Daily FX Market Commentary

Andy Harrison

Good Morning,

LMAX Close

USDJPY 110.06 | EURUSD 1.11655 | AUDUSD 0.69082 | NZDUSD 0.65311 | USDCAD 1.34294 | USDCHF 1.00858 | GBPUSD 1.27241 |

LMAX highs and Lows 05.00 GMT

                                Highs | Lows

EURUSD               1.11724 | 1.11599

USDJPY                 110.261 | 110.024

GBPUSD               1.27430 | 1.27177

USDCHF               1.00986 | 1.00823

AUDUSD              0.69291 | 0.68799

USDCAD               1.34363 | 1.34201

NZDUSD               0.65429 | 0.65115

EURCHF                1.12736 | 1.12602

EURGBP               0.87802 | 0.87632

EURJPY                 123.107 | 122.874

For Today

• GBP: A quiet session for the Cable with the market ranging around the 1.2730 levels testing into the low 1.2720 area before each time rising through to the low 1.2730’s and heading into the grey hour just off the lows. downside bids light through the 1.2700 areas with possible weak stops on any dip through the level to open the market to limited congestion through to the stronger 1.2630 areas, any break beyond here opens a deeper move towards the 1.2500 level before stronger bids make an appearance. Topside offers light back through the 1.2800 level with the chance of a small squeeze higher with a little congestion through to the 1.2850 areas before stronger resistance is expected, a break of the 1.2900 level will likely see stronger buying appearing and the market pushing for the 1.3000 level where the likelihood of strong offers appears.
• JPY: A slow steady rise from the early lows just above the 110.00 area to push through to the mid 110.25 area before slipping slowly back to the 110.20 level for the move into the grey hour with volumes less than you would expect, Downside bids strong into the 109.00 levels with possible stronger stops on a move through the 108.80 areas with stronger bids through into the 108.50 level and increasing congestion through the downside through to the 108.00 level and the lows from the beginning of the year, topside offers light through to the 110.50 levels and likely to see stronger congestion through to the 110.80 and strong offers from there through to the 111.20 level and weak stops on a break through that level.
• AUD: A quiet opening with the market rising on the initial commentary from the RBA to test to the 0.6930 area before drifting through to the Lowe comments and then dropping quickly on the move through the 0.6910 level with weak stops triggered and the market testing through to the 0.6880 areas with another rate cut likely to be sooner rather than later, topside weak stops likely through the current highs and then opening to a quick test to the 0.6940-60 resistance level, any push through this level and the market is likely to find further offers with the economy really unchanged and the new government with a lot to do. Downside bids light through to the 0.6860 level with sentimental bids likely through to the 0.6820 area where stronger bids are likely to appear with increasing bids through to the 0.6780 level before weak stops appear.
• EUR: A light rise from the opening saw the Euro testing through the 1.1170 areas before drifting through the session to test towards the 1.1160 level for the move into grey hour in very quiet trading, Light offers into the 1.1200 areas then sees congestion concentrated around the 1.1240-60 and increasing into the 1.1280 areas with stronger offers through the 1.1300-20 level with weak stops likely to be through the level any stops are likely to find congestion continuing through the 1.1340-6t0 areas and continuing through to the stronger 1.1400 areas, downside bids likely to be limited through to the 1.1140  areas with weak congestion likely through to the 1.1120 level and into the 1.1080 level with weak stops opening the market to a deeper move.

Overnight News

AUD:

RBA easing bias to be put beyond doubt DJ

RBA clears path to cut interest rates – DJ

ScoMo’s key election 2019 tax cut promise faces delay of another year

Morrison election win won’t lessen Australian banks profit risk

RBA: Labour indicators show mixed picture of near-term outlook

RBA Board recognizes risks to its forecasts in both directions

RBA considered two scenarios where rate cut likely appropriate

RBA: Upside risks including accommodative conditions, terms of trade

RBA: Home price drops moderated, modest recovery in auction rates

RBA: Drop line that board sa not strong case for near term move in policy

RBA: Board noted economic forecasts were based on market assumption of lower rates

RBA: Recognised lower rates would have less of an impact than in the past

RBA: However, lower rates would still put downward pressure on AUD, reduce mortgage repayments

RBA: Risks to the global economy remained tilted to the downside

RBA: GDP growth to be supported by higher exports new mining investment projects

APRA proposes removing guidance on using 7% interest rate to assess mortgage affordability

APRA proposes adis serviceability assessments incorporate an interest rate buffer of 2.5%

APRA proposes banks would be permitted to review, set own minimum interest rate floor for use in serviceability assessments

APRA says prudent lenders should use rates comfortably above the minima

Apra says current Australian interest rate environment does not warrant uniform mandated rate floor of 7%

ANZ consumer confidence index rises to 117.2 vs. 114.8

RBA’s Lowe Unemployment can go below 5% without raising CPI concerns

Lowe: recent data means jobs less likely to surprise on upside

Lowe: to consider cutting interest rates at June policy meeting

Lowe: Lower rates would support employment, help lift inflation toward target

Lowe: Need further improvement in labour market, jobless rate to tall under 5% without inflation concerns

Lowe: looking for tax relief to help lift household income growth

USD:

Sudden rise in non-performing loans comes despite low rates and strong growth FT

Huawei gets temporary licence amid US sanctions row SKY

Trump vows China’s economy won’t surpass US on his watch

CNY:

China’s debt iceberg shows biggest risk in state dominated areas BBG

China runs low on ammo as its readies retaliatory tariffs Nikkei

China has a big currency decision to make soon – BBG

EUR:

Bundesbank warning on German economy and Italian cracks spark new Eurozone fears Telegraph

Salvini vows to change EU tax rules as aide turns fire on PM – BBG

USD/CNY:

US warns of possible data leaks from Chinese made drones FT

GBP:

The Brexit party is on course for a huge European election New Statement

TRY:

Turkey steps up Lira defence with move to slow down FX purchases – BBG

Today’s Data

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

AUD       RBA Minutes May

08:30     GBP       BoE Inflation Report Hearings

10:00     GBP       CBI Trends Total Orders May C -5 | P -5

14:00     EUR        Eurozone Consumer Confidence May (A) C -7.7 | P -7.9

14:00     USD       Existing Home Sales Apr C 5.35M | P 5.21M

Harry Hindsight

 

• GBP: A stronger opening with the market testing to the mid 1.2740’s on the opening before drifting to fill the gap on the charts and holding through into the Tokyo session around the 1.2730 level, light buying saw a minor rally through to the 1.2740 area again before ranging through to the grey hour in the 1.2730-40 area, grey hour selling saw the market testing the lows just above the 1.2725 area before London moved in with strong buying to push up through the 1.2750 areas before running out of steam and dropping back to the 1.2740 level for the move into the NYK session, quick selling saw the market pushing through to the 1.2720 area bouncing but again testing the lows through to the 1.2715 level before settling into a steady rise to the close just above the 1.2720 levels.
• JPY: Opening a little stronger the market quickly closed the gap and headed from the lows around the 110.00 level to push through into the Tokyo session pushing through to the 110.30 level in early morning trading before drifting through to the grey hour, early sellers started a steady fall through the London session into the NYK session to test through to the 109.80 areas before holding and putting in a slow rise through to finish the day just above the 110.00 levels.
• AUD: Strong opening after a surprise win for the Conservative incumbents against the odds and the market drifting a little around the 69 cents area before testing a little back to the 0.6890 areas before rallying slowly higher through early Tokyo to test to the 0.6920 area and holding through to the London opening, early buying from the grey hour saw the market testing through to the 0.6930 areas before running out of steam and dropping back to the 0.6920 the move through to the NYK session saw very little movement and the market then steadily drifting through to the close holding around the 0.6910 level.
• EUR: Limited range through the day but reasonably choppy, opening a little higher and push through into the mid 1.1160’s for early Tokyo before slowly drifting on doomsayer commentary for the Eurozone but nothing really with substance and testing to the 1.1150 levels for the lows of the day before ranging around the 1.1155-65 level through into the NYK session and pushing a little higher through to make the highs of 1.1175 and slipping back for a quiet close.

Yesterday’s Premiership results

GBP       Rightmove House Prices M/M May A 0.90% | P 1.10%

GBP       Rightmove House Prices Y/Y May A 0.10% | P -0.10%

JPY         GDP Q/Q Q1 (P) A 0.50% | C -0.10% | P 0.50%

JPY         GDP Deflator Y/Y Q1 (P) A 0.20% | C 0.20% | P -0.30%

JPY         Industrial Production M/M Mar (F) A -0.60% | P -0.90%

EUR        German PPI M/M Apr A 0.50 | C 0.30% | P -0.10%

EUR        German PPI Y/Y Apr A 2.50% | C 2.40% | P 2.40%

EUR        Eurozone Current Account (EUR) Mar A 24.7B | C 24.2B | P 26.8B | R 27.9B

 

Any opinions, news, research, analyses, prices or other information contained on this Blog, whether by LMAX, its employees, partners or contributors, does not constitute investment advice nor has it been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the material contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. Whilst information provided on this Blog may help with your investment research you must consider carefully whether you should make (or refrain from making) investment or other decisions based on what you see without doing further research on the investments you are interested in. Participating in this Blog cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you. LMAX has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

LMAX will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the material produced in this Blog was obtained from sources deemed to be reliable, LMAX does not provide any guarantees about the reliability of such sources.

Consequently, any person acting on it does so entirely at his or her own risk.

If you currently hold an account with LMAX for the purposes of trading FX and CFD’s, you are encouraged to use a different Username and Password to access the Blog or any other online systems. The Blog is a place to learn, discuss and share information and ideas with Blog followers. It is not a place to slander, use unacceptable language or to promote LMAX or any other FX, Spread Betting and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.