Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 107.547 | EURUSD 1.13553 | AUDUSD 0.73674 | NZDUSD 0.69348 | USDCAD 1.28172 | USDCHF 0.97054 | GBPUSD 1.4440 |

LMAX Highs and Lows 5am GMT

                                High | Low

EURUSD               1.13676 | 1.13505

USDJPY                 107.894 | 107.223

GBPUSD               1.46676 | 1.44368

AUDUSD              0.74259 | 0.73596

USDCHF               0.97263 | 0.96990

USDCAD               1.28381 | 1.28111

NZDUSD               0.69297 | 0.66931

EURGBP               0.78656 | 0.77531

EURJPY                 122.510 | 121.842

EURCHF                1.10259 | 1.10216

 

For Today

• EUR: Euro’s maintained a quiet range moving from the opening in Tokyo to touch above the 1.1365 levels before trading slowly back to test into the 1.1350 levels and set the range, a brief flurry into the final hour before London saw the market touch higher on a Cable move before settling again around the low end of the range, Topside offers into the 1.1380-1.1400 levels with limited offers continuing through into the 1.1450 areas with the possibility of weak stops on a move through the level and the market becoming vulnerable to a larger move higher, downside bids light through the 1.1300 levels and then very little in the way to the 1.1220 areas and likely to be weak stops on the move through the mid 1.12 handle, leading to a possible strong test through to the 1.1150 areas.
• GBP: For the bulk of the session the market remained very quiet with the market trading slightly higher through the session from the opening just below the 1.4450 areas, however, as the market moved into the final hour before the London opening the market quickly rose in what looked like a single ticket clearing what liquidity there was to run strongly 2 big figures higher pushing quickly through the 1.4500 levels and peaking on a spike higher through the 1.4650 areas before dropping back to 1.4550 and a steady decline through to the 1.4500 areas and holding above the level into the grey hours.
• JPY: opening around the 107.60 levels the market slipped a little lower into the Tokyo session testing towards the 107.20 areas before the buyers started to reappear as the comments from Yellen yesterday impacted the early Asian market, once the USD sellers were out of the way and the market had started to talk about a stronger Yen the market started to trade counter to the talk and slowly lifted to test the 107.90 levels in steady but strong buying through the day. Topside offers still remain in the 108.00 areas with weakness behind the level and the market opening into the stronger and congested 108.50-109.00 levels however, a break here does allow the market to move back into the 109-111 range contrary to what the market is talking about. Downside bids into the 106.50 levels lead to weak stops on a move through the 106.30 areas and a possible weaker set of bids around the figure areas, a push through to the 105.50 levels is possibly a key move on any attempt to the lower levels and the 102-104 range for longer term.
• AUD: With the rate decision on the horizon the early part of the session saw the market holding quietly around the 0.7370 opening areas, and the Oz did very little, although the market suspected there’d be no change to the rate it wasn’t until the release and then the odd neutral comment that the market lifted quickly to the 0.7420 areas before slowly pushing ahead to 0.7430 into the grey hour, Topside offers likely to run into the 0.7440-60 areas and then followed by stronger offers into the 75 cent level with congestion through the level and possibly weak stops in the mix. Downside bids light through to the 0.7350 areas and then stronger bids likely to appear after today’s commentary into the 73 cent level with weak stops on a move through the level and a short term failure.

Overnight News

AUD:

RBA’s Stevens Keeps Benchmark Interest Rate at 1.75% (Full Text)

Australia’s May Construction Index Falls 4.1 Pts M/m to 46.7

USD/CNY:

U.S.’s Lew: Foreign Companies Question If Welcome in China

CNY/USD:

China to Release New Negative List for U.S. Next Week: Daily

China Decides to Give 250b Yuan RQFII Quota to U.S.: Yi Gang

CNY:

Yuan Will Remain ‘Relatively Stable’: Financial News

JPY:

Aso Says He’s Not Going to Speculate on What May Happen to Yen

NZD:

N.Z. Treasury Says 2016 Inflation May Be More Than Forecast

RBNZ Should Keep Cash Rate at 2.25% on June 9, Shadow Board Says

N.Z. Treasury Sees 2016-17 Dairy Farm Cash Shortfall of NZ$2.3b

GBP:

U.K. LFL May Retail Sales Up 0.5% Y/y, BRC Says

Today’s data

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

GBP       BRC Retail Sales Monitor Y/Y May A 0.50% | P -0.90%

AUD       RBA Rate Decision A 1.75% | C 1.75% | P 1.75%

JPY         Leading Index Apr (P) A | P 99.3

06:00     EUR        German Industrial Production M/M Apr C -0.20% | P -1.30%

07:00     CHF        Foreign Currency Reserves May P 588B

09:00     EUR        Eurozone GDP Q/Q Q1 (F) C 0.50% | P 0.50%

12:30     USD       Non-Farm Productivity Q1 (F) C -0.60% | P -1.00%

12:30     USD       Unit Labour Costs Q1 (F) C 4.00% | P 4.10%

14:00    CAD       Ivey PMI May C 54.2 | P 53.1

Harry Hindsight              

• EUR: A reasonably quiet day with the market trading around the 1.1350 levels for the bulk of the day, dipping from the opening around the 1.1370 areas to push below the 1.1340 areas into the London session, a weak German factory order had no impact however, the Eurozone retail PMI number saw the market rise quickly from the release to test to the opening levels again before slipping slowly to test lower through the London session, to push to the 1.1330, the move into the NYK session saw lacklustre buying and a return to the opening levels, the move into the London close saw the low and high of the day set in a very short period of time with a stab lower testing through the previous low before bouncing quickly higher to test above the 1.1390 levels as Yellen hit the wires with talk of the reaction to the NFP missing the point to the rest of the economic data.
• GBP: The range was set in the Cable on the opening in Tokyo with the 1.4480 levels seeing in early trading having gapped lower from Fridays close and then falling sharply as the Tokyo session saw strong selling in Cable as well as EURGBP buying with the cross taken above the 0.7900 levels before finding strong resistance, while the Europeans may talk down the consequences of a Brexit however, it goes without saying that one cannot do without the other in the long run, Cable dipped to the 1.4360 level before the market held and traded through the Asian session around the 1.4400 levels through into the London session, lifting from the lows the market tested towards the opening levels and apart from brief movement into the NYK session held the 1.4460-70 levels to the close.
• JPY: USDJPY survived and early dip from the opening to the 106.40 areas to start a steady rise through the day with early Tokyo setting the tone once the downside had been tested for the second time and pushing through to the London session pushing against the 107.00 levels, struggling through the day with the 107.20 areas the move into the Yellen comments initially saw the USD push above the 107.50 levels before collapsing back and then at a slow rate trade through to the close above the highs.
• AUD: The Oz was pretty much left to its own devices today with the market drifting as the USD slowly lifted so the Oz was pushed to the 0.7320 lows and traded through to the London session in a narrow range from that low, London bought with expectations of no rate change to come and the market eventually traded to the 0.7380 areas and the waiting offers keeping the market in check to the close.

Yesterday’s premiership results

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

EUR        German Factory Orders M/M Apr A -2.00% | C -0.50% | P 1.90% | R 2.60%

EUR        Eurozone Retail PMI May A 50.6 | P 47.9

EUR        Eurozone Sentix Investor Confidence Jun A 9.9 | C 7.1 | P 6.2

USD       Labour Market Conditions Index Change May A -4.8 | P -0.9

Good Luck,

Andy

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