The G-10 rundown
USD – the US dollar is weak and we are entering a difficult time to call direction as the election approaches and the market expectations feel far more finely balanced than Biden’s fairly strong lead in the polls. An important week on that note with the Democratic National Convention through Thursday. As noted above, also watching Fed signals through the KC Fed symposium later this month.
EUR – the consolidation after the long run higher from the prior 1.12-1.14 area has been shallow and tight, a comforting sign for bulls. The only alarm bell is the record speculative long in US futures and perhaps lack of fresh triggers in the form of US fiscal or monetary policy to push the USD lower from these levels.
JPY – again, USDJPY is running out of Fibonaccis to test after the rally to 107.00+, with the 105.50-00 area an important one for finding support if the pair is to remain in the range.
GBP – Brexit negotiations getting back under way today, will be watching headlines closely for whether the EU is trying to leverage delay tactics to force concessions from the UK. GBPUSD is eyeing the cycle highs due to USD weakness as EURGBP is locked down in the range.
CHF – see USDCHF chart above, with the new low there somewhat academic as long as EURUSD remains rangebound and EURCHF locked in a tight range.
AUD – The RBA may want a weaker currency, but it is going to have to work hard to get one in this environment, particularly when Australia’s chief export iron ore continues to set new highs for the cycle, up some 20% since the beginning of July.
CAD – CAD poking to new highs versus the USD with little fanfare as WTI crude remains bid, if quiet. The 1.3000 area is the next major chart zone for that pair. Tomorrow sees July CPI data from Canada.
NZD – the kiwi firmly under the Aussie’s thumb and would expect this to remain the case as long as iron ore continues to shoot the lights out and we have a commodities reflation narrative afoot.
SEK – the krona not playing according to the script that says a strong EUR sees a stronger SEK, especially on a day when risk sentiment is enjoying strong support. Modest squeeze risk in EURSEK for a test of higher resistance if 10.35 comes under pressure as stale SEK longs are unwound.
NOK – just as Brent crude prices are perched at the highs of the cycle and each contract expiry sees a roll to higher prices, EURNOK remains pegged near the cycle lows around the psychologically important 10.50 level . This is a strong consensus trade by now, so any concern that crops up on the vaccine front or for the outlook in general in coming days/weeks could derail NOK upside.