Daily FX Market Commentary

Good morning,

LMAX Close

USDJPY 109.132 | EURUSD 1.18635 | AUDUSD 0.74527 | NZDUSD 0.6966 | USDCAD 1.29512 | USDCHF 1.00185 | GBPUSD 1.35479 |

LMAX Highs and Lows 5am GMT

                                High | Low

EURUSD               1.18699 | 1.18429

USDJPY                 109.640 | 109.00

GBPUSD               1.35578 | 1.35261

USDCHF               1.00428 | 1.00128

AUDUSD              0.74527 | 0.74244

USDCAD               1.29684 | 1.29459

NZDUSD               0.69715 | 0.69534

EURCHF                1.18974 | 1.18828

EURGBP               0.87622 | 0.8750

EURJPY                 129.876 | 129.362

For today

• EUR: A slight rise from the opening to test to the 1.1870 levels was quickly turned as USDJPY buying dominated the market and Euro’s slipped through to test into the mid 1.1840’s then a slow rise to the 1.1860 level for the move into the grey hour, downside bids through to the 1.1840 level weakened and the market firmly into the end of 2017 ranges, congestion around the 1.1800 areas and possibly light option plays in the area could see the market testing through the level with weak stops likely to be around the 1.1770 levels with the congestion possibly continuing in better numbers on a move into the 1.1760-40 areas with stronger bids likely to be holding in front of the 1.1700 area, topside offers light back through the 1.1900 levels with stronger offers likely to be appearing on any push through to the 1.1940-60 levels and increasing above the 1.1980 area.
• GBP: Cable was little different with the market opening just below the 1.3550 level and then struggling into the Tokyo session testing towards the 1.3560 level only to see USD rally with rising oil and a USD buying becoming the focus, Cable slipped through to test towards the 1.3525 levels before finding light buying turning the market from the lows, but only just and the market running to the grey hour holding the 1.3530 area. Cable still remains supportive into the 1.3500 level with weak stops possibly on a push through to the 1.3480 areas before weak stops appear and likely limited bids into the sentimental 1.3450 area, with congestive bids likely just beyond that area and into the old support line just below, a failure here could see the 1.3400 becoming vulnerable however, for the moment likely to be fairly strong. Topside offers through to the 1.3600 level likely to be very light and the market beyond seeing limited offers around the sentimental level too around the 1.3700 area where offers could increase.
• JPY: Drifting from the opening the market pushed quickly higher once the market had settled into the Tokyo session trading off the lows to test fairly easily to the 109.60 areas and then holding around the 109.50 level into the grey hour, Tokyo market saw strong buying in USDJPY with the market talking about the Iran situation the rising Oil prices being the cause, Topside offers into the 110.00 level likely to be strong and corresponding stops through the level leaving the market free to push quickly through to the 110.50 level from earlier in the year, congestion likely through the level with the 111.00 area likely to contain similar strong offers and congestion through the level. Downside bids
• AUD: Less movement for the Oz the move into the Tokyo session saw some light selling as the USDJPY pushed higher squeezing the Oz gradually through to the 0.7425 levels before holding around the 0.7435 levels through to the grey hour, CBA admits wrongdoing in rate rigging case undermining the market a little, downside congestion through to the 0.7400 level with some limited bids into the area, a push through could see weak stops appearing and a quick test to the possibly stronger 0.7350 areas before opening the market to a deeper intraday move and the 0.7150 area exposed. Topside offers light through to the 0.7540-60 level with stronger offers towards the 60 level however, a break here could see some weak stops appearing and the market squeezing quickly through to the 76 cent.

Overnight News

GBP:

Another defeat for May with the Lords voting to remove Brexit date from key bill

UK LFL April retail sales fall 4.2% YoY BRC

USD:

Powell says market is well aligned with Fed’s rate dot plot

Ross: We’re somewhat encouraged by progress on Nafta talks

Trump says US will exit the Iran nuclear deal

Trump on Iran: Sanctions to take effect in oil/metals

NZD:

New Zealand lowers tourism spending forecast on China revision

CNY:

China may follow Fed to raise interest rates Daily Commentary

AUD:

RBA paper discusses interest rate impact on business investment

Today’s data

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

GBP       BRC Retail Sales Monitor Y/Y Apr A -4.20% | C -0.80% | P 1.40%

JPY         Labour Cash Earnings Y/Y Mar A 2.10% | C 1.00% | P 1.30% | R 1.00%

JPY         Leading Index CI Mar (P) A 105 | C 105.1 | P 106

12:30     CAD       Building Permits M/M Mar P -2.60%

12:30     USD       PPI M/M Apr C 0.20% | P 0.30%

12:30     USD       PPI Y/Y Apr C 2.80% | P 3.00%

12:30     USD       PPI Core M/M Apr C 0.20% | P 0.30%

12:30     USD       PPI Core Y/Y Apr C 2.40% | P 2.70%

14:00     USD       Wholesale Inventories M/M Mar (F) C 0.60% | P 0.50%

14:30     USD       Crude Oil Inventories P 6.2M

21:00     NZD       RBNZ Official Cash Rate C 1.75% | P 1.75%

23:01     GBP       RICS House Price Balance Apr C -1% | P 0.00%

23:50     JPY         BoJ Summary of Opinions

23:50     JPY         Current Account (JPY) Mar C 1.62T | P 1.02T

 

Harry Hindsight

• EUR: Opening around the 1.1925 levels the highs were made early in the Tokyo session testing the 1.1935 areas before dropping back to trade between the 1.1925-10 level through to the London session as cross selling against the JPY dominated the market, London initially took the market back towards the highs however, an hour later the market started to drift lower with German numbers out of the way, testing through the 1.1900 levels the market saw some weak stops triggered before falling through the 1.1880-60 congested area in a solid push and the move into the NYK session saw the market holding in the area, with little data the market struggled for the most part but with the US/Iran situation USD buying continued through the markets overall, Euro fell to the 1.1840 level before finding sufficient interest and moved a little bit higher to test the 1.1885 level before drifting to settle into trading around the 1.1860 area to the close.
• GBP: Cable saw the same early buying to make the 1.3575 level in early Tokyo before dropping back to the opening levels, the market held the area for a few hours before dipping again and running to the London opening around the 1.3550 areas, London were quick buyers from the opening taking the market quickly to the highs of the day to the 1.3995 area before slipping slowly back from the high and triggering quick selling by weak longs through the lows and grinding through to the 1.3500 level and ranging around that level for the long run to the NYK session, NYK initially tested to the 1.3485 areas before starting a steady run higher through to the 1.3550 areas and holding around that level to the close.
• JPY: For the most part the USDJPY held around the 109.00 level through the day with limited movement for the bulk of the day, the market based off the 108.90 level with the low made late into the session probing just below the 108.85 areas and unable to push much beyond the 109.15 through Asia and the bulk of London, NYK saw some steady buying through the session and tested through to the 109.35 levels before drifting back and then gyrating a little late in the session before finishing around the opening levels.
• AUD: USD strength through the session left the Oz on the back foot, weaker than expected retail sales did little to help the market and the news that China imports of AUD products was some 3.1% down on the month before saw the Oz drop from close to the 0.7525 highs to test through the 75 cent level quickly before holding around the 75 cent level through into London, London were early buyers and the market moved back to the opening 0.7515 level before seeing steady selling through to the NYK session with the 0.7450 levels eventually testing to the 0.7435 area before rising a little and finishing the day above the 0.7450 level.

Yesterday’s premiership results

CNY        Trade Balance (USD) Apr A 28.8B | C 27.5B | P -5.0B

CNY        Trade Balance (CNY) Apr A 183B | C 187B | P -30B

AUD       Retail Sales M/M Mar A 0.00% | C 0.20% | P 0.60%

NZD       RBNZ 2-Year Inflation Expectation Q2 A 2.00% | P 2.10%

CHF        Unemployment Rate Apr A 2.70% | C 2.90% | P 2.90% | R 2.80%

EUR        German Trade (EUR) Balance Mar A 22.0B | C 19.9B | P 19.2B

EUR        German Industrial Production M/M Mar  A 1.00% | C 0.80% | P -1.60%

GBP       Halifax House Prices M/M Apr A -3.10% | C -0.20% | P 1.50% | R 1.60%

CAD       Housing Starts Apr A 214K | C 218K | P 225K

 

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