The G-10 rundown
USD – the USD liquidity issue focus may fade once we slide into a new quarter, but will rise again at some ahead of year end, due to rising Trump deficits, and due to the regulation prompting major US banks to do all they can to shrink their balance sheets ahead of year end to avoid paying penalties related to their size.
EUR – the euro winning the race to the bottom at the moment, though as with every other break lower in EURUSD over the last year and more, momentum is so far lacking. AT any moment, beware the risk of President Trump lashing out on trade.
JPY – The Bank of Japan is warming up for a fresh easing move, likely aimed at yield-curve-control, perhaps by indicating a willingness to cut rates more deeply negative to lower the front-end of the curve. The 109.00 area in USDJPY shaping up as a critical one for the other side of this October’s key event risks, including the FOMC and BoJ on the last two days of October. BoJ announcements this morning on their latest purchase intentions suggest a focus on maintain a positive sloping yield curve, as the purchase range for longer term debt beyond 25 years lowered to zero and shorter maturity purchase ranges were raised.
GBP – sterling traders seem confident in a friendly outcome on Brexit that will bring a tsunami of capital back into the UK to prop up the currency, even as the UK economy is set for a recession, with or without Brexit.
CHF – The latest SNB sight deposit data were essentially flat, suggesting that the SNB was not throwing large amounts to cap the franc in its recent run at the lows in the cycle versus the EUR around 1.0850. Bond yields likely to provide directional cues here.
AUD – a very weak Private Sector Credit Growth number for August out over night at +2.9% year-on-year, lowest since 2011 and the trend is well entrenched and the RBA may be pushing on a string with rate cuts from already low levels. A majority looking for a 25-basis cut to the RBA’s cash target at tonight’s meeting.
CAD – the loonie doing its own thing by firming against a firm USD, looks a bit too firm relative to the backdrop – next important event risk for Canada with tomorrow’s July GDP release.
NZD – the weak ANZ Business Opinion noted in the AUDNZD chart comments above, with the next important risk event the Q3 CPI release on October 15.
SEK and NOK – still trying to find a pulse, with the general disappointment at the margin that the firm risk appetite hasn’t done more to support the Scandies this morning and in recent episodes.
Upcoming Economic Calendar Highlights (all times GMT)
- 1200 – Germany Sep. Flash CPI
- 2350 – Japan Q3 Tankan Surveys
- 0430 – Australia RBA Cash Target