Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 111.056 | EURUSD 1.0904 | AUDUSD 0.74738 | NZDUSD 0.68817 | USDCAD 1.36188 | USDCHF 0.99323 | GBPUSD1.28499 |

LMAX Highs and Lows 5am GMT

                                High | Low

EURUSD               1.09213 | 1.09025

USDJPY                 111.408 | 111.112

GBPUSD               1.28757 | 1.28432

USDCHF               0.99402 | 0.99245

AUDUSD              0.74926 | 0.74686

USDCAD               1.36479 | 1.35302

NZDUSD               0.69208 | 0.68924

EURCHF                1.08422 | 1.08286

EURGBP               0.84959 | 0.84744

EURJPY                 121.480 | 121.146

For Today

• EUR: A reasonably quiet day even if there was some news around, the Euro moved off the opening levels around the 1.0905 area and traded for most of the day around the 1.0910 areas with a brief flirtation with the 1.0920 levels before drifting back to the opening levels into the grey hour, Topside offers into the 1.0950-60 areas with some limited congestion before stronger offers into the 1.1000 areas and stronger congestion likely through the level to absorb the stops possibly, a push through the 1.1040-60 areas the market is likely to see further stronger offers into the 1.1080-1.1100 level. Downside bids light into the 1.0900 area with weak stops likely on a move through the 1.0880 levels with congestion around the 1.0840-60 areas, possibly weak bids into the 1.0800 areas and stronger stops on a move through the level opens up the possibility of closing the gap on the charts from Sundays opening.
• GBP: A steady push higher from the opening around the 1.2850 levels with an initial slip- to the 1.2840 areas the market gained strength once the market moved deeper into the Tokyo session pushing up to the 1.2875 levels before holding in a narrow range through to the grey hour, Topside offers through the current highs and into the 1.2900 level likely to be strong with decent stops likely on a move through the level and sentimental levels likely to be weak through to the 1.3050 areas so very dependent on news and momentum. Downside bids light into the 1.2800 areas with limited bids on a move through the level before stronger bids appear around the 1.2760-40 levels and very limited bids until deeper into the 1.2600 handle.
• JPY: No change and geopolitical events in the region for the moment seem to be a catalyst for yield buyers and a weakening JPY as the funds flood out, Opening around the 111.00 areas and tested steadily through to the 111.40 level before holding quietly around the 111.20 level. Topside offers from the 111.80 level and likely to continue through the 112.00 level, if the market can push through there is likely to be some decent stops appearing and the market opening to the ranges from last month with more offers likely into the 112.50 area the market is likely to be a little bit of a battle. Downside bids into the 110.50 areas with only limited bids in front of the level for the moment however congestion on a move through the level could hold the market away from the 110.00 and further weakness.
• AUD: A very quiet day for the Oz with the market basing along the 0.7470 areas and ranging to the 0.7490 levels deep into the session before drifting to mid-range into the grey hour, Topside offer likely to be light through the 0.7500 areas with some offers likely to appear from the 0.7530 level and through to the 0.7560 areas with congestion the name of the game to the topside, downside bids into the 0.7450 areas are likely to be moderate and a push through will likely see congestive bids appearing however, they are possibly limited and not in the same strength as we’ve seen on the 75, 76, and 77 cent handles with a push through the 74 cent level likely to see further weakness.

Overnight News

USD:

White House proposes slashing Tax rates for individuals and businesses

Cuts business rate to 15%

Repeals estate tax, would be an immediate repeal not a phase out

Repeals deductions on state and local taxes

Repeals 3.8% ACA tax

Doubles the standard deduction (12K for individuals, $24k for families)

Provides tax relief for families with child and dependent care expenses

Repeals alternative minimum tax

Repeals inheritance tax, death tax Maintains home ownership and charitable gift tax deductions

Offers one-time tax on trillions of dollars of corporate money held overseas

Eliminates tax breaks for special interests

Territorial tax system to level the playing field for American companies

White House considering order to withdraw from NAFTA

Pres. Trump agrees not to terminate NAFTA at this time

NZD:

NZ plans NZ$11B of new infrastructure spending in 2017-20

NZ will target net debt of 10-15% of GDP by 2025 Joyce says

JPY:

BoJ leaves interest rate on excess reserves unchanged at -0.10% as expected

BoJ maintains 10 year JGB yield target at about 0.000%

BoJ upgrades view on production, exports

BoJ FY2017 core CPI forecast is 1.4%

GDP growth outlook, 16/17 at 1.6% vs. 1.5%

CNY:

China March industrial profits soar 23.8% on property but off highs

Push for South China Sea code stirs Asean suspicions about Beijing’s endgame

EUR:

Macron campaign for French presidency off to slower start than Le Pen Poll

SGD:

Soft labour market curbs inflation, external outlook improves

GBP:

Housing starts indicator hits 10 year high, commercial market improves

Today’s data

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

JPY         Monetary Policy Statement

AUD       Import Price Index Q/Q Q1 A 1.20% | C -0.50% | P 0.20%

06:00    CHF       Trade Balance (CHF) Mar C 3.01B | P 3.12B

06:00    EUR       German GfK Consumer Confidence May C 9.9 | P 9.8

09:00    EUR       Eurozone Economic Confidence Apr C 108.1 | P 107.9

09:00    EUR       Eurozone Business Climate Indicator Apr C 0.82 | P 0.82

09:00    EUR       Eurozone Industrial Confidence Apr C 1.3 | P 1.2

09:00    EUR       Eurozone Services Confidence Apr C 12.9 | P 12.7

09:00    EUR       Eurozone Consumer Confidence Apr (F) C -3.6 | P -3.6

10:00    GBP       CBI Realized Sales Apr C 6 | P 9

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

11:45    EUR       ECB Marginal Lending Facility C 0.25% | P 0.25%

11:45    EUR       ECB Deposit Facility Rate C -0.40% | P -0.40%

11:45    EUR       ECB Asset Purchase Target (EUR) Apr C 60B | P 80B

12:00    EUR       German CPI M/M Apr (P) C -0.10% | P 0.20%

12:00    EUR       German CPI Y/Y Apr (P) C 1.90% | P 1.60%

12:30    USD       Advance Goods Trade Balance Mar C -65.2B | P -63.9B

12:30    USD       Wholesale Inventories Mar (P) C 0.30% | P 0.40%

12:30    USD       Durable Goods Orders Mar (P) C 1.30% | P 1.80%

12:30    USD       Durables Ex Transportation Mar (P) C 0.50% | P 0.50%

12:30    USD       Initial Jobless Claims (22 APR) C 241K | P 244K

14:00    USD       Pending Home Sales M/M Mar C -1.00% | P 5.50%

14:30    USD       Natural Gas Storage P 54B

 

Harry Hindsight

• EUR: A steady rise through the Asian session from the opening around the 1.0930 levels to test to the 1.0950 levels, the market ran out of space and while the market made a second attempt into the London opening the failure saw the market drop back through early morning with a steady USD rally on the back of Trumps executive orders which while sketchy were enough to see the Euro dipping back through to the 1.0900 levels and drifting into the NYK session, late London again pushed the market lower with the weak bids holding into the 1.0860 areas and the market catching a short squeeze back to the 1.0900 areas as further details of the Tax breaks appeared in the media, the market held to the close above the 1.0900 levels in quiet trading for the last couple of hours.
• GBP: Limited movement for the day with the Cable opening around the 1.2835 areas and moving very little through the Asian session ranging between the 1.2830-45 level through to the London session and USD buying moving into the session saw the Cable testing down to the 1.2805 areas to make the lows on the day, from there the market struggled through into the NYK session with the market slowly moving higher into the NYK option cut testing through the 1.2850 levels to peak just below the 1.2865 area before dipping quickly back again, with the offers cleared the market did see a secondary run higher but as with the first it was turned back around the 1.2860 level and the market held into the close just off the highs.
• JPY: Early Tokyo saw a rise in the EURJPY for the second day with the USDJPY pushing through to the 111.40 levels for the first time from the opening around the 111.10 areas, the market then rested through into the grey hours holding the 111.20 areas before London bought for the 111.50 level, after the initial rally the market again drifted back to the 111.20 levels and then held in a tight range through to the NYK session, strong buying from the opening saw a push for the 111.80 areas however, the market struggled with the level late into the session before limited profit taking saw the market back to that 111.20 level again and a limited follow through saw the lows just below the 110.90 and a bounce for the close.
• AUD: A steady decline for the Oz after the release of the inflationary data saw the numbers matching the target zone of the RBA however, this did not appease the market as they were expecting something a little stronger and the initial rally then stared to see the market dropping back from the 0.7560 areas to push quickly to the 0.7510 level, the move through to London was quiet and once the new session started a steady drift through to the end of London saw the market pushing to the 0.7450-60 areas, while the market did try a small recovery it struggled around the 0.7480 areas through to the close.

Yesterday’s premiership results

AUD       CPI Q/Q Q1 A 0.50% | C 0.60% | P 0.50%

AUD       CPI Y/Y Q1 A 2.10% | C 2.20% | P 1.50%

AUD       CPI RBA Trimmed Mean Q/Q Q1 A 0.50% | C 0.50% | P 0.40%

AUD       CPI RBA Trimmed Mean Y/Y Q1 A 1.90% | C 1.80% | P 1.60%

AUD       CPI RBA Weighted Median Q/Q Q1 A 0.40% | C 0.50% | P 0.40%

AUD       CPI RBA Weighted Median Y/Y Q1 A 1.70% | C 1.80% | P 1.50%

JPY         All Industry Activity Index M/M Feb A 0.70% | C 0.60% | P 0.10% | R 0.40%

CHF        UBS Consumption Indicator Mar A 1.5 | P 1.5 | R 1.45

CAD       Retail Sales M/M Feb A -0.60% | C 0.20% | P 2.20% | R 2.30%

CAD       Retail Sales Less Autos M/M Feb A -0.10% | C -0.30% | P 1.70% | R 2.30%

USD       Crude Oil Inventories A -1.0M | C -1.75M | P -1.0M

Good Luck,

Andy

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