Daily FX Market Commentary

Andy Harrison

Andy Harrison

Good Morning,

LMAX Close

USDJPY 107.177 | EURUSD 1.13668 | AUDUSD 0.69614| NZDUSD 0.66424 | USDCAD 1.31687 | USDCHF 0.97546 | GBPUSD 1.2689 |

LMAX highs and Lows 05.00 GMT

                                Highs | Lows

EURUSD               1.13722 | 1.13527

USDJPY                 107.503 | 107.138

GBPUSD               1.26930 | 1.26728

USDCHF               0.97707 | 0.9745

AUDUSD              0.69696 | 0.69516

USDCAD               1.31951 | 1.31742

NZDUSD               0.66621 | 0.65939

EURCHF                1.10937 | 1.10789

EURGBP               0.89600 | 0.89498

EURJPY                 122.089 | 121.795

For Today

  • GBP: Another slow day with limited range and volume for the Cable, opening around the 1.2690 areas the market moved into the Tokyo session slowly drifting away from close to the 1.2695 area to lightly test the 1.2675 level but generally held through the session just below the open and around the 1.2685 level, likely strong congestion above the 1.2760 level with possibly weak stops on a test through the 1.2780 areas and a quick push through the sentimental levels and momentum building to a stronger test through to the 1.2900 level and limited congestion in the area likely to slow the rise however, very little technical wise to stop further movement higher other than Brexit news. Downside Strong congestion on any move through the 1.2650 level and building into the 1.2620-00 area, a dip through the level is likely to see some weak stops however, the downside is possibly going to see better buyers moving in on any dips through towards the 1.2500 levels and limited interest from sellers for the time being.
  • JPY: Reasonably quiet with very little in it with the early range seeing a spike to the 107.10 level and then pushing into the Tokyo session lifting to the 107.25 level, the market continued to drift until into the RBNZ release and then quick buying of NZDJPY appeared in the market as the carry trade reappeared, the USDJPY leg took much of the pressure and rose steadily through to the 107.50 levels before holding quietly on the move through to the grey hour, Congestion likely through the downside with weak stops on a break through the 106.80 areas and support are likely to start appearing on any push through to the 106.20-00 areas and the congestion then increasing on any attempt to break through to the 105.80 levels. Topside offers light through to the 108.00 level with weak stops likely on a break above the 108.30 areas and opening a move through to the 108.80-109.00 level where better offers are likely to appear.
  • AUD: Oz was kept in a tight range with a little chop around the RBNZ announcement, dipping a little from the opening to test the 0.6955 area the market recovered in the move into the Tokyo session and slowly pushed to the 0.6965 level only to range around the level for the most part to the grey hours, brief dip on the RBNZ   announcement saw the low made just above the 0.6950 level before rising back to the holding level. Topside offers from the current levels are a little thin but increase as the market pushes towards the 0.6980 level with weak stops on a move through the 0.7050 and then some stronger offers appearing to slow the market from squeezing higher, Downside bids light through the 69 cents level with limited stops likely to appear before stronger bids start to reappear on a move through the 0.6850 level and increasing the closer to the 68 cents level the market gets.
  • EUR: Opening around the 1.1370 level the market held quietly through to the Tokyo opening dipping to the 1.1360 level before rising back the sessions high just above the opening level, a steady drift from above the 1.1370 areas saw the market slowly push through to the mid 1.1350’s for a quiet move into the grey hour, Congestive offers still remain to the topside with possible weak stops above the 1.1420 level and lighter congestion from there through the usual 1.1440-60 area to build into stronger offers on any push for the 1.1480-1.1500 area, even through this level the market continues to see resistance to the 1.1550 level and the market moving into the ranges from last summer, downside bids light back through to the 1.1350 area with some possible stronger congestion in the area however, through there leaves very little until the approach of the 1.1320-00 area where some older bids could still be holding.

 

Overnight News

NZD:

IMF says NZD level not an immediate concern

USD:

Fed’s Barkin says de doesn’t know if rate cut will be needed – DJ

Barkin: Monetary policy is still modestly accommodative

Barkin: Think were still shy of having monetary policy be the constraint to the economy

Barkin: Have to be very humble about how much a particular increase of decrease is going to move activity, inflation – DJ

Fed’s Bullard: He was approached by Trump administration in recent months about possible seat on Fed board, but said he was happy in his current job – DJ

Bullard: Part of his preference for a rate reduction in June was tactical, would prefer to move rather than promise a move in the future – DJ

Bullard: He thinks two rate reductions by end of year would ensure a soft landing move policy from slightly restrictive to slightly accommodative

Bullard: If Fed does cut rates in July, he does not feel a need to also end reduction in the balance sheet since that is already going to end in September – DJ

Trump’s Huawei ban side stepped by intel, and Micron – NYT

Trump says US will use overwhelming force if Iran attacks – BBG

Markets bullying Federal reserve on interest rate cuts – FT

US debt set to soar to unprecedented levels over the next 30 years CBO warns – AXS

EUR:

ECB to Italian Government: Your gold is ours now – Zero Hedge

CNY:

China opposes possible US restrictions on banks – Global Times

China is losing the war against shadow banking – BBG

OIL:

API reports US crude stockpiles dropped 7.55M BBL last week – BBG

NZD:

RBNZ maintains benchmark interest rate at 1.5%

RBNZ lower OCR may be needed over time

RBNZ Discussed the merits of lowering the OCR at this meeting

RBNZ Leaves rates on hold but points to cuts ahead

ANZ now sees RNBZ cutting cash rate to 1% in August and November

 

Today’s Data

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

NZD       RBNZ Official Cash Rate (JUN 26) A 1.50% | C 1.50% | P 1.50%

06:00                     EUR German GfK Consumer Confidence (JUL) C 10 | P 10.1

08:00                     CHF Credit Suisse Survey Expectations (JUN) P -14.3

08:30                     GBP BBA Loans for House Purchase (MAY) C 41000 | P 42989

09:15                     GBP BOE’s Carney, Cunliffe, Tenreyro and Saunders Speak

11:00                     USD MBA Mortgage Applications (JUN 21) P -3.4%

12:30                     USD Durable Goods Orders (MAY P) C -0.1% | P -2.1%

12:30                     USD Durables Ex Transportation (MAY P) C 0.1% | P 0.0%

12:30                     USD Advance Goods Trade Balance (MAY) C -$71.9b | P -$72.1b

12:30                     USD Retail Inventories (MoM) (MAY) P 0.5%

12:30                     USD Wholesale Inventories (MoM) (MAY P) C 0.5% | P 0.8%

14:30                     USD DOE U.S. Crude Oil Inventories (JUN 21) P -3106k

14:30                     USD DOE U.S. Gasoline Inventories (JUN 21) P -1692k

15:30                     USD Fed’s Daly Speaks to the Forecasters Club of New York

23:50                     JPY Retail Trade (YoY) (MAY) C 1.2% | P 0.5%

23:50                     JPY Retail Trade s.a. (MoM) (MAY) C 0.6% | P 0.0%

23:50                     JPY Large Retailers’ Sales (MAY) C 0.2% | P -1.8%

 

Harry Hindsight

 

  • GBP: A slow steady climb through the Asian session pushing from the opening around the 1.2735 level to push through the 1.2750 area and range around the level through into the London session, early London buyers saw strong buyers appearing and the market testing through an old trendline on a quick stab to the 1.2785 area before dropping back in the same fashion to just below the 1.2760 level and the old trendline for the move into the NYK session, NYK were less enamoured with Cable and to be fair it was a USD market from then on, with Cable dropping on the opening through to the opening levels and then a gradual drift through to just after London closed then dropping from the 1.2720 level quickly through the 1.2700 level before renewing the drift to the lows around the 1.2675 area, a quick rally into the end of the CME session and back above the 1.2700 level before drifting again to the close.
  • JPY: Opening around the 107.30 level the market struggled through into the Tokyo session with very little direction making early highs just above the 107.40 level before starting a slow steady drift as the market digested April policy meeting minutes and a reluctance to invest rather than safe haven flows. The drift increased through the 107.30 level testing quickly through to the 107.10 level then slowing as the market met limited profit taking on the wary through to the 107.00 level, the move to the grey hour saw the lows made around the 106.80 area before bouncing for the London opening and holding for a few hours around the 107.00 level, and ranging through the session around the level until late in the session where the USD jumped higher after commentaries to hit the highs again before drifting through to the close slightly off from the opening.
  • AUD: A slow rise from the opening through to the 0.6970 levels before dipping quickly back to test the 0.6955 level and ranging through to the London session around the 0.6960 levels, London were slow buyers pushing gradually higher to test the previous highs just above 0.6970 level and remaining in the area through to deep into the NYK session, eventually NYK extended the highs just after the end of London running to the high 0.6970’s before dropping quickly on the USD rally and pushing through to just above the 0.6940 area eventually moving off the level once the market had decided that the downside was not going to break and holding around the 0.6960 level through to a quiet run to the close.
  • EUR: A slow run higher through the bulk of the Asian session pushing through the 1.1410 level but unable to make any real solid gains before dipping away into the grey hour and steady selling through London to the NYK session and the market holding around the 1.1380 area, NYK saw very little in early trading and only once the commentary from Powell and Barkin were over did the Euro move with conviction testing quickly through towards the 1.1340 level bouncing back to the 1.1390 and then drifting to the close.

 

Yesterday’s Premiership results

NZD       Trade Balance 12mth YTD (MAY) A 5.492b | C 5.53b | P 5.459b

NZD       Trade Balance (MAY) A 264M | C 200m | P 433m

NZD       Exports (MAY) A 5.81b | C 5.61b | P 5.55b

NZD       Imports (MAY) A 5.54b | C 5.40b | P 5.11b

JPY         BOJ Minutes of April Policy Meeting (APR)

JPY         Corporate Service Price (YoY) (MAY) A 0.8% | C 1.0% | P 0.9% | R 1.0%

AUD       RBA’s Bullock Gives Speech in Berlin

GBP        CBI Reported Sales (JUN) A -42 | C -3 | P -27

GBP        CBI Total Dist. Reported Sales (JUN)         A -22 | C -8 | P -20

CAD       Wholesale Trade Sales (MoM) (APR) A 1.7% | C 0.3% | P 1.4%

USD        Fed’s Williams Makes Opening Remarks at Finance Forum

USD        House Price Index (MoM) (APR) A 0.4% | C 0.2% | P 0.1%

USD        Richmond Fed Manufact. Index (JUN) A 3 | C 2 | P 5

USD        Revisions: Retail Sales

USD        New Home Sales (MAY) A 626K | C 685k | P 673k | R 679k

USD        New Home Sales (MoM) (MAY) A -7.8% | C 1.8% | P -6.9% | R -3.7%

USD        Fed’s Bostic Speaks on Housing

USD        Powell Discusses Economic Outlook and Monetary Policy

USD        Fed’s Barkin Speaks in Ottawa

 

 

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