Daily FX Market Commentary

Andy Harrison

Good Morning,

LMAX Close

USDJPY 108.536 | EURUSD 1.12179 | AUDUSD 0.68525 | NZDUSD 0.64953 | USDCAD 1.34133 | USDCHF 0.99909 | GBPUSD 1.25332 |

LMAX highs and Lows 05.00 GMT

                                Highs | Lows

EURUSD               1.12340 | 1.12209

USDJPY                 108.583 | 108.259

GBPUSD               1.25439 | 1.25119

USDCHF               0.99897 | 0.99724

AUDUSD              0.68571 | 0.68331

USDCAD               1.34125 | 1.34023

NZDUSD               0.65005 | 0.64907           

EURCHF                1.12130 | 1.12012

EURGBP               0.89748 | 0.8949

EURJPY                 121.870 | 121.60

For Today

• GBP: Opening around the 1.2535 level the market edged through the 1.2540 level peaking around the 1.2545 before some stronger selling moved into the market and the market dipping through towards the 1.2510 as long GBPJPY crosses began cutting out of positions, a minor bounce saw the market push back from the lows to run into the grey hour holding the 1.2525 level, downside bids into the 1.2500 still likely to be a little stubborn, with congestion likely to appear on any dips through however, the market does seem to be optimistic and any push through could  see strong stops appearing and a battle for any move through to the 1.2400 level with limited bids into the 1.2450 areas. Topside offer light through the 1.2600 level and with limited stops on the move higher the possibility of a short squeeze ever present however, the distance to that weakness is increasing each day with 1.2700 area likely to be a more solid area for resistance.
• JPY: USDJPY struggled for direction in early trading with the market moving around the 108.55 areas before moving into the RBA announcement and AUDJPY selling dominating the USDJPY on a dip through to the 108.35 level holding for a short period and then moving again to penetrate the 108.30 levels with a minor dip to the 108.25 level before moving back to the 108.30 areas for the grey hour, Topside congestion light through to the 109.00 area with stronger offers competing with weak stops on a move through the 109.20 areas with the offers increasing on any move towards the 109.60 level and likely to be stubborn on any test of the 110.00 level, downside bids light through to the 108.00 area with stronger bids likely to appear on any dip through the level and while stops may be lurking the 107.50 is likely to see increased buying interest.
• AUD: Light buying but with very little direction and topping around the 0.6855 areas for the RBA minutes, and the comments were possibly a little more dovish than expected, dipping quickly to the 0.6840 and then holding the level for a long period of time before again dipping to the 0.6830 areas as the bids disappeared, the move to the grey hour saw the market holding the mid 0.6830’s in quiet trading, congestive bids through to the 68 cents level and an old trendline likely to slow the market until a break through and the lows from the beginning of the year opening a deeper move. Topside offers light through to the 0.6900 area with congestive offers giving way to possibly stronger stops and the market then opening to the 0.6980 areas where stronger offers are likely to appear.
• EUR: Light buying from the opening saw the Euro slowly rising through the day as the market pushed through from the opening around the 1.1220 level to push above the 1.1230 area and hold through to the grey hour, Topside sees limited sellers into the 1.1275 level with light offers quickly turn into  stronger offers building again into the 1.1300 areas with strong stops likely on a test through the 1.1320 level. Downside bids likely to continue through the 1.1200 areas through with congestion likely to dominate the 1.11 handle with particular strength through to the 1.1180 level and again around the 1.1140-60 areas before facing the lows from May.

 

Overnight News

Fitch:

Fitch cuts World growth forecast for 2020 on trade uncertainty

USD/CNY:

Tariff procedure rolling ahead of G20 FX Research

USD:

Fed stimulus just ain’t what it used to be WSJ

NYK Fed factory gauge drops by record to two year low BBG

CNY:

China traders reassess counterparties after bank seizure – BBG

OIL:

Oil short selling surges as Global demand outlook dims BBG

AUD:

Australia risks slow decline without reform AFR

RBA Head of Financial stability Kearns: Arrears on housing loans have risen

Kearns: Arrears are by no means at a level that poses Financial stability

Kearns: Over 99% of housing loans are on, or ahead of schedule

Kearns: Loan arrears are lower in Australia than in many other advanced economies

Kearns: Arrears driven by weak income growth, house price falls, rising unemployment in some areas

Kearns: Rollover from interest only loans may have added to arrears, but temporary

Kearns: Tighter lending standards might also temporarily add to arrears

Kearns: Arrears rate could continue to edge higher for a bit longer

Kearns arrears should not pose a risk as long as unemployment stays low

RBA: Lower rates not only policy option to help cut jobless rate

RBA: Lower rates unlikely to spur material rise in borrowing

RBA: Jobs market particularly important in assessing more easing

RBA: Risks to growth, inflation forecasts in both directions

RBA: Factors damping inflation likely to continue for some time

RBA: Further policy easing more likely than not in period ahead

CNY/HKD:

China is courting disaster in Hong Kong PS

MXN:

Mexico growth seen at 1.2% in IMEF survey Deputy Banxico Gov.

USD/MXN:

Trump says ICE to start removing illegal immigrants next week – BBG

KRW:

N. Korea has built 10 more nukes CHO

GBP:

Chancellor Hammond prepared to resign over May’s spending plans – PA

 

Today’s Data

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

NZD       Westpac Consumer Confidence Q2 A 103.5 | P 103.8

AUD       House Price Index Q/Q Q1 A -3.00% | C -2.60% | P -2.40%

AUD       RBA Minutes Jun                             

09:00     EUR        Eurozone Trade Balance (EUR) Apr C 16.4B | P 17.9B

09:00     EUR        Eurozone CPI M/M May (F) C 0.20% | P 0.70%

09:00     EUR        Eurozone CPI Y/Y May (F) C 1.20% | P 1.70%

09:00     EUR        Eurozone CPI Core Y/Y May (F) C 0.80% | P 0.80%

09:00     EUR        German ZEW Economic Sentiment Jun C -5.8 | P -2.1

09:00     EUR        German ZEW Current Situation Jun C 6.1 | P 8.2

09:00     EUR        Eurozone ZEW Economic Sentiment Jun C -3.6 | P -1.6

12:30     CAD       Manufacturing Sales M/M Apr C 0.40% | P 2.10%

12:30     USD       Housing Starts May C 1.24M | P 1.24M

12:30     USD       Building Permits May C 1.30M | P 1.29M

22:45     NZD       Current Account (NZD) Q1 C 0.16B | P -3.26B

23:50     JPY         Trade Balance (JPY) May C -0.80T | P -0.11T

 

Harry Hindsight

 

• GBP: Choppy opening saw the market pricing wide dipping to the 1.2580 level and then pushing to the 1.2595 level before settling down to range around the 1.2590 level through to the London session, drifting from the London opening the market tested through to the 1.2570 levels before starting a slow recovery through the session and through to deep into the NYK session pushing through the 1.2600 level, PM discussions and a fractured political system saw the market dropping back again with afternoon discussion and comments from the different factions, the dip through the 1.2580 level this time saw very little support and weak stops triggering through to the 1.2555 level with a minor bounce before continuing the move once the London session was out of the way to test into the 1.2530’s and unable to move off the level through to the close.
• JPY: Another range bound day with the market opening a little lower and then recovering steadily through to the Tokyo session filling in the small gap on the charts, fixing demand saw the market start to rise again pushing through to the 108.60 level and quickly testing then through to the 108.70 level before running out of steam and dipping back to range through to the London opening around the 108.60 areas, the market drifting in early selling only to the 108.55 area and after several hours of tight range trading started a slow push for the highs of the day testing into the NYK session pushing a little above the 108.70 area before dropping quickly back with a poor Empire state number and back to the opening levels to base along that level to the close with only one other minor push above the 108.65 level.
• AUD: Early trading saw a gradual climb on limited volume pushing slowly into the Tokyo session from the opening around the 0.6870 areas before testing towards the 0.6885 area and holding deep into the session and slipping slowly through into the London session testing back to the opening levels and holding quietly deep into the London session before dipping through the level and testing through to the NYK session holding the 0.6865 level, late London pushed the market lower in a quick move testing the 0.6850 level and the run to the close saw limited action from then on holding the lows through to the close just off the level.
• EUR: Opening unchanged the market slowly rose through the Asian session from the 1.1210 level to push into midsession just above the 1.1220 areas holding for a short time before starting a slow drift through into the grey hour, the move into the London session saw the lows made and as with the day before the market held the 1.1200 area before starting to recover a little after the release of better than expected labour costs to hold in the 1.1210-20 level through to the NYK session and a quick rise on poor NYK manufacturing numbers testing quickly through towards the 1.1250 area, the market held the area for a period before the buyers disappeared and the market dipped back quickly for the London close, while the market reversed after London had left the downside trading wasn’t over with and the market pushed back into the 1.1210-20 range for the run to the close.

 

Yesterday’s Premiership results

GBP       Rightmove House Prices M/M Jun A 0.30% | P 0.90%      

EUR        Eurozone Labour Costs Y/Y Q1 A 2.40% | C 2.60% | P 2.30%         

CAD       International Securities Transactions (CAD) Apr A -12.8B | P -1.49B | R -1.56B

USD       Empire State Manufacturing Jun A -8.6 | C 11 | P 17.8     

USD       NAHB Housing Index Jun A 64 | C 67 | P 66

 

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