Daily FX Market Commentary

Andy Harrison

Good Morning,

LMAX Close

USDJPY 111.10 | EURUSD 1.12027 | AUDUSD 0.70236 | NZDUSD 0.66441 | USDCAD 1.3421 | USDCHF 1.01651 | GBPUSD 1.31753 |

LMAX highs and Lows 05.00 GMT

                                Highs | Lows

EURUSD               1.12004 | 1.11806

USDJPY                 110.854 | 110.284

GBPUSD               1.31712 | 1.31177

USDCHF               1.01711 | 1.0152

AUDUSD              0.69984 | 0.69629

USDCAD               1.34853 | 1.34549

NZDUSD               0.66284 | 0.66013

EURCHF                1.13794 | 1.1362

EURGBP               0.85317 | 0.84946

EURJPY                 124.101 | 123.372

For Today

• GBP: Cable was a little adrift from the close on Friday opening just above the 1.3150 level and dipping a little through before regaining its footing and filling the gap steadily through into the final day of Golden week however, once in the Tokyo session the market drifted with stimulus with lower reserve requirements for smaller banks, the market held for a period around the 1.3140-50 areas for several hours before dropping through to the 1.3120 level with some strong volumes moving through the market, and the market moved through into the grey hour, topside offers through to the 1.3180-1.3200 areas with congestion just through the level and possible mixture of light offers with weak stops through the 1.3220 areas leading to stronger congestion on any move through the 1.3250 level and continually increasing through the 1.3300 area. Downside bids light through the 1.3100 area with weak stops a possibility on a move back through the level, stronger bids start to appear on a move through to the 1.3050 areas with stronger congestion then continuing through to the 1.3000-1.2980 where possibly stronger medium-term bids appear.
• JPY: Pre market suggested USDJPY was not to far away from the Friday close however, the opening was some 40 pips away from the close, opening around the 110.70 level the market continued through to the 110.55 area before starting a slow rise through to the 110.85 area and into the Tokyo session before testing steadily through to the 110.30 level before slowly recovering through to the 110.65 areas for the move into the grey hour, Downside bids light through the 110.55 level with increasing bids on a move towards the 110.00 level with strong stops are likely to appear on any dip through the 109.80 areas with strong bids likely to appear on any attempt to move beyond the 109.50 area. Topside offers weak through the 111.00 areas with stronger offers likely to appear on a move beyond the 111.50-60 level into the 112.00-20 area before weak stops start to appear but strong offers from there likely to appear.
  AUD: Oz saw a similar pattern with the market opening around the 0.6980 level and dipped into the low 0.6970’s before recovering through to the Tokyo session just short of the figure level before dropping off quickly through this time to the low 0.6960 area before recovering and ranging quietly through to the grey hour just below the 0.6980. Downside bids into the 0.6950 level likely to be congestive in nature with the market likely to be fairly stubborn through to the 0.6920-00 with strong bids reappearing, topside offers likely to be weak through to the 71 cents level with those offers likely to continue through to the 0.7120 level before weak stops appear and the market is free to push again towards the 72 cents levels.
• EUR: Opening towards its lows around the 1.1175 area before a slow steady rise through to the 1.1200 area into the Tokyo session before ranging in an ever-tightening move through to the grey hour cantering on the 1.1190 level. 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

USD:

US deploys bomber task force, carrier to send message to Iran

CNY/USD:

China considers cancelling trade talks with US this week after Trump threats DJC

China’s Liu likely to delay US trip by 3 days – SCMP

USD/CNY:

Trump says he will increase tariffs on 200B of Chinese goods from 10-25% on Friday WSJ

GBP:

May is said to draft new customs law for Brexit deal with Corbyn BBG

Labour MP’s will not back Brexit deal without second referendum BLG

USD:

Trump to announce new sanctions on anniversary of Iran deal withdrawal AXS

CNY:

PBoC to set lower reserve requirement for smaller banks – RTRS

Today’s Data

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

AUD       TD Securities inflation MoM A 0.20% | P 0.40%

CNY:      Caixin China PMI Services Apr A 54.5 | C 54.2 | P 54.4

0745       EUR        Italy Services PMI Apr C 51.8 | P 53.1

0750       EUR        France Services PMI Apr (F) C 50.5 | P 50.5

0755      EUR        Germany Services PMI Apr (F) C 55.6 | P 55.6

0800       EUR        Eurozone Services PMI Apr (F) C 52.5 | P 52.5

0830       EUR        Eurozone Sentix investor confidence May C 1.1 | P -0.3

0900       EUR        Eurozone retail sales MoM Mar C -0.10% | P 0.40%

Harry Hindsight

• GBP: A quiet Asian session with the market slowly rising towards the 1.3045 area from the 1.3030 level opening the move through to the grey hour saw the market drifting within the range before dipping into the grey hour to test to the 1.3015 area, after and hour into the London session the market dipped through to its lows and held through to the NYK session before rising quickly as chatter about a EU deal formulated between the Conservatives and Labour picked up meaning driving the Cable quickly through to the 1.3175 areas even though the results of the local elections saw ever increasing losses for both the main parties, with ever increasing reports of voting papers spoiled rather than being used, the market dropped back from the highs but steadily pushed through into the close again testing that topside.
• JPY: A quiet session through Asia and London initially slowly drifting from the 111.50 opening areas and holding around the 111.40 area before recovering into the grey hour, London held quietly around the opening level through to NYK in a very tight range before rising quickly through to the 111.70 level on better than expected NFP numbers before slipping slowly off through to the 111.35 and triggering some minor stops and dipping through to the 111.15 before ranging quietly around the 111.20 through to the final hours before dipping to the 111.10 level for the close.
  AUD: Ranging quietly through the Asian and London session dipping away from the 0.7000 level before drifting through to the 0.6985 areas and that range continuing through to the NYK session, NFP initially dipped through to the lows again before quickly reversing with the AUDJPY rising and dragging the AUD with it, pushing through to the 0.7020 level before running into sufficient offers to curb its enthusiasm, the market topped around the 0.7025 areas into the close.
• EUR: A tight range through the Asian session basing along the 1.1170 level through into the grey hour, the move into the London session saw the market drifting through to the 1.1145 level before recovering a little for the move into the NYK session before dipping quickly through to the 1.1135 area and recovering once the NFP was out of the way rallying steadily through to the 1.1200 areas before slowing on the move through and holding quietly to the close.

Weekend News

 

KRW:

1. Korea says N. Korea fired short range missile Joongang

Kim Jong Un’s weapon test may have included ballistic missile – BBG

GBP:

UK Voters Brexit Backlash leaves both May and Corbyn bruised BBG

USD/CNY:

Trump threatens to raise China tariffs before talks this week BBG

Trump says 10% China tariffs will rise to 25% on Friday – BBG

Trump: Trade deal with China continuing too slowly BBG

Trump aides said hurdles remain to reach China trade deal RTRS

EUR:

Eurozone risks, Japanisation and lost decades of economic growth Telegraph

Weidmann joins ECB doubters on Draghi move to soften rate impact – BBG

Yesterday’s Premiership results

AUD       AiG Performance of Service Index Apr A 46.5 | P 44.8

AUD       Building Approvals MoM Mar A -15.50% | C -12.50% | P 19.10%

CHF        SECO Consumer Confidence Apr A -6 | C -3 | P -4

CHF        CPI MoM Apr A 0.20% | C 0.20% | P 0.50%

CHF        CPI YoY Apr A 0.70% | C 0.70% | P 0.70%

GBP       Services PMI Apr A 50.4 | C 50.4 | P 43.9

EUR        Eurozone PPI MoM Mar A -0.10% | C 0.00% | P 0.10%

EUR        Eurozone PPI YoY Mar A 2.90% | 3.00% | P 3.00%

EUR        Eurozone CPI estimate YoY Apr A 1.70% | C 1.60% | P 1.40%

EUR        Eurozone CPI Core YoY Apr (A) A 1.20% | C 1.00% | P 0.80%

USD       Advance goods trade balance Mar A -71.45B | C 73.0B | P -70.9B | R -80.38B

USD       Wholesale inventories MoM Mar (P) A 0.00% | C 0.20% | 0.20%

USD       Change in Non-Farm payrolls Apr A 263K | C 185K | P 196K | R 189K

USD       Unemployment rate Apr A 3.60% | C 3.80% | P 3.80%

USD       Average hourly earnings MoM Apr A 0.20% | C 0.30 | P 0.10% | 0.20%

USD       Services PMI Apr (F) A 53 | C 52.9 | P 52.9 | R 55.3

USD       ISM Non-Manufacturing/Services composite Apr A 55.5 | C 57 | P 56.1

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