Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 104.254 | EURUSD 1.12256 | AUDUSD 0.73624 | NZDUSD 0.70428 | USDCAD 1.29684 | USDCHF 0.96496 | GBPUSD 1.4203 |

LMAX Highs and Lows 5am GMT

                                High | Low

EURUSD               1.12721 | 1.1222

USDJPY                 104.832 | 104.127

GBPUSD               1.42947 | 1.4200

AUDUSD              0.74045 | 0.73608

USDCHF               0.96478 | 0.96353

USDCAD               1.29674 | 1.28989

NZDUSD               0.70688 | 0.70345

EURGBP               0.79091 | 0.78741

EURJPY                 118.100 | 117.015

EURCHF                1.08724 | 1.0826

 

For Today

• EUR: A quiet opening saw the market slip a fraction to make the lows in the 1.1220 areas before holding and rising a little into Tokyo session and weak stops on the move through the 1.1230 areas saw the market quickly push to the 1.1270’s and then range quietly through the session around the 1.1260 areas, a dip back to the 1.1250 levels as the market moved towards London. Topside offers into the 1.1300 levels are likely to give way to weak stops on a test to the 1.1340 areas and then the market is likely to find offers continuing through the level and into the 1.1400-20 stronger offers. Downside bids light through the 1.1200 areas with the original bids now blown away and the stronger 1.1140 areas now the better supportive areas, bids through to the 1.1100 areas are likely to continue with the possibility of strong stops appearing on a move to the 1.1080 area.
• GBP: Moving through the early part of the session saw the market holding around the opening 1.4210 areas, the move into the Tokyo session saw a sudden move higher with pushing quickly to just short of the 1.4300 figure areas before spending the rest of the session slipping slowly back towards the 1.4240 areas to range from that level through into London. Topside offers light through to the 1.4300 levels and through that level the market is free to the 1.4350 areas one imagines and then offers are likely to begin to appear with the 1.4400 area likely to be a stronger area. Downside bids are likely to be very light especially on Brexit information through the day, with the 1.4100 areas likely to be lightly bids and real bids not seen until the market dips below the 1.4050 areas again, a break through 1.4000 however, is likely to see further selling from stops and fresh trades coming to the market and could cause a flurry of downward pressure.
• JPY: USDJPY pushed higher from the opening In Tokyo to test the 104.80 areas but was unable to push through the level so rejected the area and slipped back to the 104.20 levels and the holding the opening levels into the London session, Topside offers through the 105.00 areas are likely to give way to weak stops on a push through and possibly test back to the 105.80 areas with offers then taking over to the 106.00 areas, little data for the day would suggest that the JPY’s movement is likely to be dictated by news in the European areas specifically Brexit and causing further equity sales and safe haven flows, above the 106.00 levels the market is likely to be a little congestive and possibly contained into the mid 106 levels, downside bids light through the 104.00 areas and possibly seeing further support appearing on any move below the 103.80 areas and into yesterday’s lows, however, stronger bids are possible through those levels and into the 103.20 level rather more being sentimental than anything else.
• AUD: A lacklustre day for the Oz with meagre gains back to the 74 cent levels without being able to seriously push through the areas, the attempted rejection of the level was short lived and the market was only able to drop back to the 0.7380 areas before holding the range to the London session, topside offers light through to the 0.7420 areas with those offers likely to increase on a move through towards the 0.7440-60 areas and stronger offers likely to protect the 75 cent levels, downside bids light through to the 0.7300 areas with the best bids likely to be just below the levels and continuing through to 0.7240.

Overnight News

JPY:

Aso Concerned About One-Sided, Abrupt, Speculative FX Move

Asakawa: Discussed FX Situation With BOJ, FSA Officials

Japan’s Public Pension Funds Turn Seller of Foreign Assets 1Q

Japan Keeps Economic Assessment, Cuts View on Corporate Profits

Foreigners, BOJ Together Own Almost 90% of Japan’s T-Bills in 1Q

JPY/USD/EUR:

Central Banks Mull Dollar Liquidity Injection on Brexit: Nikkei

CNY:

China May Outbound Investment 87.6b Yuan

NZD:

New Zealand Manufacturing Growth Accelerates For a Second Month

New Zealand ANZ May Job Advertisements Rise 0.2% M/m to 39,346

Fonterra Says New Zealand Milk Collection Fell 3% in 2015-16

New Zealand Confidence Gauges Show ‘Hum of Positivity,’ ANZ Says

Today’s data

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

NZD       Business NZ Manufacturing Index May A 57.1 | C 56.5 | P 56.6

8:00        EUR        Eurozone Current Account (EUR) Apr P 27.3B

12:30     USD       Housing Starts May C 1.15M | P 1.17M

12:30     USD       Building Permits May C 1.15M | P 1.12M

12:30     CAD       CPI M/M May C 0.60% | P 0.30%

12:30     CAD       CPI Y/Y May C 1.70% | P 1.70%

12:30     CAD       BoC CPI Core M/M May C 0.30% | P 0.20%

12:30    CAD       BoC CPI Core Y/Y May C 2.00% | P 2.20%

Harry Hindsight              

• EUR: Opening around the 1.1260 areas and tested slowly higher through the Asian session with USD suffering across the board as the FOMC fades into the background for another month, the move into the London session saw the market dipping back a little with the ECB bulletin seeing very little that the market didn’t already know, however, the CPI was little changed and the market started to trend lower from that point onwards with the Euro losing ground against both the USD and GBP and slowly trended to the 1.1180 areas into the opening in NYK, while the market was less convincing the move continued through to the midsession in NYK testing through to the 1.1140 level with strong volumes going through before finding a base into the 1.1135 area, talk of the Euro being a safe haven however, while that view may be in the back of some minds, the future of the EU in its present format is also pinned on the Brexit vote in the UK and safe haven is not a view I would put forward, the market rejected the lows and saw a short squeeze as the London session closed for the day and the market quickly pushed back to the 1.1240 before running into some light offers and little interest for the end of the day.
• GBP: Cable drifted for a large portion of the day with the market moving off the early highs around the 1.4220 level and slowly drifting through Asia and to the 1.4160 areas into the London session, a very good retail sales number saw the EURGBP being sold from its highs around the 0.7990 areas and although there was some movement in Cable with a quick spike high and then lower as liquidity caused problems the Cable remained in the 1.4160 levels while Euro took the brunt of the selling in the cross, however, the closer the market moved to the NYK session the weaker the Cable became, little change for the CPI numbers saw the Cable start to fall back as the USD rallied more a consequence of the weaker Euro than anything else and the USD sent Cable close to the 1.4000 levels before bouncing off the supportive level and the short squeeze into the end of London saw Cable regaining the 1.4200 areas over a short period pushing to new highs for the day above the 1.4250 areas with the market starting to run out of steam after a large move, to settle back and hold the opening levels to the close.
• JPY: USDJPY saw early steady selling form the opening 106.00 areas and the drift lower into Tokyo found fresh selling as the market broke the 105.60 areas and a plunge through the 105.00 areas with little to support the market, the drop found limited buying into the usual 104.80 levels however even this was quickly eroded and the market dipped again holding briefly around the 104.20 areas before pushing through to the 103.60 areas as weak stops were triggered into the 103.70 areas and tipping to 103.60, the market having gained the 102-104 ranges from 2014 found limited support and gradually found buyers possibly in the view of a post Brexit move higher once safe haven flows are over with and the market starts to settle down to normal economic patterns, the rest of the day saw the market ranging around the 104.00 areas for the most part into the NYK session before finally pushing to the 104.40 areas and a tighter range to the close.
• AUD: A stronger Yen dominated the Oz market with the market initially moving in the early session higher from the opening 0.7410 areas to see a spike to the 0.7440 as the usual algo’s were triggered by a better employment number however, as with every other time the market dropped back from those highs and the stronger Yen saw the AUDJPY dropping quickly back to below the 74 cent levels, the move through to the London session was a slow affair and the market held around the 0.7390 areas. London were quick sellers and the Oz dropped back to the 0.7350 levels before finding a more supportive area and traded quietly into the NYK session ranging to the 0.7370 levels, NYK saw the market drift off and through the supportive level and test through the 0.7300 areas before the USD started to drift and the Oz reversed some of its losses to the 0.7380 areas.

Yesterday’s premiership results

JPY         BOJ Monetary Policy Statement

NZD       GDP Q/Q Q1 A 0.70% | C 0.50% | P 0.90%

AUD       Employment Change May A 17.9K | C 16.5K | P 10.8K | R 0.8K

AUD       Unemployment Rate May A 5.70% | C 5.70% | P 5.70%

CHF        SNB 3-Month Libor Lower Target Range A -1.25% | C -1.25% | P -1.25%

CHF        SNB 3-Month Libor Upper Target Range A -0.25% | C -0.25% | P -0.25%

CHF        SNB Sight Deposit Interest Rate A -0.75% | C -0.75% | P -0.75%

EUR        ECB Economic Bulletin

GBP       Retail Sales M/M May A 0.90% | C 0.20% | P 1.30%

EUR        Eurozone CPI M/M May A 0.20% | C 0.00% | P 0.00%

EUR        Eurozone CPI Y/Y May (F) A -0.10% | C -0.10% | P -0.10%

EUR        Eurozone CPI – Core Y/Y May (F) A 0.80% | C 0.80% | P 0.80%

GBP       BoE Decision A 0.50% | C 0.50% | P 0.50%

GBP       BoE Asset Purchase Target Jun A 375B | C 375B | P 375B

GBP       MPC Official Bank Rate Votes A 0–0—9 | C 0–0—9 | P 0–0–9

GBP       MPC Asset Purchase Facility Votes A 0–0—9 | C 0–0—9 | P 0–0–9

CAD       Intl Securities Transactions (CAD) Apr A 15.52B | C 14.7B | P 17.17B | R 17.05B

USD       Current Account Balance Q1 A -124.7B | C -125B | P -125B | R -113.4B

USD       Initial Jobless Claims (JUN 11) A 277K | C 267K | P 264K

USD       Philly Fed Manufacturing Index Jun A 4.7 | C 2 | P -1.8

USD       CPI M/M May A 0.20% | C 0.30% | P 0.40%

USD       CPI Y/Y May A 1.00% | C 1.10% | P 1.10%

USD       CPI Core M/M May A 0.20% | C 0.20% | P 0.20%

USD       CPI Core Y/Y May A 2.20% | C 2.20% | P 2.10%

USD       NAHB Housing Market Index Jun A 60 | C 59 | P 58

Good Luck,

Andy

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