Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 102.551 | EURUSD 1.11543 | AUDUSD 0.75384 | NZDUSD 0.72343 | USDCAD 1.28469 | USDCHF 0.97055 | GBPUSD 1.32884 |

LMAX Highs and Lows 5am GMT

                                High | Low

EURUSD               1.11584 | 1.11226

USDJPY                 102.609 | 101.984

GBPUSD               1.32960 | 1.32396

AUDUSD              0.75458 | 0.74934

USDCHF               0.97215 | 0.97094

USDCAD               1.28940 | 1.28461

NZDUSD               0.72300 | 0.71943

EURGBP               0.84052 | 0.83903

EURJPY                 114.378 | 113.478

EURCHF                1.08264 | 1.08116

 

For Today

• EUR: With the US holiday still impacting the market the market in Euro’s drifted from the opening settling back from the opening 1.1155 areas to trade quietly in a tight channel to the 1.1125 levels before finding limited support and then holding in a tight range into the grey hour, Topside offers likely to still be in the 1.1160 levels with limited possibility of weak stops above, however, offers are likely to have built a little into the 1.1180 areas through to the 1.1200 areas however, while there is congestion above the level a stronger possibility of stops through the level will possibly quickly test the 1.1250 levels and better offers, with 1.1280 becoming vulnerable but possibly for the moment stronger than previous levels. Downside bids into the 1.1100 areas are likely to be light with very little to deflect a move to the stronger 1.1050 areas with weak stops a light possibility and the 1.1000 a stronger area.
• GBP: Very quiet for Cable with the market drifting after the previous days limited numbers seeing the market pushing from the opening around the 1.3290 areas to test back to the 1.3250 and then limited buying to hold the market in place, EURGBP which had struggled for several hours through yesterday’s session to get past the topside 0.8400 saw the market eventually push through and then continue to trade around the level and possibly was the main reason for the limited buying interest in GBP over the session, Topside offers likely to be towards the 1.3350 levels with those offers likely to be around the sentimental and for the moment the key levels is likely to be around the 1.3500 levels and once broken properly will see the market closing the gap on the charts from the 26^th June to 1.3600 areas. Downside bids into the 1.3200 level are likely to continue through the level with strength increasing to the 1.3150 levels if nothing untoward is mentioned to affect the market on the subject of Brexit.
• JPY: The USDJPY was to dominated more by the Oz numbers than anything else with the market in the AUDJPY quickly pushing to the 77.00 areas before finally pushing quickly lower after a brief period of calm around the level, the Equity markets were struggling through the session and the added pressure on the margin requirements saw the AUDJPY drop quickly to the 76.50 areas, and while some of the movement was translated into Oz selling the USDJPY took the bulk of the pressure and traded quickly from the opening levels around the 102.55 areas to the 102.30 before renewing the fall towards the 102.00 area to post the lows into early Tokyo, the market then struggled to regain the 102.20 areas and has remained close to the lows for the most part. Topside offers likely to be growing in the 102.80-103.00 levels with the market now looking to struggle on any movement above the level, only a push through the 103.50 area is likely to stir the market and that will likely see some strong two way trading before the direction is decided with the topside likely to be weak through the 104.00 areas. Downside bids into the 101.50 areas and the BoJ likely to quickly react on a move through the level and likely to quickly talk the market higher with verbal intervention at the least, however, whether they would do anything materialistic from that point remains to be seen with the move on the 26^th June causing several commentaries through the day.
• AUD: Early numbers saw a growing negative trade balance and retail sales wilting slowly giving cause for concern, the fall back from the opening 0.7540 areas to push through 75 cents was limited only in the fact that the RBA had still to announce the rate decision with the market bouncing just below the level back to the 0.7510 areas, heavy selling in the AUDJPY carry was likely to be a combination of nervousness before the rate announcement and margin squeezes as equity markets also came under pressure, the move to the announcement saw the Oz rising quietly to push quickly on a now change release to test the 0.7540 areas again before dipping back again with a continued dovish stance still the key word from the commentary released and the Oz fell back to the 0.7510 areas before starting to find some stability above the 75 cent levels. Topside offers from the 0.7540 and likely to continue through to the 0.7560 areas, however, a push through this level is likely to open the market to the 0.7650 areas with the possibility of only limited offers on a push through the 76 cent level and possibly weak stops building for that break, possible offers from then on are likely to then slow the market on its ascent and undoubtedly commentary from the RBA to curb further rises. Downside bids light through to the 0.7450 areas with some light congestion to contend with, a break here then opens the market to test the 74 cent levels which for the moment are likely to be the pivotal point for a move back through the 73-72 range.

Overnight News

AUD:

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

Australian May Retail Sales Rose 0.2% M/M; Est. 0.3% Rise

Australia ANZ Weekly Consumer Confidence Falls 0.9% to 115.8

Australia June Services Index Falls 0.2 Pt M/m to 51.3

CNY:

Making FX Rate Mkt-Based Helps EMs Manage Fund Flows: China SAFE

PBOC Panel Says Don’t Underestimate Complexity of Economic Risks

Caixin China June Services PMI 52.7 vs 51.2 in May

China Likely to Fine-Tune Monetary Policy in 2H: Sec. Journal

JPY:

Nikkei Japan June Services PMI 49.4 vs 50.4 in May

Japan Denies That Its Military Provoked Chinese Planes in ADIZ

JPY/KRW:

Japan’s Abe, S. Korea’s Park May Hold Meeting This Month: Asahi

NZD:

New Zealand Business Confidence Jumped in Second Quarter: NZIER

New Zealand House-Price Inflation Accelerates for a Third Month

Auckland June Average House Price Rises 9.9% Y/Y: Barfoot

Key: RBNZ Should Tighten Property Investor Rules: Interest.co

GBP:

Pessimism among UK businesses almost doubles after EU vote survey

Today’s data

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

AUD       Trade Balance (AUD) May A -2.22B | C -1.72B | P -1.58B | R -1.79B

AUD       Retail Sales M/M May A 0.20% | C 0.30% | P 0.20% | R 0.10%

CNY        Caixin China PMI Services Jun A 52.7 | P 51.2

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

08:00     EUR        Eurozone Services PMI Jun (F) C 52.5 | P 52.4

08:30     USD       Services PMI Jun C 53.1 | P 53.5

09:00     EUR        Eurozone Retail Sales M/M May C 0.60% | P 0.00%

09:30     GBP       BoE Financial Stability Report

14:00    USD       Factory Orders May C -0.40% | P 1.90%

Harry Hindsight              

• EUR: A quiet Asian session saw the market trading in a narrow range through to the London session, opening around the 1.140 levels the market drifted lower to trade along the 1.1125 levels in early Tokyo before lifting back to the opening levels on the run to the London opening, a light reaction to the Investor confidence number saw the Euro drop back and the addition of a Cable selloff saw the Euro testing the 1.1100 areas before the PPI numbers were released with these being better than expected boosted the market back to the opening levels, the move through to the closed NYK session saw the market rising through the 1.1150 levels touching the 1.1160 areas before drifting to a quiet close.
• GBP: As with the previous day the market was choppy on a limited data day, with the market in Asia opening around the 1.3260 areas and heading into the Tokyo session testing towards the 1.3300 levels breaking through in mid Tokyo before moving through into the London session holding around the levels until the Building PMI numbers hit cutting the market from under the early stability and dropping quickly to test below the level before bouncing with the help of the Euro numbers to test back to 1.3300 areas, the nervousness continued through into the latter part of the day with the market again testing through the 1.3250 areas before starting a steady rise through to push through the 1.3300 and triggering weak stops and a lack of liquidity for the market to touch above 1.3340 before quickly dropping back and drifting to the 1.3280 areas to close for the day.
• JPY: A very quiet day for the USDJPY with the market stuck between the 102.50-80 areas for the bulk of the day with the lows and highs made in the Asian session with limited selling from the opening 102.60-70 areas to test through into the 102.40’s before rising steadily through the session to push lightly above the 102.80 areas and then drifting steadily through the session to the 102.50 areas.
• AUD: Australian voting initially dominated the market with exit polls and early indications showing Turnbull’s party lagging with underlying numbers looking weak, and the Oz opened around 50 pips lower however, as the results started to appear in earnest the market started to rally through the session to push through to the 75 cent levels again, by the time the market opened in London the market was far more stable and the results saw the lead increasing for Turnbull and Oz pushing through the 75 cent level and increasing in strength on a push through to the 0.7530 levels before entering into the late part of the day and a final limited push to the 0.7540 areas for the close.

Yesterday’s premiership results

JPY         Monetary Base Y/Y Jun A 25.40% | C 26.30% | P 25.50%

AUD       TD Securities Inflation M/M Jun A 0.60% | P -0.20%

AUD       Building Approvals M/M May A -5.20% | C -3.60% | P 3.00%

GBP       Construction PMI Jun A 46 | C 50.6 | P 51.2

EUR        Eurozone Sentix Investor Confidence Jul A 1.7 | C 8.1 | P 9.9

EUR        Eurozone PPI M/M May A 0.60% | C 0.30% | P -0.30%

EUR       Eurozone PPI Y/Y May A -3.90% | C -4.10% | P -4.40%

Good Luck,

Andy

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