The G-10 and CNH rundown
USD – the US dollar weak, but somewhat cautious on going full bore bearish again, as the conditions were about as perfect as they could be yesterday for a more pronounced move. Watching how we close the week.
CNH – not a leader in FX against the US dollar and as long as China drags its heels on CNY strengthening. China will have to limit travel during the New Year holiday (the week before and after February 12) due to Covid outbreaks.
EUR – the euro lagging just about everything else besides JPY and USD as EU growth is set for perma-sluggishness outside of potential for rising export demand because of EU’s aging demographics and besides, negative rates are just no fun. Zero expectations that the ECB moves the needle today.
JPY – the Bank of Japan’s Kuroda out with an oddly timed exhortation that the entire yield curve must be kept low – was he referring to the US? The weaker USD without a rise in US rates allows the USDJPY to trickle back lower and encourages the view that USDJPY to stay in the descending trend channel for now.
GBP – sterling making new gains against the Euro in breaking lower as BoE’s Bailey pushes back against negative rates talk. GBPUSD has also managed a new top – let’s see if these moves stick for another pull higher.
CHF – EURCHF avoided a break to a multi-month low by staying above 1.0735 – but not exactly on the edge of my seat here for anything – volatility only likely to pick up on yield volatility in long fixed income.
AUD – solid employment figures overnight, though full time positions lagging a bit. Still,the participation rate is impressive with it rise back to pre-Covid levels.
CAD – the Bank of Canada outlined the complacent view on inflation – yes, inflation will surge on the basing effects of the year-ago Covid wipeout in March and April, but then quickly fade back lower, in line with the “significant excess supply” in the economy. What if assumptions about that supply are misplaced, however?
NZD – steep consolidation in AUDNZD – profit taking ahead of Q4 NZ CPI tonight? The first support is the area around the 200-day moving average near 1.0720.
SEK – fairly straightforward strength given the backdrop of better risk sentiment with no spike in yields – can we finally have a go at the critical 10.00 levelin EURSEK?
NOK – EURNOK making a bid lower and NOKSEK for parity, the latter probably requiring a new high for the cycle – or at least threat thereof – for Brent crude as NOK longs are a great expression of eventual economic normalization.
Upcoming Economic Calendar Highlights (all times GMT)
- 1245 – ECB Meeting
- 1330 – ECB President Lagarde Press Conference
- 1330 – US Dec. Housing Starts and Building Permits
- 1330 – US Philadelphia Fed Survey
- 1330 – US Weekly Initial Jobless Claims and Continuing Claims
- South Africa Interest Rate Announcement
- 2145 – New Zealand Q4 CPI
- 2330 – Japan Dec. CPI
- 0030 – Australia Dec. Retail Sales