The G-10 rundown
USD – the US dollar continues to trade sideways – looking for a technical price catalyst in key pairs and/or divergence from passive and weak moves to risk-on, risk-off for inspiration. Long term bear without a short to medium term hook and plenty of room for USD upside shenanigans if we see, for example, a chunky US market correction before the election on fears of a Biden victory, even ironically as Democratic policy mix is long term USD bearish in our view.
EUR – the euro looks relatively firm considering yesterday’s equity market correction (recently, the directional correlation has been rather tight), but some of the upside may have been on heavy EURGBP buying. Regardless, we feel more comfortable calling EURUSD higher if the economic outlook were turning more positive rather than negative, though we keep an open mind on the potential for decoupling of EURUSD from risk-on, risk-off, and EUR looks excessively weak
JPY – the yen is ready to bounce if we go into a proper downward spiral in risk appetite, if we see a proper equity market correction combined with signs of safe haven seeking in bond markets. GBPJPY, AUDJPY, CADJPY and NZDJPY are candidates for a deeper correction on that note.
GBP – a tough chart for EURGBP traders as the recent sell-off (GBP rally) looked promising for sterling bulls, but this reversal has neutralized that sell-off and begins to tilt the tables back higher for EURGBP on a close above 0.9100.
CHF – the curious Monday ramp in EURCHF is fading somewhat – have seen this pattern before. Perhaps progress on the recovery package and signs of deeper commitment to mutualised debt shocks this one out of the range to the upside? Seeing is believing…
AUD – nothing to work with here – persistent ramp in commodity prices together with risk appetite the key factors here – 0.6850-6800 is the downside pivot zone of note, and 0.7000 the obvious tactical upside focus. Thursday sees latest jobs data, where the “JobKeeper” programme has veiled the true state of the Australian labor market, and is under review for whether it will be extended beyond September.
CAD – the Bank of Canada has little to cheer about tomorrow and will inevitably offer to support the Canadian economy as well as it can in a highly uncertain environment.
NZD – the AUDNZD pair surged back higher after touching multi-month lows, a decent sign of support for the structural bulls there (we count ourselves among these.) The next event risk for NZD is the NZ Q2 CPI up Thursday (Wed evening for us in Europe).
SEK – EURSEK shying away from a downside break as equity markets corrected lower yesterday. Hotter CPI levels from Sweden in June than expected keep negative interest rate policy risk from the Riksbank at bay for now.
NOK – the big barrier for further NOK upside is that 200-day moving average in EURNOK around 10.55 currently, followed by the nominal low of 10.44 when that moving average was tested about a month ago. Squeeze risk higher for EURNOK on any oil market downside from the important oil-market developments this week, as noted in today’s Saxo Market Call podcast.
Upcoming Economic Calendar Highlights (all times GMT)
- 09:00 – Germany Jul. ZEW Survey
- 10:00 – US Jun. NFIB Small Business Optimism Survey
- 12:00 – OPEC's Monthly Oil Market Report (Time not confirmed)
- 1230 – US Jun. CPI
- 18:00 – US Fed’s Brainard (FOMC Voter) to Discuss Economy and Monetary Policy
- 18:00 – US Fed’s Bullard (Non voter) to Speak
- 19:30 – US Fed’s Harker (FOMC Voter) to Speak