Daily FX Market Commentary

Good morning,

LMAX Close

USDJPY 109.646 | EURUSD 1.1927 | AUDUSD 0.75266 | NZDUSD 0.69182 | USDCAD 1.28129 | USDCHF 1.00051 | GBPUSD 1.35557 |

LMAX Highs and Lows 5am GMT

                                High | Low

EURUSD               1.19383 | 1.19126

USDJPY                 109.930 | 109.66

GBPUSD               1.35722 | 1.35397

USDCHF               1.00205 | 1.00007

AUDUSD              0.75374 | 0.75075

USDCAD               1.28217 | 1.2793

NZDUSD               0.69181 | 0.68924

EURCHF                1.19415 | 1.19335

EURGBP               0.88007 | 0.87936

EURJPY                 131.009 | 130.829

For today

• EUR: From a slightly lower opening the market traded slowly higher to test to the 1.1940 areas but was unable to push through the level and held deep into the session before the release of weaker JPY data saw the USD rising and the Euro slipping back to the 1.1910 levels for the move into the grey hour, light offers through to the 1.2000 area where the market is likely to be a little stronger with some congestion running to the 1.2020 areas with weak stops likely to be through the level and weakness until through the 1.2050 areas and stronger offers likely to reappear, a push to the 1.2100 level is likely to continue to be defended and only a strong break through the 1.2120 is likely to clear the topside for further testing. Downside bids light back into the 1.1900 level before the market opens a little however, the downside is likely to see stronger bids appearing on any test through the 1.1880 level and increasing the closer the market gets to the 1.1840 level.
• GBP: Cable moved slightly higher from the opening into the Tokyo early morning session again testing above the 1.3570 levels before slipping back to hold just below the levels for the run into the JPY numbers and slipping back quickly to fall back to the 1.3540 areas to the grey hour, Downside strength into the 1.3500 areas and has shown notable support through the past week or so, a push through to test the 1.3450 level could see stronger stops appearing and the market opening, topside offers through the 1.3600 level have also been resistance over the same period as the downside support however the topside stops are likely to be just through the 1.3620 level and closer for any test through, a push through to the 1.3650 area could see stronger bids appearing and the market running through to a weaker 1.3700 level.

• JPY: A quiet range for the USDJPY through the early part of the day with the market moving around the 109.60-80 area through to deep in the session and the release of the tertiary number which hit weaker than expected and the USD rallying sharply through to the 109.90 levels and the grey hour, Topside offers into the 110.00-20 areas, possible weak stops on a move through the level will likely run into offers on any move to the 110.50 area which at the very least will slow any rally with stronger offers likely to continue into the 110.80-111.00 areas and then some minor weakness above, downside bids light through to the 109.20-00 areas beginning to form with weak stops below the 108.80 areas the downside does become vulnerable if the yield players fail to appear and a quick run to the 108.00 level and some limited bids appear.

• AUD: As with the rest of the market a reasonably quiet session with RBA minutes not even stirring the market, a light rise through to make the highs around the 0.7540 levels but with little momentum soon slipped back to hold around the opening levels, the JPY numbers saw the USD rallying and the Oz dipping quickly back to the 0.7510 levels before finding some bids and holding to the grey hour, Topside offers into the 76 cent area will likely see weak congestion through the level and then stops on a break through the 0.7620 areas opening through to the 0.7660 areas before starting to meet anything meaningful, congestion then into the stronger 77 cent levels and likely to be a little deeper with offers then increasing into the 0.7740 areas, downside bids light through the 75 cent level however, the congestion then is likely to increase with possible weak stops in the mix the market continues to see stronger bids on a move through to the 0.7420 level providing a base for the market.

Overnight News

CNY/USD:

China unlikely to meet US demands on bilateral trade Moody’s

AUD:

RBA Minutes: Board agreed there was not a strong case for near-term move in policy

RBA: Given current circumstances, board agreed next move in rates likely to be up, rather than down

RBA: Progress on unemployment and inflation likely to be only gradual

RBA: Inflation to remain low for some time given retail competition slow wage growth

RBA: March QTR inflation data in-line with banks expectations

RBA: An appreciation in A$ would slow expected acceleration in growth, inflation

RBA: Wages expected to pick up gradually as leading indicators pointed to more job gains

RBA: Still uncertainties remain on extent, speed of pick-up in wages and inflation

RBA: Strength in employment has supported household consumption so far

RBA: High household debt poses uncertainty for consumption outlook

RBA: Consumption relatively resilient to slower growth in household income over recent years

RBA: Conditions in global economy positive, China debt levels an important risk

NAFTA:

Trump, Trudeau discussed possibility of quick NAFTA deal

Deadline looms, pessimism grows about prospects of imminent agreement

USD:

Shale drillers increase production with a back log of congested pipelines and shortages in labour and material

Fed’s Mester says improved economic outlook supports more rate rises

GBP:

Theresa may hits wall over EU customs deal

PM admits both her current options are unworkable

EUR:

Villeroy expects ECB rate hike some after QE ends (genius)

CNY:

China’s financial risk greater than official numbers suggest SCMP

TRY:

Erdogan: He’ll take more responsibility for monetary policy

Erdogan: A new cabinet could be formed from outside parliament

Erdogan: Central bank can’t ignore president’s signals after vote

Today’s data

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

AUD       RBA May Meeting Minutes

CNY        Retail Sales Y/Y Apr A 9.40% | C 10.00% | P 10.10%

CNY        Industrial Production Y/Y Apr A 7.00% | C 6.40% | P 6.00%

JPY         Tertiary Industry Index M/M Mar A -0.30% | C -0.20% | P 0.00%

06:00     EUR        German GDP Q/Q Q1 (P) C 0.40% | P 0.60%

07:15     CHF        Producer & Import Prices M/M Apr C 0.30% | P -0.20%

07:15     CHF        Producer & Import Prices Y/Y Apr C 3.00% | P 2.00%

08:30     GBP       Jobless Claims Change Apr C 13.3K | P 11.6K

08:30     GBP       Claimant Count Rate Apr P 2.40%

08:30     GBP       Average Weekly Earnings 3M/Y Mar C 2.60% | P 2.80%

08:30     GBP       ILO Unemployment Rate 3Mths Mar C 4.20% | P 4.20%

09:00     EUR        Eurozone Industrial Production M/M Mar C 0.70% | P -0.80%

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

09:00     EUR        German ZEW Economic Sentiment May C -8.2 | P -8.2

09:00     EUR        German ZEW Current Situation May C 85.2 | P 87.9

09:00     EUR        Eurozone ZEW Economic Sentiment May C 2 | P 1.9

12:30     USD       Empire State Manufacturing May C 15 | P 15.8

12:30     USD       Retail Sales Advance M/M Apr C 0.30% | P 0.60%

12:30     USD       Retail Sales Ex Auto M/M Apr C 0.50% | P 0.20%

14:00     USD       Business Inventories Mar C 0.10% | P 0.60%

14:00     USD       NAHB Housing Market Index May C 70 | P 69

20:00     USD       Net Long-term TIC Flows Mar P 49.0B

Harry Hindsight

• EUR: Opening in line with the close on Friday the market moved sideways into the Tokyo session before starting a slow steady rise through to the 1.1970 level before holding in a quiet range around the 1.1960 on the move into the London session, the lack of numbers saw the market holding around the 1.1960-75 in early trading before again starting to rise through to the 1.1990 level before moving into the NYK session, NYK struggled with the 1.2000 areas before dropping back as chatter talked on interest rate rises to come, the market initially dipped back into the 1.1950 areas and held through the London close before dropping back in late trading to trigger weak stops on a move to the 1.1910 areas for the close.
• GBP: Opening a little higher the market filled the gap before starting a slow rise which accelerated through into the Tokyo session to push through to the 1.3570 and holding into the grey hours, the market then drifted through to the London session dipping in early London testing back to the opening levels before bouncing quickly through to the 1.3590 level to hold and rise a little to the just above the 1.3600 levels, the market moved through to the London close before dropping off quickly and holding through to the close around the 1.3550 areas on limited volume.
• JPY: Holding the around Fridays close the market moved through into the Tokyo session around the 109.30 levels and eventually dipped a little lower to make the lows into the 109.20 area before recovering for the move into the London session, London was a slow buyer and the market continued that move through to the 109.60 levels into the NYK session, the market did eventually push above the level and held above there to the close.
• AUD: A bit wide on the opening the market moved off the 0.7535 areas and pushed through into the Tokyo session testing through to the 0.7560 level and made the highs for the day, the market then slipped a little lower through to the London session holding the opening levels and trading in that range through to late in NYK and the Sydney opening with the market dipping to the lows around the 0.7530’s to the close.

Yesterday’s premiership results

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

JPY         Machine Tool Orders Y/Y Apr (P) A 22.00% | P 28.10%

 

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