The G-10 rundown
USD – the US dollar firmer against the entire EM complex this morning as the CNY has steeply retraced a chunk of its recent gains and on general risk off. Volatility still muted, and the modest dollar rally has yet to show any real momentum.
EUR – the euro a bit heavy as we discuss above in EURJPY, and EURUSD is also having a look at the lows for the year, though the market is giving up on the prospects for any EURUSD volatility after record lows were posted in the implied volatility for all major EURUSD options tenors recently. Given that 1-year options are trading 5.3% and that easily encapsulates the US election – longer term USD bears have opportunity to establish a position for record low options premium (and with far less premium due to carry and basis considerations than a year ago!).
JPY – the Bank of Japan a non-factor overnight as the focus on the corona virus has taken the JPY a bi higher here – nothing profound yet, but the currency may have the potential to come alive rather suddenly if risk off accelerates – particularly given the recorded quiet in JPY volatility.
GBP – speculative positioning in the US currency futures shows speculative sterling longs continuing to build aggressively, but the price action going nowhere amid the risk that the trade deal uncertainty continues to drag on after the UK is sending the signal it wants leeway in establishing its own regulatory framework rather than being forced to copy EU rules.
CHF – the CHF disproving for the moment that it will trade in negative correlation with risk appetite (due to SNB holdings of a large equity portfolio) as EURCHF trades heavily on the lows of the cycle on this modest bout of global risk off.
AUD – downside potential on risk-off and the negative focus on Asia from the virus outbreak as we watch AUDUSD poking at the lows of the year this morning.
CAD – USDCAD refusing to move here, but may get the signal from a cautious Bank of Canada tomorrow, which may finally take the pair more firmly back into the range as we await a vaulting of the 1.3100-50 area to confirm upside potential into 1.3500 again.
NZD – the kiwi potentially impacted by the Asia-focus of the corona virus concerns and any additional risk off on that issue – watching NZDUSD technically as it pokes at the sub-0.6600 pivot levels and then watching the Q4 CPI release this week together with follow-on commentary from the RBNZ.
SEK – would expect pressure on SEK on the corona virus worries – but SEK may be catching a bit of a bid this morning via NOKSEK correcting – see NOK below.
NOK – the populist Progress Party has abandoned the government over an “ISIS bride” and her children being repatriated back into the country – this and weaker oil prices pressuring the currency.
Today’s Economic Calendar Highlights
- 0930 – UK Dec. Jobless Claims Change
- 0930 – UK Nov. Earnings and Unemployment Rate
- 1000 – Germany Jan. ZEW Survey
- 1330 – Canada Nov. Manufacturing Sales
- 1500 – UK BoE’s Carney to Speak