The G-10 rundown
USD – the dollar bounce not a surprise given the source of the market’s unease this morning (US-China trade deal concerns) and we assume a deepening concern on this front together with risk off would be USD-supportive.
EUR – China related concerns are a net euro negative and we are all waiting for the next signals from EU policymakers – a EURJPY downdraft one way to trade further risk off on US-China concerns while avoiding the USD.
JPY – the powerful bid in treasuries finally making more of a mark on the JPY, where the general addition of risk off could see the yen rising to the top as EM sinks to the bottom (implications for carry trades, etc.).
GBP – sterling suffered a setback on Corbyn’s strong debate performance yesterday, but as well, I suspect any general downdraft in risk appetite could sideline sterling rally attempts for now.
CHF – the franc less reactive than the JPY to intermarket developments as we continue to find it difficult to pay attention here.
AUD – surprised to see AUDUSD still near 0.6800 after the overnight news flow – significant risks for the AUD will mount if risk off based on US-China trade tensions continues here. The 0.6770 area in AUDUSD a notable technical level/pivot.
CAD – the latest BoC rhetoric seeing a chunkier rally now at the short end of the Canadian yield curve – and there could be more pressure to come if today’s CPI misses to the downside, but especially on tomorrow’s “fireside chat” from BoC Governor Poloz tomorrow.
NZD – NZDUSD looks overambitious at these levels given the backdrop and a close back below 0.6400 would underline that point here.
SEK – our recent comment that SEK strength had been disappointing recently given the backdrop underlined now as SEK getting hammered today on still fairtly moderate risk off – though the Riksbank out with its financial stability review this morning frets rising financial stability risks (This morning, it emerged that the US is investigating Sweden’s Swedbank for money laundering with Russia).
NOK – everything going wrong for NOK as global growth and oil demand concerns will mount on a US-China trade negotiation failure. The oil sell-off and recent rejection of the attempt lower aggravating the NOK sell-off here – new EURNOK highs possible if we see an equity market correction here and lower oil prices.
Today’s Economic Calendar Highlights (all times GMT)
- 1000 – Sweden Riksbank Financial Stability Review press conference
- 1330 – Canada Oct. CPI
- 1530 – US DoE Weekly Crude Oil Inventories
- 1700 – ECB’s Lane to Speak
- 1900 – US FOMC Meeting Minutes