Daily FX Market Commentary

Andy Harrison

Good Morning,

LMAX Close

USDJPY 110.764 | EURUSD 1.11994 | AUDUSD 0.69928 | NZDUSD 0.66098 | USDCAD 1.34485 | USDCHF 1.0179 | GBPUSD 1.30961 |

LMAX highs and Lows 05.00 GMT

                                Highs | Lows

EURUSD               1.12136 | 1.11967

USDJPY                 110.853 | 110.589

GBPUSD               1.31322 | 1.30919

USDCHF               1.01788 | 1.01632

AUDUSD              0.70477 | 0.69806

USDCAD               1.34587 | 1.3410

NZDUSD               0.66331 | 0.65929

EURCHF                1.13964 | 1.13913

EURGBP               0.85533 | 0.85381

EURJPY                 124.158 | 123.909

For Today

• GBP: The market saw a slow but steady rise through the session pushing through to the 1.3130 into the grey hour, light offers through the 1.3150 area with the market likely to see increasing offers on any push through to the 1.3180-1.3200 where strong offers await, a push through the 1.3220 level is likely to see some weak stops and the market opening through to the 1.3250 areas and increasing offers thereafter, 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: Very limited movement to the USDJPY rising from a weak opening around the 110.60 level and then quietly rising through to the Tokyo session pushing to the 110.85 areas for the fix period before drifting back to the opening level and holding quietly just off those lows 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: A slow rise from a low opening around the 0.6985 area to push lightly above the 0.7000 level and holding through to the RBA announcement, unchanged saw a kneejerk reaction with the market dipping to 0.6985 level and quickly pushing through to the 0.7050 areas to hold around the 0.7045 into the grey hour, 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: A slow rise for the Euro from the closing areas to push back through the 1.1200 level holding for a couple of hours around the level before starting a second steady rise through to the 1.1210 area making the highs on the RBA announcement before drifting into the grey hour, 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

AUD:

Apr Construction index falls 3 pts MoM to 42.6

RBA: 1Q inflation noticeably lower than expected

RBA: Underlying inflation at 2% 2020

RBA: Explicitly stated they are paying close attention to labour market

RBA: Further jobs improvement likely needed to meet CPI target

ZAR:

Assets signal rising anxiety as election nears BBG

USD:

US deployment triggered by intelligence warning of Iranian attack DJ

Fed issues more warnings on hazards of high-risk corporate debt – BBG

USD/CNY:

Lighthizer: Over the course of the last week have seen an erosion in commitments from China

Mnuchin: China moved away from language in the agreement that would have changed it substantially

Lighthizer: China was reneging in commitments

Lighthizer: Over the last week or so Chinese pulled back and that was what precipitated Trumps tweet

Lighthizer: We are continuing talks, China delegation will be here Thursday and Friday

Lighthizer: He expects htat the Chinese vice premier will attend the talks

Mnuchin: It would be unfortunate if we cannot conclude an agreement

Mnuchin: The entire economic team is unified in recommending to Trump that the US go ahead with tariffs if there is not an agreement by Friday

Mnuchin: We are not going to negotiate to go backwards, says we have negotiated in good faith

Lighthizer: Trump would like a deal with substantial structural changes, that is not where we are right now

Lighthizer: USTR will probably put out a notice on Tuesday about the increase in tariffs to 25% on $200B of Chinese goods

CNY/USD:

China ready for temp breakdown in talks Global times

China impact controllable if talks fail Global Times

GBP:

Tory MP’s will move to oust Theresa May this week if she agrees Brexit deal with Labour

NZD:

RBNZ seen cutting rate to new low as economy cools BBG

TRY:

Election board nullifies Istanbul mayor vote – Haberturk

Today’s Data

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

JPY         PMI Manufacturing Apr (F) A 42.6 | C 49.5 | P 49.5

AUD       Trade Balance (AUD) Mar A 4.95B | C 4.49B | P 4.80B | R 5.14B

AUD       Retail Sales M/M Mar A 0.30% | C 0.20% | P 0.80% | R 0.90%

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

4:30        AUD       RBA Rate Decision A 1.50% | C 1.25% | P 1.50%

6:00        EUR        German Factory Orders M/M Mar C 1.50% | P -4.20%

7:00        CHF        Foreign Currency Reserves (CHF) Apr C 756B | P 756B

9:00        EUR        EU Economic Forecasts

14:00     CAD       Ivey PMI Apr C 51.5 | P 54.3

Harry Hindsight

• GBP: Opening lower from Friday the market recovered to fill the gap on the charts before slowly drifting through the day with the market slipping through to the London session holding the 1.3120 areas slowing its decent but continuing through to the NYK session testing too the 1.3080 level and the low of the day and NYK arresting the slow decline to push too the 1.3100 level and holding for a long drive through to the close.
• JPY: Opening around the 110.70 level the market dipped from the opening levels through to the 110.55 area before recovering a little to test into the Tokyo session around the 110.85 level before renewing its move to the downside, this time the market tested to the 110.30 level bouncing off the area and pushing steadily through to the grey hour testing back to the 110.85 area again with good volumes moving through the market, the move into the London session holding around the 110.75 level before a slow rise through to the NYK session pushing through to the 110.95 level and testing the level several times on a steady move through to the close with the final minutes seeing stronger selling moving in to 110.75 for the end of the day.
• AUD: The Oz finished the day pushing above the 0.7020 level on Friday and while the early call was for a quiet opening the actual opening saw the Oz testing the 0.6980 level briefly recovering before moving again to dip into the low 0.6965 area to make the lows for the day, the move through to the grey hour saw some limited recovery testing through to the 0.6990 area and holding around the level deep into the NYK session before attempting the 70 cents level and a quick dip into the close.
• EUR: Opening around the 1.1185 areas the market dipped through to the 1.1175 area before rising to fill the gap on the charts to the 1.1200 area before dipping again into the Tokyo session the market didn’t go quiet so deep before ranging around the 1.1190 level through to deep into the London session before rising a little through to the NYK session testing to the 1.1205 area, NYK pushed to the lows from the opening but steadily bought the market too its highs testing towards the 1.1210 level into the London close before drifting a little through to the end of the day.

Yesterday’s Premiership results

AUD       TD Securities Inflation M/M Apr A 0.20% | P 0.40%

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

EUR        Italy Services PMI Apr A 50.4 | C 54.4 | P 53.1

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

EUR        Germany Services PMI Apr (F) A 55.7 | C 55.6 | P 55.6

EUR        Eurozone Services PMI Apr (F) A 52.8 | C 52.5 | P 52.5

EUR        Eurozone Sentix Investor Confidence May A 5.3 | C 1.1 | P -0.3

EUR        Eurozone Retail Sales M/M Mar A 0.00% | C -0.10% | P 0.40% | R 0.50%

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