Daily FX Market Commentary

Andy Harrison

Good morning,

LMAX Close

USDJPY 106.795 | EURUSD 1.23677 | AUDUSD 0.77566 | NZDUSD 0.73542 | USDCAD 1.2578 | USDCHF 0.95771 | GBPUSD 1.41787 |

LMAX Highs and Lows 6am GMT

                                High | Low

EURUSD               1.23804 | 1.23555

USDJPY                 106.972 | 106701

GBPUSD               1.41984 | 1.41716

USDCHF               0.96010 | 0.9571

AUDUSD              0.77715 | 0.77451

USDCAD               1.25938 | 1.25627

NZDUSD               0.73769 | 0.73559

EURCHF                1.18634 | 1.18428

EURGBP               0.87231 | 0.87147

EURJPY                 132.314 | 132.077

For today

• EUR: Light buying through the opening in Tokyo taking the market to the 1.2380 level before starting a slow decline through the session to push through the 1.2360 level to move into the grey hours just holding below the level. Topside offers strong into the 1.2400 levels with much of the preceding offers now cleared the market could push through but still finds congestive offers through to the 1.2420 level and then increasing on any attempt to push beyond the 1.2450 levels, with any stops likely to be light and strong offers then suspected into the 1.2480-1.2520 levels. Downside bids light through to the 1.2320 areas with some limited bids through the level and into the 1.2280 areas, with stops likely on a push through however, congestion through to stronger bids into the 1.2220-00 level is likely to slow any move and key to a push into the mid 1.21 handle.
• GBP: Early Tokyo saw the market pushing towards the 1.4200 levels falling just short of the level before starting a slow track back to the opening levels in light trading, the move towards the grey hour saw unconfirmed comments from Russia, USD then seemed a little firmer from those comments touching the 1.4170 area before reversing into the grey hour to move back to the opening levels. Topside offers light through the 1.4200 levels with increasing offers likely into the 1.4250 level, weak stops through the level could see a quick move to the 1.4290-1.4300 areas however, the two previous highs this year are likely to see strong offers in that area at least able to slow the ascent with congestion possible through to the 1.4330-40 areas before descent offers again appear in the market, downside bids light through to the 1.4115-20 areas with bids then starting to thicken on a push to the 1.4100 level however, weak stops are likely to be plentiful below the level and a quick return to the congestive 1.4050 level could be key to a deeper move.
• JPY: Early trading into the Tokyo session saw the USDJPY dipping back to the 106.70 areas however, the selling was short lived and the market started to push quickly back pushing through the opening 106.80 level to test through 106.90 and hold quietly through the balance of the session to test only as far as the 106.96-8 levels into the grey hours. Topside offers through the 107.00 level lightly congestive and building in size through to the 107.40-50 areas with weak stops likely through the level and the 108.00 area lightly protected, a move through the level will then start to see increasing amounts of offers with any serious push to the 108.50 levels likely to see significant amounts in the way and slowing any further pushes, downside bids light through to the 106.00 areas with some stronger bids in that area and limited bids below there until the 105.40-00 areas where stronger bids are likely to appear.
• AUD: The move through into the Tokyo session saw the Oz rising steadily to test through the 0.7770 levels before quickly reversing and remaining in a tight channel on a drift back to the 0.7745 levels and almost replicating the range from yesterday. Topside offers from the 0.7780 levels and into the 78 cent area will likely be stronger with congestion just the other side possibly absorbing any weak stops on a break, congestion remains the name of the game with further offerings in the 0.7840-60 areas leading to stronger offers on any approach of the 79 cent level, downside bids light through to the 77 cent level however, from there the bids are likely to increase and in particular around the 0.7650 level with weak stops through the level and possibly some break out plays but limited still by congestive bids into the 76 cent level.

Overnight News

GBP:

PM May summons emergency cabinet to discuss UK’s Syria response

Top investor who predicted recent share sell off says an earthquake is about to happen to the markets

EUR:

Draghi says hit to confidence is the real risk for trade spats

AUD/CNY:

Turnbull’s rhetoric upset China’s leadership possibly leading to showcase of trade and business being abandoned

MXN:

Moody’s changes outlook on Mexico’s ratings to stable from Negative A3

USD:

Stormy Daniels allegations, Russia probe and escalating tensions with Moscow threaten to engulf Trump

US defence Sec, Mattis still assessing evidence from purported chemical attack in Syria

CNY:

China to open Shanghai-London link by end of year in push to widen stock access

China commerce ministry says misleading to say Pres. Xi’s speech this week was a concession to US on trade issues

CCM: Pres. Xi’s sppech is important strategy for China’s further opening up, has nothing to do with trade friction

CCM: Market opening is China’s voluntary act

CCM: Hope the US does not misjudge the situation

CCM: China will develop in its own direction

CCM: hopes US will understand the world’s situation, would not walk down its own path blindly

CCM: China is well prepared if US escalates on trade, will fight back without hesitation

CCM: So far US, China have not done any negotiation on bilateral trade frictions

CCM: Not a matter of if China will to negotiate with US its about US not showing sincerity

CCM: US actions so far are typical trade protectionism unilateralism

CCM: Impossible for China to negotiate with US if negotiations are hijacked

CCM: hope to complete revision of foreign investment negative list within H1 2018

CCM: Hoping to implement lowering tariffs on various foreign goods including autos as soon as possible

NZD:

Two year swap rate jumps to 9 month high in catch up play

Metals:

Zinc tumbles as much as 3.5% on LME to lowest since December

RUB:

Russia is said to ready countermeasure on Syria Kommersant

Russia is said to expect info on US, Syria targets Kommersant

Kommersant cites unidentified Russian officials on Syria

Russian Military police star patrolling Syria’s Douma – RIA

Today’s data

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

GBP       RICS House Price Balance Mar A 0% | C 2% | P 0%

JPY         Japan Money Stock M2+CD Y/Y Mar A 3.20% | C 3.20% | P 3.30%

AUD       Consumer Inflation Expectation Apr A 3.60% | P 3.70%

AUD       Home Loans M/M Feb A -0.20% | C -0.40% | P -1.10%

09:00     EUR        Eurozone Industrial Production M/M Feb C 0.10% | P -1.00%

11:30     EUR        ECB Monetary Policy Meeting Accounts

12:30     CAD       New Housing Price Index M/M Feb P 0.00%

12:30     USD       Import Price Index M/M Mar C 0.10% | P 0.40%

12:30     USD       Initial Jobless Claims (Apr 7) C 230K | P 242K

14:30     USD       Natural Gas Storage P -29B

 

Harry Hindsight

• EUR: A slow rise through the Asian session moving from the opening around the 1.2355 areas but initially struggling into the 1.2370 level and taking a second run deep into the session to test the level into the London opening, the market pushed through slowly to the 1.2390 level and then ranged through the session between the 1.2370-90 levels and held quietly into the FOMC minutes, hawkish comments were overshadowed by current events unfolding in Syria between the US and Russia, the Euro dropped back to make the lows just through the 1.2350 level before recovering to the 1.2370 areas to finish the day.
• GBP: Quiet range through the Asian session with the market holding around the 1.4180 levels and then slowly rising into the London opening to the 1.4190 level, reduction in visible trade balance helping the market higher and the market pushed in steps through to the 1.4220 level grinding away at the congestive offers however, while that shrinkage is beneficial the other numbers saw IP and MP numbers shrinking for the month of March but possibly weather related, however, the market did react eventually and slipped lower triggering a few weak stops on the move back through to the 1.4190 levels, and falling again as the market moved into the NYK session with CPI numbers in line and the market again dipping this time to the 1.4160 level, the market bounced of the level and pushed again through to the 1.4220 levels over the first few hours in NYK however, the closer the market got to the same lows once the FOMC minutes were released, a slow climb to the close saw the market more or less unchanged on the day.
• JPY: Opening saw the highs for the USDJPY falling away from the level, holding the 107 level through to the London session, London continued the slow selling and the market eventually tested through to the 106.80 areas for the move into the NYK session and managed to test to the 106.70 levels the market chopped around a little through to the FOMC levels with the market extending the low by a couple of pips only before testing above 107.00 levels before dropping back and holding the 106.80 area to the close.
• AUD: A fairly quiet session for the Oz with the Oz dipping with the USDJPY as previous days cross buying falling out of bed a little with the Oz quickly dipping to the 0.7750 level rom the opening just off the 0.7770, the market then held quietly into the NYK rising quickly after the numbers back to extend the highs a little before drifting into the FOMC, the market initially dipped and then returned to the 0.7760 levels for a quiet close.

Yesterday’s premiership results

JPY         Machine Orders M/M Feb A 2.10% | C -2.50% | P 8.20%

JPY         Domestic CGPI Y/Y Mar A 2.10% | C 2.00% | P 2.50%

AUD       Westpac Consumer Confidence Apr A -0.60% | P 0.20%

CNY        CPI Y/Y Mar A 2.10% | C 2.60% | P 2.90%

CNY        PPI Y/Y Mar A 3.10% | C 3.30% | P 3.70%

GBP       Visible Trade Balance (GBP) Feb A -10.2B | C -11.9B | P -12.3B

GBP       Industrial Production M/M Feb A 0.10% | C 0.40% | P 1.30%

GBP       Industrial Production Y/Y Feb A 2.20% | C 2.90% | P 1.60% | R 1.20%

GBP       Manufacturing Production M/M Feb A -0.20% | C 0.20% | P 0.10%

GBP       Manufacturing Production Y/Y Feb A 2.50% | C 3.30% | P 2.70% | R 2.20%

GBP       Construction Output M/M Feb A -1.60% | C 0.70% | P -3.40% | R -3.10%

GBP       NIESR GDP Estimate Mar A 0.20% | C 0.30% | P 0.30%

USD       CPI M/M Mar A -0.10% | C 0.00% | R 0.20%

USD       CPI Y/Y Mar A 2.40% | C 2.40% | P 2.20%

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

USD       CPI Core Y/Y Mar A 2.10% | C 2.10% | P 1.80%

USD       Crude Oil Inventories A 3.3M | C -0.6M | P -4.6M

USD       Monthly Budget Statement Mar A -208.7B | C -175.0B | P -215.2B

USD       FOMC Meeting Minutes

 

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