A 1.90% | C 0.50% | P 1.10% | R 1.50%

Stay lucky

Andy

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