Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 106.046 | EURUSD 1.23386 | AUDUSD 0.77656 | NZDUSD 0.71897 | USDCAD 1.29037 | USDCHF 0.94947 | GBPUSD 1.41413 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.23693 | 1.23393

USDJPY                 106.060 | 105.579

GBPUSD               1.41707 | 1.41366

USDCHF               0.94917 | 0.94687

AUDUSD              0.77864 | 0.7738

USDCAD               1.29046 | 1.28804

NZDUSD               0.72452 | 0.72224

EURCHF                1.17169 | 1.17088

EURGBP               0.87322 | 0.87253

EURJPY                 130.965 | 130.584

For today

• EUR: Quiet move into the Tokyo session with the market then lifting through to the 1.2370 levels in a steady move and plenty of volume ticking through, the market then struggled with the level and started a slow drift lower through to the grey hours holding the 1.2350 areas, Topside offers through the 1.2380 level are likely to continue through the 1.2400 level with congestion mixed with light stops through to the 1.2450 areas and stronger topside offers appearing, a push through the 1.2460 level is not likely to dent those offers that much with any move higher likely to run into stronger stops on an approach to the 1.2500 areas with weak stops and the chance of a run towards the 1.2560 level and possible attempts higher, downside bids light through the 1.2300 levels and weak stops not suspected until the market again tests the 1.2240 areas close to this week’s lows, with stronger bids likely through the 1.2220 levels and into the 1.2200 area, with stops through the 1.2180 level and the chance of a deeper move if it can challenge the lows of the month around 1.2160.
• GBP: Similar movement to the Euro however, the Cable is more driven by GBP’s rally on the back of rising pay and the thoughts that inflation will be impacted by the costs to companies, Cable pushed from the opening around the 1.4140 levels to the 1.4170 area before drifting off through the session slowly to trade around the 1.4160 area to move into the grey hours, Topside offers into the 1.4200 level with weak stops and weaker congestion through the level will likely allow the market to run up to the stronger 1.4300 level last seen in January and only a strong move through the 1.4335 level opening any further gains, downside bids light through to the 1.4050 level and only limited bids with the 1.4000 level likely to see some limited congestion and the market then targeting the stronger 1.3950-00 levels.
• JPY: USDJPY drifted from the opening and moved into the Tokyo session dropping quickly back to the 105.60 levels before hitting bids and slowly rising back into the 105.90 areas, Downside bids likely to be strong into the 105.50 areas and continuing through to the 105.00 level before weakness appears with stops likely on a dip through the level and opening up a deeper move with the 103.50 levels likely to be the strongest of the supportive levels, topside offers weak through to the 107.00 level with the market spending the last week trading back and forth in the 105.50-106.50 level, limited congestion through the 106.50-107.00 levels with weak stops on a strong push through the 107.20 levels then exposing weak resistance to a move into the 107.50 levels, stronger offers then likely to take over on any attempt to push to the 108.00 level.
• AUD: Early gains into the Tokyo session saw the market move off the open to test to the 0.7785 areas however, the USD weakness saw USDJPY falling back and the AUDJPY cross slipping lower through to the 0.7740 areas and holding through to the grey hours pushing weakly off the level into the grey hours, limited congestion into the 78 cent level with stronger offers appearing just behind the level and possibly through to the 0.7820 areas where weak stops will likely open the market into the 0.7840-60 resistance level however, through the level the offers are likely to increase on any attempt to the 79 cent areas, downside bids light through to the 0.7680 levels where stronger bids are likely to continue appearing with congestion into the 0.7650 areas, a move through the level leaves the market technically weak and the 75-76 cent range appears as a target however, there is likely to be congestion through to those levels and a lot of work to get there.

Overnight News

NZD:

RBNZ holds key rate at 1.75% as expected

RBNZ uncertainties remain, policy may need to adjust

RBNZ inflation is forecast to trend upwards towards 2%

RBNZ long term inflation expectations are well anchored

RBNZ inflation expected to weaken further in near term

RBNZ Economic growth is expected to strengthen

NZ May limit house rental rises to once a year says Minister

RBNZ acting Governor Spencer gives interview before retirement and pokes at RBNZ

Spencer says RBNZ should scale back Kiwi jaw boning

Spencer says Forecasts still assume some NZD depreciation

Spencer RBNZ shouldn’t comment on NZD unless concerned

Spencer says NZD is in the vicinity of fair value

GBP:

Pimco is said to be in talks to buy GBP 5.5B of UK mortgage loans Sky

USD:

Mnuchin says Trump has options on China IP action Reuters

Trump is said to be planning to impose $50B in China tariffs

Special counsel looking at Trump and Cambridge Analytica ABC

US said to be flexible on key auto demand in NAFTA talks

Trump to sign memo targeting China’s economic aggression

Powell: post FOMC

Powell: Inflation should move up in coming months

Powell: we expect the job market will remain strong

Powell: Gradual hikes should continue to serve economy well

Powell: inflation may be above 2% at times

Powell: we’re trying to take middle ground on rates

AUD:

Oz feb jobless rate at 5.6% vs. est. 5.5%

Full time employment rose 64.9K in Feb

Part time fell 47.4K in Feb

Participation rate was 65.7% in Feb vs. est. 65.6%

Jan jobs revised to 12.500 vs. previously reported 16K

EUR:

EU plans 3% turnover tax for Amazon, Google, and Facebook

Today’s data

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

NZD       RBNZ Rate Decision A 1.75% | C 1.75% | P 1.75%

AUD       Employment Change Feb A 17.5K | C 20.3K | P 16.0K | R 12.5K

AUD       Unemployment Rate Feb A 5.60% | C 5.50% | P 5.50%

JPY         PMI Manufacturing Mar (P) A 53.2 | C 54.3 | P 54.1

JPY         All Industry Activity Index M/M Jan A -1.80% | C -1.80% | P 0.50% | R 0.60%

08:00     EUR        France Manufacturing PMI Mar (P) C 55.5 | P 55.9

08:00     EUR        France Services PMI Mar (P) C 57 | P 57.4

08:30     EUR        Germany Manufacturing PMI Mar (P) C 59.8 | P 60.6

08:30     EUR        Germany Services PMI Mar (P) C 55 | P 55.3

09:00     EUR        Eurozone Manufacturing PMI Mar (P) C 58.1 | P 58.6

09:00     EUR        Eurozone Services PMI Mar (P) C 56 | P 56.2

09:00     EUR        Eurozone Current Account (EUR) Jan C 30.2B | P 29.9B

09:00     EUR        German IFO Business Climate Mar C 114.6 | P 115.4

09:00     EUR        German IFO Expectations Mar C 104.4 | P 105.4

09:00     EUR        German IFO Current Assessment Mar C 125.6 | P 126.3

09:00     EUR        ECB Economic Bulletin

09:30     GBP       Retail Sales M/M Feb C 0.40% | P 0.10%

12:00     GBP       BoE Rate Decision C 0.50% | P 0.50%

12:00     GBP       BoE Asset Purchase Target Mar C 435B | P 435B

12:00     GBP       MPC Official Bank Rate Votes C 0–0—9 | P 0–0–9

12:00     GBP       MPC Asset Purchase Facility Votes C 0–0—9 | P 0–0–9

12:30     USD       Initial Jobless Claims (MAR 17) C 225K | P 226K

13:00     USD       House Price Index M/M Jan C 0.40% | P 0.30%

13:45     USD       US Manufacturing PMI Mar (P) C 55.5 | P 55.3

13:45     USD       US Services PMI Mar (P) C 56 | P 55.9

14:00     USD       Leading Index Feb C 0.50% | P 1.00%

14:30     USD       Natural Gas Storage P -93B

23:30     JPY         National CPI Core Y/Y Feb C 1.00% | P 0.90%

 

Harry Hindsight

• EUR: A slow rise through the Asian session pushing from the low opening around the 1.2245 level pushing steadily through to the 1.2270 area into the grey hours, grey hours buying from early Europeans and the move into the London session saw the market dipping back from the 1.2290 level to range through to the NYK session around the 1.2270-75 areas, the market started to slip a little with expectations of the raise, the market held into the FOMC release saw the market rise quickly, several reasons put forward for the USD sharp move lower however, the only thing that really stands out is talk of only 2 more hikes this year and 3 for 2019, the Euro rose through to the 1.2330 levels pushing through the light offers and holding below the 1.2350 levels through to the close.
• GBP: Quiet through the Asian session with the market opening around the 1.4000 level and rising into the 1.4020 level through into the grey hours, the move into the London session pushing weakly to the 1.4040 areas, the release of employment numbers and more importantly the weekly earnings numbers saw the earnings rise and the market become unnerved by this rallied through to the 1.4070 levels before ranging through to the NYK session between there and the 1.4050 level, as with the Euro the after chat by Powell and co was sufficient to drop the USD back and Cable quickly pushed through the resistance and pushed through to the 1.4150 levels before holding steadily through to the close.
• JPY: USDJPY traded quietly through the Asian session holding around the 106.50 levels and dipping to the 106.45 level for the most part, the move into the grey hours saw the market slowly slipping lower and pushing into early morning in London to run around the 106.25 levels, the move into the NYK session saw the market dropping off quickly to the 106.10 level from around 106.35 in what looks like a precursor to what was to come, the market gyrated a little through to the FOMC testing to the 106.40 areas and holding the 106.15 level. the release saw the market move up to the highs around 106.65 and then drop quickly back as the conference and chatter started with the market quickly challenging the 106.00 level and then pushing through slowly to the 105.90 areas before rising slightly through to the close.
• AUD: A quiet rise higher through the Asian session saw the market push through the 77 cent level again and hold quietly through to the grey hours, grey hour buying extend the highs a little before early London moved in and the market slipped lower on short term selling to hold into the NYK session holding around the 0.7580 areas dipping a little lower before recovering from the 0.7675 area to push through to the FOMC release extending the gains to the 0.7715 level. the release saw the market dip momentarily to the 77 cent level before rising quickly to the 0.7765, holding around the 0.7750 level before rallying for the second time to the 0.7780 areas before running into some resistance and then holding quietly through to the close just off the highs.
• USD: While the 3 rises this year that they’ve telegraphed to the market can be construed to have dampened enthusiasm for the market and the ever present trade wars instigated by Trump maybe a factor, one has to say that he does come out fighting and once he gets recognition for what he is saying then negotiations then get more serious and those negotiations are far more level headed and tend to balance out like the NAFTA negotiations, revisions to economic numbers in a positive manner belays what was said and again we are left with a quandary to the USD weakness.

Yesterday’s premiership results

AUD       Westpac Leading Index M/M Feb A 0.30% | P -0.24% | R -0.30%

GBP       Jobless Claims Change Feb A 9.2K | C -3.1K | P -7.2K

GBP       Claimant Count Rate Feb A 2.40% | P 2.30%

GBP       Average Weekly Earnings 3M/Y Jan A 2.80% | C 2.60% | P 2.50% | R 2.70%

GBP       ILO Unemployment Rate 3Mths Jan A 4.30% | C 4.40% | P 4.40%

GBP       Public Sector Net Borrowing Feb A -0.3B | C -0.4B | P -101B | R -11.6B

USD       Existing Home Sales Feb A 5.54M | C 5.41M | P 5.38M

USD       Crude Oil Inventories A -2.6M | C 2.6M | P 5.0M

USD       FOMC Rate Decision A 1.75% | C 1.75% | P 1.50%

USD       FOMC Press Conference

NZD       RBNZ Rate Decision A 1.75% | C 1.75% | P 1.75%

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