The G-10 rundown
USD – The USD firming notably against all risk currencies since yesterday and underlines its status as the flipside of risk appetite against risky currencies, while it was notably weak versus the Euro and to a degree the JPY as well.
EUR – as discussed above, the hard euro rally, especially in the crosses, speaks of positioning unwinding of recent risk-on trades more than any narrative I can cobble together from the ECB meeting..
JPY – the focus on EURJPY proved unwarranted, although the JPY has ceom back stronger and then some in the crosses as we have new signs of what we have seen before in recent weeks, a “G3 versus the rest” market as the JPY rallies against risk currencies as risk appetite weakens, but is less compelling in a G3 context (USD, EUR and JPY).
GBP – sterling got oddly ambitious yesterday – watching 1.2500 in GBPUSD as a sign that yesterday’s move was an anomaly and noting that the latest EURGBP attempt below 0.8700 has now reversed, and hard.
CHF – little to say here as heavy hand of SNB makes it untradeable – watching 1.0500 in EURCHF as a possible psychological catalyst if we drift back lower.
AUD – I noted “discomfort” with AUDUSD in my last update the day before yesterday and the pair managed to rally a bit further to a local high of 0.6570. Just as AUD flew the highest among the commodity currencies, it is falling the fastest, likely on the unsettling rally in USDCNH overnight. A close significantly below 0.6450 in AUDUSD points to a bearish technical reversal.
CAD – the USDCAD pair survived the 1.3850 area pivot test and has rallied hard off that level – potential toward 1.4500+ again on any more significant setback for risk appetite and notable that this significant crude rally of the last couple of sessions has largely been shrugged off.
NZD – the kiwi a big holdout against the more China-sensitive AUD, which likely dropped on the overnight move in the CNH overnight – still, wouldn’t expect the kiwi to escape negative focus either and warming up a bearish view on NZDUSD again on a weak close today.
SEK – EURSEK teased a breakdown but the price action didn’t linger below that key 10.69 area 200-day moving average and the rally into today suggests that SEK remains sensitive to risk appetite. As well, if the country doesn’t more quickly get its Covid19 numbers under control after its novel, less vigorous approach to slowing the spread, the risk of a more sustained shutdown rises.
NOK – EURNOK has found a based well above 11.00 for now and the risk of a rally back toward 12.00 or somewhat higher if medium to longer term oil prices (out 6 months or more) move back toward the contract lows or lower (we expect heavy official hands to avoid the kind of disorderly price action that saw 13.0+ in EURNOK)
Economic Calendar Highlights (times GMT)
- 1400 – US Apr. ISM Manufacturing