Daily FX Market Commentary

Good morning,

LMAX Close

USDJPY 109.863 | EURUSD 1.19924 | AUDUSD 0.74901 | NZDUSD 0.70027 | USDCAD 1.28497 | USDCHF 0.99669 | GBPUSD 1.36104 |

LMAX Highs and Lows 5am GMT

                                High | Low

EURUSD               1.20113 | 1.19876

USDJPY                 109.920 | 109.647

GBPUSD               1.36197 | 1.35988

USDCHF               0.99692 | 0.99553

AUDUSD              0.75074 | 0.74755

USDCAD               1.28578 | 1.28244

NZDUSD               0.70290 | 0.69925

EURCHF                1.19572 | 1.19482

EURGBP               0.88214 | 0.88085

EURJPY                 131.824 | 131.645

For today

• EUR: Opening around the 1.1990 level the market initially struggled for direction before starting a slow climb through the 1.2000 levels to push lightly to the 1.2010 areas and range above 1.2000 through to the grey hour with little to impact the market. Moves yesterday put the Euro into the ranges from the beginning of the year, downside bids remain through to the 1.1980 level with possible weak stops through the level and opening the market to a deeper move through to the 1.1900 level with only sentimental levels until through the level with some stronger bids into the 1.1880 area and stronger stops on a break through the level, and limited congestion through to the stronger 1.1800 levels. Topside offers weak through to the 1.2100-20 level where stronger offers are likely to appear, and a possible small chance of a short squeeze.
• GBP: Very quiet for the Cable with the market awaiting the next snippet on the subject of Brexit and a split government, holding around the 1.3605-15 for the most part into the grey hour. As with the Euro the market is testing the years lows, bids into the 1.3600 level are likely to be sentimental only with a push through the level opening up into limited congestive bids through to the 1.3550 level and then 1.3500 with stronger bids then appearing into the next sentimental levels. Topside offers light back through to the 1.3700 level with some weak stops on a push through the level, and then limited offers until closer to the 1.3800 level. FOMC today with no expectations for a rise for the time being and everyone looking for June rise however, most of the commentary seems to remain cautious and today will likely be about soundbites from various Fed speakers.
• JPY: Early buyers into Tokyo failed to push the USDJPY to the 110.00 levels and the market having peaked above the 109.90 level dipped back from the level to test the 109.70 level and then through the balance of the session testing to the low around 109.65 before slowly pushing back towards the opening levels into the grey hour, Topside offers into the 110.00 level with possibly weak stops on a push through the level but congestive offers then running through to the 110.40 levels and the highs from February with stronger offers towards the 110.60 level, downside bids light through the 109 handle with possible bids on any dip through onto the 108 handle however, it would not be a surprise if the buying has started to ebb away for the time being and the downside possibly open to a good move if it has, however, FOMC could surprise and one to watch for with the run up to that event likely to be quiet.
• AUD: Mirror image of the USDJPY with early sellers testing towards the years lows before rising slowly through the session to the 0.7505 areas and holding through the grey hour. Downside bids through into the 0.7450 areas, with limited possibility of stops on a move through the 0.7440 areas and into the possibility of a good deal of congestion dating back into last year, a push through the 74 cent level could see weak stops on a move through the level and the market opening up to a larger move however, even now the market is talking about an undervalued Oz, topside offers light back through the 0.7600 level with some offers likely in the area however, a push through could see the market rallying quickly through the 0.7650 areas and opening up the 77 cent level for a quick challenge.

Overnight News

CAD:

Poloz: Interest rates are headed higher

Poloz: Economy can grow above potential, sweet spot of growth

Poloz: Convinced there remains untapped potential in economy

Poloz: Concerned about transition in household debt dynamics

Poloz: Income growth is key to improving financial stability

USD:

Lighthizer aiming for Nafta deal in May as talks gather pace

Atlanta FED’s GDP nowcast model sees US 2q GDP at 4.1%

Mueller raised possibility of Presidential subpoena in meeting with Trump

NZD:

Whole milk powder average price falls to NZ$3,231 a ton

NZ house value growth moderates in April

AUD:

RBA’s Lowe: Reasonable to expect next rate move will be up

Lowe: No strong case for near term adjustment in cash rate

Lowe: Australia has a lot resting on China manging its debt

Lowe: Possible Australia lending standards may tighten further

Australia Banks not trusted to do right thing APRA’s Byres

Fitch affirms Australia at AAA outlook stable

GBP:

Davis warns Irish border measures may take years Brexit update

Brexiteers send customs ultimatum to Theresa May BBC

UK Consumer credit rose £254M lowest since 2012

Government at risk of collapse as May warned by 60 Tory MP’s if customs partnership with EU is not dropped

CNY:

China April factory growth edges up marginally, export orders shrink Caixin PMI

Today’s data

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

NZD       Unemployment Rate Q1 A 4.40% | C 4.50% | P 4.50%

NZD       Employment Change Q/Q Q1 A 0.60% | C 0.60% | P 0.50% | R 0.40%

GBP       BRC Shop Price Index Y/Y Apr A -1.00% | P -1.00%

JPY         Monetary Base Y/Y Apr A 7.80% | C 9.20% | P 9.10%

CNY        Caixin PMI Manufacturing Apr A 52.5 | C 50.9 | P 51

JPY         Consumer Confidence Apr A 43.6 | C 44.5 | P 44.3

05:45     CHF        SECO Consumer Confidence Apr C 4 | P 5

07:15     CHF        Retail Sales Real Y/Y Mar C 0.30% | P -0.20%

07:30     CHF        PMI Manufacturing Apr C 59.8 | P 60.3

07:45     EUR        Italy Manufacturing PMI Apr C 54.5 | P 55.1

07:50     EUR        France Manufacturing PMI Apr (F) C 53.4 | P 53.4

07:55     EUR        Germany Manufacturing PMI Apr (F) C 58.1 | P 58.1

08:00     EUR        Eurozone Manufacturing PMI Apr (F) C 56 | P 56

08:30     GBP       Construction PMI Apr C 50.5 | P 47

09:00     EUR        Eurozone Unemployment Rate Mar C 8.50% | P 8.50%

09:00     EUR        Eurozone GDP Q/Q Q1 (A) C 0.40% | P 0.60%

09:00     EUR        Italian GDP Q/Q Q1 (P) C 0.30% | P 0.30%

12:15     USD       ADP Employment Change Apr C 200K | P 241K

14:30     USD       Crude Oil Inventories P 2.2M

18:00     USD       FOMC Rate Decision C 1.75% | P 1.75%

 

Harry Hindsight

• EUR: A slow decline through the Asian session moving from the 1.2080 levels through to the London opening around the 1.2070 areas, with tariffs at the forefront of EU thoughts and the market the Euro dropped quickly through the 1.2050 levels with weak stops along the way and then a steady drift through to the NYK session, USD rallied into the NYK session and the Euro slipped through the 1.2000 levels as concern for the slowing economy, Brexit pressures and Tariff worries all beginning to tell for the EU and its ability to take too long to react to situations, the market tested through to the 1.1980 levels before finding sufficient support and hold around the 1.1990 level for the most part to the close.
• GBP: Another day another Lords defeat for the government, with the motion passed by the Lords to force the MP’s to vote on any Brexit strategy, with this in mind though from two years ago when the general vote saw Brexit and Cameron calling one vote in or out saw all parties stating that they would work for the greater good now it would seem that some parts of those MP’s and Lords are tainted by personal agenda’s at best, needless to say the Government is under threat and given what awaits in the wings outright anarchy is a possibility, the market opened around the 1.3770-75 areas and saw a slow drift through the Asian session drifting to the 1.3750 levels into the London session, talk of a deal over the Irish border saw limited optimism however, this was quickly put aside as the party lines were drawn and the inner government split saw sharp commentary during the early part of the session, the Cable dropped quickly to the 1.3700 levels and while there was some bids and attempts to buy into the drop the move towards the NYK session saw the lows around 1.3665 again being tested and the market running lower to push the 1.3600 level and fortunately holding for the most part with a stab through to the 1.3585 areas before rallying a little to hold 1.3610-30 through to the close.
• JPY: A steady climb for the USDJPY with USD pushing against all the other currencies, the Asian session saw the market opening around the 109.30 levels and slowly pushing through to the London session moving towards the 109.40 level in a dull session, London were slow buyers to begin with but having forced the market through the 109.60 level the market struggled for impetus into the NYK session, Initially testing to the 109.80 levels the market struggled until late in the session before pushing towards the 109.90 area before finishing quietly.
• AUD: Early trading was muted with the market holding around the 0.7530-35 levels through to deep into the Tokyo session before starting a lift through to the 0.7540 areas, no change in the cash rate saw some minor movement however, the move into the London session saw the market dropping back quickly and the market tumbled to the 0.7510 levels on cross trading and generally USD strength, the market held though into the NYK session before following the rest of the market with the Oz pushing quickly to the 0.7470 level before finding a base and then moving back to attempt the 75 cent levels but generally holding around the 0.7490 area to the close.

Yesterday’s premiership results

NZD       Building Permits M/M Mar A 14.70% | P 5.70% | R 6.40%

JPY         PMI Manufacturing Apr (F) A 53.8 | C 53.3 | P 53.3

AUD       RBA Rate Decision A 1.50% | C 1.50% | P 1.50%

GBP       Mortgage Approvals Mar A 62.9K | C 63.0K | P 63.9K | R 63.8K

GBP       Money Supply M4 M/M Mar A -1.40% | C 0.20% | P -0.30%

GBP       PMI Manufacturing Apr A 53.9 | C 54.8 | P 55.1

CAD       GDP M/M Feb A 0.40% | C 0.30% | P -0.10%

CAD       RBC Manufacturing PMI Apr A 55.5 | P 55.7

USD       Manufacturing PMI Apr (F) A 56.5 | C 56.5 | P 56.5

USD       Construction Spending M/M Mar A -1.70% | C 0.50% | P 0.10%

USD       ISM Manufacturing Apr A 57.3 | C 58.5 | P 59.3

USD       ISM Prices Paid Apr A 79.3 | C 76.8 | P 78.1

 

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