Daily FX Market Commentary

Andy Harrison

Good Morning,

LMAX Close

USDJPY 111.648 | EURUSD 1.11851 | AUDUSD 0.70563 | NZDUSD 0.66678 | USDCAD 1.34575 | USDCHF 1.01967 | GBPUSD 1.30359 |

LMAX highs and Lows 05.00 GMT

                                Highs | Lows

EURUSD               1.12197 | 1.12111

USDJPY                 111.504 | 111.393

GBPUSD               1.30465 | 1.30306

USDCHF               1.01937 | 1.01849

AUDUSD              0.70563 | 0.7037

USDCAD               1.34003 | 1.33774

NZDUSD               0.66814 | 0.66271

EURCHF                1.14359 | 1.14257

EURGBP               0.86047 | 0.85987

EURJPY                 125.154 | 124.977

For Today

• GBP: Another quiet session for the Oz with the market holding around the 1.3040 level having moved up from the opening around the 1.3035 level with volumes limited, topside congestion through to the 1.3100 level with that congestion increasing as the market moves higher, a test through the 1.3120 areas could see weak stops appearing and the market opening only to stronger offers on any move higher with stronger offers increasing into the 1.3200 level. downside bids light through to the 1.2940 areas with stronger congestion through to the 1.2880 level with stops likely to appear if the market can gain impetus through the 1.2860 level to open a test to the stronger 1.2800 areas.
• JPY: USDJPY opened around the 111.40 area and the market based in the area for a long period before slowly making its way through to the 111.50 area and a quiet move into the grey hour, Topside offers cleared through the 112.20 with further offers around the 112.50 level absorb the move and slow the market on any push to the 113.00 level, downside bids light through to the 111.00 area with congestion in the area and through to the 110.50 level before any weakness appears and the 110.00 becomes susceptible to a test with strong congestion on any dips.
• AUD: Still the market chatters about a rate cut however, clear evidence one way or the other is yet to really materialise, with the AUD relying to inward investment that a higher rate attracts while economic constraints would suggest a cut the above is likely to constrain a fluctuating political situation, dipping into the Asian session the market tested the 0.7035 areas before steadily recovering and pushing through to the 0.7055 level for a quiet run to the grey hour, downside stops likely on a dip through the 0.6980 area and then stronger support on a mo0ve through to the 0.6950 area possible however, the support is dated to the slow ranges from 2016 and suspect at best, with a push through the sentimental levels open until possibly stronger bids into the 68 cents area, topside offers likely to be weak through the 0.7040-60 area and increasing only on a move through the 71 cents areas and increasing from there with stronger resistance increasing the further the market moves towards the 72 cents level.
• EUR: A slow dip through into the Asian session testing towards the 1.1210 level before starting a slow rise through the session to push towards the 1.1220 level in very quiet trading, downside bids light through to the 1.1150 area where congestion increases through to the stronger supportive 1.1120-1.1080 with stops likely through the level and possibly stronger chance of a larger move, topside offer congested through the 1.1250 areas with those offers likely to increase through to the 1.1280 level and continuing through to the 1.1320 area before weakness appears for a short run into the 1.1350 areas.

Overnight News

GBP:

Farage could win majority of conservative voters, as less than a third think Tories are pro-Brexit Telegraph

PM May preparing to cave in to Labour demands on Brexit Eurosceptics fear – Telegraph

USD/CNY:

White house says it’s ready to walk if no China trade deal soon BBG

CNY:

A $4.4B accounting error burns investors in China

China state owned traders downgrade to have ripple effect BBG

Chinese banks plan to issue $77B of perpetual bonds – Caixin

EUR:

Time to find a new approach to Beijing Der Spiegel

AUD:

Is the market any good at predicting RBA moves AFR

Watch out Australia: There’s a flood of dismal economic news on the horizon- Yahoo Finance news

ANZ flags stubbornly low wages as mortgage stress climbs AFR

CBA Australia MFG PMI falls to lowest since series began 2016 – BBG

USD:

The Fed should dump its interest rate target Bill Dudley BBG

NZD:

NZ debt management proposes new framework to access auctions – BFW

Today’s Data

Actual A | Consensus C | Previous P | Revised R | all timings GMT/UTC

AUD       AiG Performance of Manufacturing Index Apr A 54.8 | P 51

NZD       Employment Change Q/Q Q1 A -0.20% | C 0.50% | P 0.10%

NZD       Unemployment Rate Q1 A 4.20% | C 4.20% | P 4.30%

NZD       Labour Cost Private Sector Q/Q Q1 A 0.30% | C 0.50% | P 0.50%

GBP       BRC Shop Price Index Y/Y Apr A 0.40% | P 0.90%

08:30     GBP       Mortgage Approvals Mar C 64K | P 64K

08:30     GBP       Money Supply M4 M/M Mar C 0.30% | P 0.30%

08:30     GBP       PMI Manufacturing Apr C 53.1 | P 55.1

12:15     USD       ADP Employment Change Apr C 181K | P 129K

13:30     CAD       Manufacturing PMI Apr P 50.5

13:45     USD       Manufacturing PMI Apr (F) C 52.4 | P 52.4

14:00     USD       ISM Manufacturing Apr C 55 | P 55.3

14:00     USD       ISM Prices Paid Apr C 55.7 | P 54.3

14:00     USD       ISM Employment Apr P 57.5

14:00     USD       Construction Spending M/M Mar C 0.10% | P 1.00%

14:30     USD       Crude Oil Inventories P 5.5M

18:00     USD       FOMC Rate Decision (Lower Bound) C 2.25% | P 2.25%

18:00     USD       FOMC Rate Decision (Upper Bound) C 2.50% | P 2.50%

22:45     NZD       Building Permits M/M Mar P 1.90%

Harry Hindsight

• GBP: Pressure building on the current incumbent government and in particular PM May, the move through the Asian session saw limited movement moving quietly around the 1.2930 level to deep into the Asian session before pushing through the 1.2940 for a limited period before dipping to its lows just below the 1.2930 level, the more through to the grey hour saw the market again pushing for the highs testing the 1.2945 level before drifting a little into the London session, The move through London saw a steady climb through the day and pushed steadily through the 1.3000 level with decent volume on the back of news that PM May could be on the road to a deal with Labour opponents however, how this works is still speculative given what the referendum dictated, that was Brexit in its purest form and not what Labour would wish. The move into the NYK session saw the movement continuing through to the 1.3050 area before running into sufficient offers to hold and a slow drift through to the close holding around the 1.3030-40 areas.
• JPY: Weaker USD over all with mix of signals from the Fed and White House, wo while GDP surprises the market expects nothing and the USDJPY slipped from the early highs in Asia to dip from close to the 111.70 level to the 111.60 area and slowly slipping from there steadily into the grey hour holding around the 111.50 area, the move into the grey hour saw early London pushing the USDJPY down to the 111.30 level and then a quiet range through to the NYK session making the lows just before moving into the 111.25 area and bouncing around a little and then holding around the 111.40 level to the close.
• AUD: Moving quietly through to the release of the CNY numbers with a quick push higher before dropping quickly back to the 0.7035 from the highs for the day around the 0.7070 area, the market recovered a little for the move to the grey hour before dropping back to the 0.7030 area and recovering into the London session and pushing through to the opening levels, NYK dipped steadily through to make new lows but only just before the end of the London session where the market recover to just above the 0.7050 areas for the close.
• EUR: Euro’s move quietly around the 1.1180-90 for the most part through to the grey hour with the market dipping through the downside but holding just through into the London session, French GDP in line with expectations as did employment numbers in Germany with Eurozone GDP showing a little better than expected and the market started a strong drive through to the 1.1210 area pausing for an hour or so before continuing through to the 1.1230 area for the high of the day into the NYK session, the market drifted from that point mixed numbers in the US session saw the market dropping back before again pushing back to the 1.1220 for the run to the close.

Yesterday’s Premiership results

GBP       GfK Consumer Confidence Apr A -13 | C -13 | P -13

NZD       ANZ Business Confidence Apr A -37.5 | P -38

CNY        Manufacturing PMI Apr A 50.1 | C 50.6 | P 50.5

CNY        Non-manufacturing PMI Apr A 54.3 | C 55 | P 54.8

CNY        Caixin PMI Manufacturing Apr A 50.2 | C 51 | P 50.8

EUR        French GDP Q/Q Q1 (P) A 0.30% | C 0.30% | P 0.30%

EUR        French GDP Y/Y Q1 (P) A 1.10% | C 1.10% | P 1.00%

EUR        German Import Price Index M/M Mar A 0.00% | C 0.30% | P 0.30%

EUR        German GfK Consumer Confidence May A 10.4 | C 10.3 | P 10.4

CHF        KOF Leading Indicator Apr A 96.2 | C 97 | P 97.4

EUR        German Unemployment Change (000’s) Apr A -12K | C -6K | P -7K

EUR        German Unemployment Claims Rate Apr A 4.90% | C 4.90% | P 4.90%

EUR        Eurozone Unemployment Rate Mar A 7.70% | C 7.80% | P 7.80%

EUR        Eurozone GDP Q/Q Q1 (A) A 0.40% | C 0.30% | P 0.20%

EUR        Italian GDP Q/Q Q1 (P) A 0.20% | C -0.10% | P 0.00% | R -0.10%

EUR        German CPI M/M Apr (P) A 1.00% | C 0.50% | P 0.40%

EUR        German CPI Y/Y Apr (P) A 2.00% | C 1.50% | P 1.30%

CAD       GDP M/M Feb A -0.10% | C 0.00% | P 0.30%

CAD       Industrial Product Price M/M Mar A 1.30% | P 0.30%

CAD       Raw Materials Price Index M/M Mar A 2.80% | P 4.60%

USD       Employment Cost Index Q1 A 0.70% | C 0.70% | P 0.70%

USD       S&P/Case-Shiller Composite-20 Y/Y Feb A 3.00% | C 3.10% | P 3.60%

USD       Chicago PMI Apr A 52.6 | C 59 | P 58.7

USD       Pending Home Sales M/M Mar A 3.80% | C 0.70% | P -1.00%

USD       Consumer Confidence Apr A 129.2 | C 126.5 | P 124.1 | R 124.2

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