Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 113.122 | EURUSD 1.10826 | AUDUSD 0.74267 | NZDUSD 0.68899 | USDCAD 1.36066 | USDCHF 0.9859 | GBPUSD 1.29169 |

LMAX Highs and Lows 5am GMT

                                High | Low

EURUSD               1.11172 | 1.10849

USDJPY                 113.100 | 112.366

GBPUSD               1.29420 | 1.29120

USDCHF               0.98545 | 0.98248

AUDUSD              0.74318 | 0.7411

USDCAD               1.36180 | 1.35953

NZDUSD               0.69036 | 0.68837

EURCHF                1.09269 | 1.09112

EURGBP               0.86016 | 0.85796

EURJPY                 125.388 | 124.801

For Today

• EUR: Continued USD weakness saw the Euro push against the 1.1100 level for several hours before breaking the level and testing to above the 1.1110 levels falling just short of the 1.1120 level several times, Topside offers sees congestion around the sentimental levels with very little in the way of resistance lines until the 1.1400 areas so for the moment 1.1120 still holds light offers with the possibility of weak stops on a push through the 1.1150-60 areas is likely to see stronger offers and will slow a weak move with some Eurozone inflationary numbers likely to see pressure building for an end to the accommodative stance by the ECB, through that level though the offers are likely to be a little stronger moving into the 1.1180 level and through 1.1200 with mid 2015 and 2016 seeing the same ranges for several months. Downside bids light through the 1.1100 areas with weak stops possible and maybe some looking for the fail and reversal for the Euro however, as long as the Trump situation continues to bang around the USD has little support for the moment. Better bids likely through the 110.50 level with 1.1000 possibly the strongest point for the day.
• GBP: Very quiet range from the opening which actually belays the volumes that moved through the market over the session, Cable moved up to the 1.2920 levels and ran through the session around that level until the Tokyo lunch period when Cable forced itself up to the 1.2940 areas before ranging through into the grey hour holding the 1.2930-40 levels. Topside congestion continues through to the 1.3000 areas with the market likely to find stronger resistance at that point with possible option barriers in play, a push through the level though sees further congestion on a move through to the 1.3050 level with a slim possibility of weak stops above the level driving the market towards that congestive area. Downside bids light through the 1.2900 areas with likely weak stops on a dip through the level with stronger bids likely to be seen from the 1.2850 levels onwards. Employment numbers to watch for.
• JPY: USDJPY traded lower through the session with the USD on the back foot as the Trump news ran around the market and undermined the USD, trading into the Tokyo session dropping through the 113.00 levels the market really only stopped once it hit the 112.50 areas holding for a few hours before grinding through to test the 112.40 level before finding some support and moving into the grey hour holding the 112.50 level. Topside offers light back through the 113.00 areas with stronger offers on a move above the 113.50 areas and likely to continue through to the 114.00 level which for the moment sees strong resistance around the level, downside bids into the 112.20-111.80 areas however, a break here sees the market opening for a possible quick test through the 111.00 areas with only sentimental levels into the figure, and weakness on a break through the 110.80 areas with possible strong stops appearing.
• AUD: A very quiet session for the Oz with all the focus on the USD, opening around the 0.7425 level the market remained in touch with the level with a dip through to the 0.7410 areas to base off that level through the Tokyo session, the market did repeatedly attempt to move to the early highs around the 0.7430 areas however, the end of the session was focused around the 0.7425 level, Topside offers into the 0.7440-60 levels lighter than the previous moves through the level however, given the interest in the Oz at the moment will possibly take time to clear unless there is strong movement in Cross/AUD during the day, weak stops through the level are likely to be absorbed by congestion through to the 0.7480 areas where stronger offers are likely to be and continuing through to further stops above 0.7510. Downside bids into the 73 cent level are likely to be congestive types at first however, the move through the 0.7360 area will see stronger bids moving in with possible strong stops behind the level to challenge 73 cent a break here though is likely to see stronger bids moving in and possibly yield interest appearing.

Overnight News

JPY:

Japan March core machinery orders disappoint, outlook gloomy

Kuroda: at this stage not exiting extraordinary easing program

Kruoda: declines to answer if willing to serve another term

USD:

Laptop ban on flights to US likely to expand: official

Comey memo says Trump asked him to end Flynn investigation

Speculation about whether Trump let slip more than was needed in his meeting with Russians

House oversight committee chairman gives FBI until 24May to turn over communications between

Trump-Comey

White House in lockdown, reason unclear

GBP:

London office space rises despite Brexit uncertainty: Deloitte survey

AUD:

Australia banks to face ACCC inquiry into fees – Telegraph

CNY:

PBOC strengthens Yuan fixing for fourth day in a row

AUD:

S&P affirms Australia AAA/A-1+ ratings, outlook Negative

Today’s data

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

NZD       PPI Inputs Q/Q Q1 A 0.80% | C 0.70% | P 1.00%

NZD       PPI Outputs Q/Q Q1 A 1.40% | C 1.10% | P 1.50%

JPY       Machine Orders M/M Mar A 1.40% | C 2.50% | P 1.50%

AUD       Westpac Consumer Confidence May A -1.10% | P -0.70%

AUD       Wage Cost Index Q/Q Q1 A 0.50% | C 0.50% | P 0.50%

JPY        Industrial Production M/M Mar (F) A -1.90% | C -2.10% | P -2.10%

08:30    GBP       Jobless Claims Change Apr P 25.5K

08:30    GBP       Claimant Count Rate Apr P 2.20%

08:30    GBP       Average Weekly Earnings 3M/Y Mar C 2.40% | P 2.30%

08:30    GBP       ILO Unemployment Rate 3M Mar C 4.70% | P 4.70%

09:00    EUR       Eurozone CPI M/M Apr C 0.40% | P 0.80%

09:00    EUR       Eurozone CPI Y/Y Apr (F) C 1.90% | P 1.50%

09:00    EUR       Eurozone CPI – Core Y/Y Apr (F) C 1.20% | P 1.20%

12:30    CAD       Manufacturing Shipments M/M Mar C 0.40% | P -0.20%

14:30    USD       Crude Oil Inventories C -2.5M | P -5.2M

Harry Hindsight

• EUR: A steady rise through the Asian session opening around the 1.0980 level and then struggling around 1.0990 through to the London session, grey hour buying tested the 1.1000 level holding briefly before popping through the level and starting a long steady grind through to NYK pushing eventually through the 1.1050 level, the move into the NYK session saw the move continuing and while Eurozone Trade balance was a decent rise the market move seemed more option derived the push through the 1.1060 level saw the market hitting weak stops and a push to the resistance line around the 1.1088-90 area and again struggling with the level and although late in the session the market pushed through it was unable to test the 1.1100 level.
• GBP: Opening just below the 1.2900 level the market struggled through into the Tokyo session, the fixing demand for GBPJPY was sufficient to help Cable higher pushing through to the 1.2920 areas before drifting through to the London session holding around the 1.2910 areas, the lead in to the numbers saw the market moving quietly higher pushing through the 1.2930 areas, the release saw stronger inflationary data and the market testing towards the 1.2960 levels before dropping quickly back to test the 1.2870 in a rather strange move on the face of it however, one has to wonder how much inflation balanced against wage costs they can afford for the future, and maybe this was the reading that the market took, with the Euro grinding higher it helped the Cable and with the Cable rising quickly probably helped the Euro, The Cable bottomed out around the 1.2870 and then moving through into the NYK session quietly before starting a steady rise through to the 1.2930 and drifting to the close around the 1.2920.
• JPY: USDJPY saw quiet selling through the Asian session with the market dipping from the opening around the 113.80 levels and into the Tokyo session testing 113.55, fixing demand for cross/JPY saw the USDJPY rising towards the opening levels but never quiet getting there, the move through the balance of the Tokyo session saw the market slipping lower holding around the 113.50 areas into the grey hour before dropping quickly down to the 113.30 level and the support line held through the London session with the market pushing slowly back to the 113.70 areas before entering the NYK session, NYK sold from the opening back to the 113.50 level before the market dropped quickly as concerns over the Trump administration again impacted the market and the USDJPY hit the 113.00 levels and ranging through to the close between the 113.00-20 level to finish just off the lows.
• AUD: Up and down day but contained in a very narrow range with the market opening around the 0.7415 levels and pushing quietly through to the 0.7435 areas before dropping quickly back to the 0.7405 levels, the RBA minutes were more or less in line with expectations and previous releases and explains the limited reaction through the day, the market recovered through into the grey hours and cross buying against the Oz saw the market pushing through to the lows testing through the 74 cent level for the first and last time for the day, having hit the low the USD came under pressure once the full set of numbers were out of the way in Europe and the market moved into the NYK session pushing to the highs into the upper 0.7430’s and then ranging through to the close holding around that 0.7430 area.

Yesterday’s premiership results

AUD       RBA Minutes

JPY        Tertiary Industry Index M/M Mar A -0.20% | C 0.10% | P 0.20%

EUR       Italian GDP Q/Q Q1 (P) A 0.20% | C 0.20% | P 0.20%

GBP       CPI M/M Apr A 0.50% | C 0.40% | P 0.40%

GBP       CPI Y/Y Apr A 2.70% | C 2.60% | P 2.30%

GBP       Core CPI Y/Y Apr A 2.40% | C 2.30% | P 1.80%

GBP       RPI M/M Apr A 0.50% | C 0.40% | P 0.30%

GBP       RPI Y/Y Apr A 3.50% | C 3.40% | P 3.10%

GBP       PPI Input M/M Apr A 0.10% | C 0.00% | P 0.40%

GBP       PPI Input Y/Y Apr A 16.60% | C 17.00% | P 17.90% | R 17.40%

GBP       PPI Output M/M Apr A 0.40% | C 0.20% | P 0.40%

GBP       PPI Output Y/Y Apr A 3.60% | C 3.40% | P 3.60%

GBP       PPI Output Core M/M Apr A 0.50% | C 0.20% | P 0.30%

GBP       PPI Output Core Y/Y Apr A 2.80% | C 2.50% | P 2.50%

GBP       House Price Index Y/Y Mar A 4.10% | C 5.30% | P 5.80% | R 5.60%

EUR       Eurozone Trade Balance (EUR) Mar A 23.1B | C 18.8B | P 19.2B | R 18.8B

EUR       German ZEW (Economic Sentiment) May A 20.6 | C 22 | P 19.5

EUR       German ZEW (Current Situation) May A 83.9 | C 82 | P 80.1

EUR       Eurozone ZEW (Economic Sentiment) May A 35.1 | C 29.1 | P 26.3

EUR       Eurozone GDP Q/Q Q1 (P) A 0.50% | C 0.50% | P 0.50%

USD       Housing Starts Apr A 1.17M | C 1.26M | P 1.22M | R 1.20M

USD       Building Permits Apr A 1.23M | C 1.27M | P 1.27M | R 1.26M

USD       Industrial Production Apr A 1.00% | C 0.40% | P 0.50% | R 0.40%

USD       Capacity Utilization Apr A 76.70% | C 76.30% | P 76.10%

Good Luck,

Andy

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