The G-10 rundown
USD – the greenback successfully avoiding drama into the weekly close, as EURUSD managed a seventh weekly close at virtually unchanged levels while USDJPY avoided a strong close and AUDUSD did likewise. Perhaps some more dynamism in the USD outlook this week with so many voting Fed speakers on the loose and US retail sales up today.
EUR – rather surprising that speculators have sustained their long euro positioning despite the collapse in the EU data surprises in the negative direction and the unwinding of the European Central Bank rate hike anticipation. But the euro has been going neither up nor down recently, passive to the moves in other currencies and we’re not sure what will spark more volatility. Most interesting data point this week from the EU is tomorrow’s ZEW survey’s expectations component, which has a strong history as a leading indicator.
JPY – the USDJPY breakout on Friday above the noted 107.50 area resistance fizzled so USDJPY outlook remains wobbly, as does the outlook for all JPY crosses – we suspect that the JPY eventually rallies, but from here or after a bit more consolidation?
GBP – as we stress above, the sterling outlook is pivotal after the big technical break, and we should get a stronger sense after the data this week and the Brexit negotiation headlines, as well as whether the Bank of England is more likely to hike in May.
CHF – we passed along the discussion on whether Russian sanctions risked a feed through into the Swiss franc and the first direct evidence of this may be uncovered with the latest Swiss National Bank weekly sight deposit levels up today. After falling a bit into year-end, the sight deposit levels have been mostly unchanged, so a new dynamism in levels could energise CHF traders.
AUD – we are highly contrarian to much additional AUD strength, and the shooting star reversal in AUDUSD and AUDJPY after an apparent squeeze on weak AUD shorts on Friday is the first bearish technical hook in a while. The data focus this week Down Under is on Thursday’s Australian jobs report.
CAD – USDCAD suddenly stable after a fairly brutal run lower, with rallies all failing within a handful of pips of the 200-day moving average as we await the pivotal Bank of Canada meeting on Wednesday. The chart is full of contradictions while the fundamental backdrop (rate outlook from the Bank of Canada based on strong data and strong oil prices), so we’ll watch what unfolds – resistance/pivot to upside is the 1.2800 area and the downside less well-defined, perhaps the round 1.2500 and then the rising trendline a bit lower.
NZD – important data up this week with the latest CPI report on Thursday, which will provide the next status check on the currency, especially vis-à-vis the range top in NZDUSD and whether AUDNZD can continue to grind lower to the next long-standing range supports.
SEK – an odd overextension late Friday in EURSEK that looks suspiciously like a squeeze and has been unwound partially overnight. The steep extension of a trend is often a hallmark of a trend that is ending, but we’ll wait for a reversal before calling one – in this case, EURSEK would have to work back below 10.35-30 to begin to suggest that the krona is ready to put up a fight.
NOK – EURNOK remains embedded in the range, rather disappointing given the oil rally – NOK bulls need a fresh 9.50 break to get something going and 9.70-ish is the range resistance.
Upcoming Economic Calendar Highlights (all times GMT)
• 1200 – Poland Mar. CPI
• 1230 – US Apr. Empire Manufacturing
• 1230 – US Mar. Retail Sales
• 1400 – US Apr. NAHB Housing Market Survey
• 1600 – US Fed’s Kaplan (non-Voter) to speak
• 1600 – US Fed’s Kashkari (non-Voter) to speak
• 1715 – US Fed’s Bostic (Voter) to speak