The G-10 rundown
USD – we noted a break in the slavish, minute-by-minute negative correlation between risk appetite and the US dollar in recent sessions, though this seems to be reasserting a bit here. We continue to watch the combination of 1.1500 in EURUSD, 106.00 in USDJPY and perhaps 0.7050 in AUDUSD as the set of levels that will need to fall to indicate the USD is triggering for a run lower.
EUR – the recent bid is compelling, but let’s see where we are Monday morning after the key EU Council meeting stretching into the weekend. Easier to argue for a euro rally higher versus USD and JPY if the mood and economic outlook continue to brighten.
JPY – the lean lower yesterday quickly erased and frustrating once again the least attempt to establish a direction. More than a bit surprised that today’s shaky markets haven’t managed to inspire any notable bid into JPY.
GBP – yesterday’s surge in GBPUSD largely erased today as the sterling technical outlook is finely balanced (a move and close above 1.2700 needed to excite upside interest in GBPUSD.
CHF – we have to take note of the EURCHF rally handily clearing the 200-day moving average around 1.0740 – is this a short squeeze similar to the one inspired by huge shift in Merkel’s position on Germany’s responsibility to help fund the recovery or a more promising sign of a euro resurgence on new EU solidarity – we will know more next week after the market digests the EU council meeting. Note that the 1.0800 area in EURCHF rather important chart level we have neared today.
AUD – some headwinds for the Aussie at the moment on wobbly risk appetite and especially on the sharp consolidation in key metals prices that have provided a supportive backdrop, but the trading ranges in AUD so miniscule and the tactical reaction to developments is painfully lacking
CAD – the Bank of Canada provided little of note yesterday and USDCAD once again tested the 1.3500 area 200-day moving average without breaking. CAD looks passive here to risk appetite and oil prices, with that 1.3500 the key downside level.
NZD – AUDNZD not getting further support as key metals prices have slumped in recent sessions (less AUD supportive) and NZ Q2 CPI was a bit higher than expected.
SEK – the most important EURSEK pair hovering at these cycle lows, but will want a positive tone from the EU Council meeting and likely also a stronger euro to see EURSEK lower (SEK prefer a positive outlook for its export markets)..
NOK – the big barrier for further NOK upside is that 200-day moving average in EURNOK around 10.55 currently, and we likely need a steady risk rally to extend, together with Brent crude taking out the key resistance zone of late near 44.00/bbl to get more NOK upside/EURNOK downside.