The G-10 rundown
USD – the greenback with its back up against the wall as risk appetite has staged a remarkable recovery and on the friendlier US-China overtures. Given where markets are trading, the Fed seems unlikely to deliver a particularly dovish message next week, and has to feel a bit rebellious after Trump labelled Fed leadership “boneheads” in a tweet.
EUR – If the market has overpriced ECB easing potential, would look for the Euro to back up sharply versus EM and risky currencies and trade sideways/lower versus the USD and the opposite on the ECB delivering big. Feels like the market is overconfident in what the ECB can deliver, but we’ll soon know.
JPY – yen getting further offers overnight on the strong risk sentiment and boost to bond yields on Trump’s overture to China. Key US yield benchmarks at important resistance (10-year at 1.75%) – next major level for USDJPY 109.00
GBP – UK Supreme court to now have a look at whether Johnson’s move to suspend parliament was unlawful after the Scottish high court said it was. We’re none the wiser on where this leads.
CHF – franc traders struggling to weigh ECB easing (euro negative) versus the rise in bond yields and strong risk appetite (CHF negative). An ECB under-delivery relative to expectations may see the latter a more important driver and EURCHF lower if the market throws a tantrum.
AUD – AUDUSD bears have their back against the wall here as a further charge higher through 0.6925-50 begins to break the back of the bear market from early 2018.
CAD – CAD not participating in the risk-on as it has been resilient anyway all year and yesterday’s crude oil sell-off sounds a sour note.
NZD – kiwi enjoying the complacency and the Trump overture to delay the October tariffs – a bit more room to run to the upside without breaking things in NZDUSD and NZDJPY terms, but not much.
SEK – krona spiking back to the upside as externalities very supportive (especially risk sentiment) – the reversal looks impressive and if the ECB manages to exceed the dovish bar and boost risk sentiment across Europe, we could be looking at a technically decisive move through 10.60, opening the last bit of the range to 10.50
NOK – EURNOK working down to its key pivot zone, together with everything else risk-correlated, but with a bit of a drag from oil prices correcting on the fear that Trump’s firing of Bolton could mean a friendlier tone from the US on Iran.
Upcoming Economic Calendar Highlights (all times GMT)
- 0900 – Euro Zone Jul. Industrial Producttion
- 1100 – Turkey Repo Rate announcement
- 1145 – ECB Meeting
- 1230 – ECB President Draghi Press Conference
- 1230 – US Aug. CPI
- 1230 – US Initial Weekly Jobless Claims
- 1230 – Canada Jul. New Housing Price Index
- 1700 – US 30-year Treasury Auction