The G-10 rundown
USD – The US dollar on its back foot as the market prices an easy Fed and political gridlock. US Retail Sales today the US data release of the week.
EUR – not much to like here in broad euro terms (if EURUSD goes higher, would mostly likely be on USD weakness) as the EU remains a political mess for getting decisive action done and Covid-19 will rage away for months to come.
JPY – the yen firming a bit more as the rising US yield threat has backed away for now. The yen gets more interesting across the board if risk sentiment sours again, together with rates backing off lower.
GBP- sterling moving higher, perhaps as markets smell that UK Prime Minister Boris Johnson letting go of his more hard-line ideological advisers means he is ready to go soft on compromise with the EU to get a deal done?
CHF – the price action has gotten more interesting for upside interest in EURCHF, but we need global economic normalization to get interested in a CHF downtrend again.
AUD – If the future plays out as the market hopes, the AUD should prove a star-performer among the G10 in 2021 on a global reflation trade – tactically watching 0.7400+ as the next objective, having noted concerns on the quality of the near-term narrative elsewhere in today’s post.
CAD – the loonie looks better in a normalizing world with higher oil prices than it does at the moment – for upside interest, still need the USD breakthrough lower and 1.3000-1.2950 to fall in USDCAD.
NZD – the less dovish RBNZ was only good for a modest bump in NZD versus AUD – still see long term value in AUDNZD, but may be a strategic rather than a tactical trade – options, anyone?
SEK – the SEK strength is testament to how the market looks through the current reality on the ground, as the SEK only suffers minor turbulence on new covid-19 restrictions on a virus resurgence. If the market can continue to trade on hope rather than reality, 10.00 is possible in EURSEK, but a move above 10.30 suggests near term concern is nixing the krona upside potential for a while longer.
NOK – the recent EURNOK rally rejected at the 200-day moving average (near 10.87) and that resistance needs to hold as the market tries to trade in “fast-forward” mode on the world beyond Covid-19.
Upcoming Economic Calendar Highlights (all times GMT)
- 1300 – Hungary Central Bank Rate Decision
- 1315 – Canada Oct. Housing Starts
- 1330 – US Oct. Retail Sales
- 1400 – UK Bank of England Governor Bailey to Speak
- 1415 – US Oct. Industrial Production and Capacity Utilization
- 1500 – US Nov. NAHB Housing Market Index
- 1600 – ECB President Lagarde to Speak
- 1800 – US Fed Chair Powell to Speak
- 1900 – Canada Bank of Canada’s Macklem to Speak
- 2340 – Australia RBA’s Lowe to Speak
- 1600 – UK BoE Governor Bailey to Speak