Daily FX Market Commentary

Andy Harrison

Andy Harrison

Good morning,

 

LMAX Close

USDJPY 106.53 | EURUSD 1.13082 | AUDUSD 0.69295 | NZDUSD 0.64968 | USDCAD 1.35509 | USDCHF 0.9485 | GBPUSD 1.25209 |

 

LMAX Highs and Lows 0500 GMT

Highs | Lows  

EURUSD               1.13260 | 1.13072

USDJPY                106.638 | 106.388

GBPUSD               1.25425 | 1.25102

USDCHF               0.94503 | 0.94366

AUDUSD              0.69616 | 0.69293

NZDUSD               0.65141 | 0.6450

USDCAD               1.35572 | 1.35402

EURCHF               1.06925 | 1.06839

EURGBP               0.90432 | 0.90256

EURJPY                120.674 | 120.369

 

For Today

 

  • GBP: Rising through from the opening around the 1.2515 level to test through into the early part of Tokyo pushing just above the 1.2540 areas running at the level a couple of times over the course of the early morning the market failed the second time to drift lower through the session to the grey hour testing to the Asian markets base area around the 1.2513-15 area, strong congestion likely on a move to the 1.2550 area with weaker offers through the level on a push for the 1.2600 level before congestion reappears around the 1.2630 level, downside bids light through to the 1.2400 level and possible weak stops on a dip through the level before increasing bids into the 1.2350 areas, congestion on any move through the level to the 1.2300  areas before opening the downside 1.2250 area for a test and possibly the key level for the short term.
  • JPY: Very quiet USDJPY today with the market opening around the 106.50 level and moving through into the Tokyo session testing just below the 106.40 area from the fix only to recover and push steadily through to the 106.60 level with a minor push towards the 106.65 area before returning to a tight range around the 106.50 level for the grey hour, Downside bids into the 106.20 area through to 105.80 possible weak stops through here 105.50 has primarily been a tough level in the dips in 2018 and 2019 so strong congestion likely to appear and continue through to the 104.80 levels. Topside offers increasing through the 107.80 area and likely to continue through to the 108.10-20 area before weak stops appear and limited offers through to the 108.50 area where steady offers are likely to appear through to the 109.00 levels.
  • AUD: A steady rise from the opening around the 0.6930 level pushing through into the Tokyo session testing through the 0.6940 level before pausing for the fix saw the market running again pushing this time to the 0.6950 area and a further pause before heading to the high for the session with the Oz being tugged along with the NZD before the RBNZ release, a steady drift initially and a spike through to the 0.6935 area before ranging through to the London session around the 0.6940 areas for the grey hour, Topside offers likely to be light through the 0.7000 area and stiffen on any move through to the 0.7050-0.7100 area, once through the 0.7120 area the possibility of a small squeeze however, Downside bids light through to the 0.6800 area and continuing on any push through to the 0.6780 level is likely to see stronger stops appearing and the downside opening to a deeper move. With limited bids through to the 0.6700-0.6680 before stronger bids appear.
  • EUR: Opening around the 1.1310 areas into the Tokyo session to steadily rise on limited action to range around the 1.1320 areas with minor pushes to the 1.1325 area and basing for the most part 1.1315 through to the grey hour, Topside congestions through the 1.1350 level with increasing offers likely through to the 1.1400 level with strong stops likely on a move through the 1.1420 area to open up a quick move through to the 1.1450 area before slowing as the market moves to the sentimental 1.1480-1.1520 area and possibly a bid tone. Downside bids light through the 1.1300 level and weak stops through the 1.1280 level are likely to be light and quickly absorbed through any further drop to the congestive bids around the 1.1250 area.

 

Overnight News

 

EUR:

EU May opt to keep Americans out when external borders open – BBG

Macron says EU virus package advancing in talks with Dutch PM

Germany orders local virus lockdowns since easing, outbreak linked to food factory

USD/CNY:

Mnuchin: US-China decoupling will occur if American firms cannot compete fairly – SCMP

China has picked up its game on trade with US – Trump adviser

AUD/CNY:

As China diversifies imports, time running out for Australia – Global Times

USD:

The COVID Shock to the USD – Project Syndicate

NZD:

RBNZ: Maintains benchmark interest rate at 0.25%

RBNZ: Maintains its large-scale asset purchase programme at NZ$60b

RBNZ: Monetary policy committee prepared to use additional monetary policy tool as necessary

RBNZ: Committee will review large scale asset purchase quantum at regular intervals

RBNZ: Rising NZD has put further pressure on export earnings

RBNZ: Monetary policy will continue to provide significant support

RBNZ: The negative economic impact on NZ is exacerbated by the required international border restrictions

RBNZ: Committed to meeting our inflation and employment mandate

RBNZ: Committed to reviewing quantum of QE program

RBNZ: Policy committee reached consensus on rates decision

RBNZ: Prepared to provide additional stimulus as necessary

RBNZ: Prepared to expand LSAP program as necessary

RBNZ: Govt. fiscal stimulus slightly larger than assumed

RBNZ: Cause for some confidence but economic challenges remain

RBNZ: Broader tools include term lending facility, lower OCR

RBNZ: NZD Appreciation places pressure on export earnings

RBNZ: Broader tools also include foreign asset purchases

RBNZ: Not yet clear if easing is sufficient to meet mandate

 

Today’s Data

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

NZD       RBNZ Interest Rate Decision A 0.25% | C 0.25% | P 0.25%

NZD       RBNZ Rate Statement

NZD       RBNZ Press Conference

0800      EUR       German Business expectations A | C 87.0 | P 80.1

0800      EUR       German Current Assessment A | C 84.0 | P 78.9

0800      EUR       German Ifo Business Climate A | C 85.0 | P 79.5

1430      USD       Crude Oil Inventories A | C 0.299m | P 1.215m

1900      USD       FOMC Member Bullard Speaks

2245      NZD       Trade Balance MoM (MAY) A | P 1.267m

2245      NZD       Trade Balance YoY (MAY) A | P -2,500m

 

Harry Hindsight

 

  • GBP: Early buyers into the Tokyo session saw the market rising from the 1.2470 level to briefly trade above the 1.2500 level before a Trump adviser caused a risk off movement and USD rose as Cable dropped quickly through to the 1.2435 area before the same adviser put out a retraction of the new item and the low was quickly left behind to push through to the 1.2495 area, the move through to the London session saw the London session saw a steady drift through to the 1.2450 area, London opening saw another steady run higher with early buyers testing through the 1.2500 again this time testing the 1.2510 level before dropping back again through to the 1.2450 level before slipping slowly through to the 1.2430 area for the low of the day, the move into the NYK session started to see a steady recovery for the Cable pushing through the 1.2500 for the third time triggering some light stops for a test to the 1.2530 level for the high of the day and then running to the close holding around the 1.2515 area. Much of the movement was down to commentary like Navarro, Johnson etc.
  • JPY: Risk on, off, on and who knows, opening around the 106.90 area the market slowly rose through into the Tokyo session managing to trade through the 106.95 level before dropping quickly through to the 106.70 area before bouncing when Navarro retracted or said he had been misquoted or misunderstood and the market pushed through the 106.95 level triggered some weak stops and pushed into the 107.20 area to range in a tight range through to the grey hour, early London saw the market slowly drifting through to the 107.05 in light trading and then hold through to the NYK opening, then the market set off on a quick move through to the 106.35 level before pausing then continuing to test the 106.05 level to make the lows of the day and a limited bounce through to the 106.40 pushing gradually through the 106.50 level for the close just above the level.
  • AUD: Rising a little from the opening to push from the 0.6910 area to test above the 0.6935 level before dropping quickly back through to the 0.6855 area before recovering just as quickly, having moved back through to above 69 cents area before slowly drifting from the 0.6925 area to test lightly through to the 69 cent level again for the grey hour, early London were steady buyers to extend the high to 0.6935 level again pushing a little further then after a brief pause started a slow steady rise through into the NYK session to push through to the 0.6975 level before finding sufficient offers to hold and the market drifted to the close.
  • EUR: Much the same pattern as Cable with the Euro slowly rising into the Tokyo session from the opening 1.1260 level to test through to the 1.1280 areas before dropping quickly back through to the 1.1235 area and move back after a brief pause to the same level only to drift through to the grey hours holding just above the opening level, early London started to buy through to the 1.1275 area before weak stops to the 1.1300 level before ranging around the 1.1290 level through to midday in London before starting to rise again pushing through to NYK open testing the 1.1320 level, although the market pushed through to the 1.1330 area before dipping again and running for the last time for the high of the day just short of the 1.1350 level, the run to the close saw the market adrift and out of ideas slipping through to the close holding the 1.1300 level.

 

Yesterday’s Premiership Results

JPY         Services PMI A 42.3 | P 26.5

EUR       German Manufacturing PMI (JUN) A 44.6 | C 41.5 | P 36.6

EUR       German Services PMI (JUN) A 45.8 | C 42 | P 32.6

EUR       Eurozone Manufacturing PMI (JUN) A 46.9| 44.5 | P 39.4

EUR       Eurozone Composite PMI (JUN) A 47.5 | 42.4 | P 31.9

EUR       Eurozone Services PMI (JUN) A 47.3 | C 41 | P 30.5

GBP        Composite PMI  A 47.6 | P 30

GBP        Manufacturing PMI A 50.1 | P 40.7

GBP        Services PMI A 47.0 | P 29.0

GBP        BoE Gov. Bailey Speaks

USD       Manufacturing PMI (JUN) A 49.6 | C 48 | P 39.8

USD       Markit Composite PMI (JUN) A 46.8 | P 37.0

USD       Services PMI (JUN) A 46.7 | C 48.5 | P 37.5

USD       New Home Sales A 476k | C 648k | P 623k | R 580k

USD       New Home Sales MoM (JUN) A 16.6% | C 3.5% | P 0.6% | R -5.2%

USD       API Weekly Crude Oil Stock A 1.749m | P 3.9m

 

Best Regards

Andy

 

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