Trading interest Long JPY via short AUDJPY and USDJPY as long as weak risk appetite persists.
Less confident in USD outlook – going flat here outside of downside interest in USDJPY.
Lifting any EURNOK shorts as this sudden vicious turn in risk appetite is not NOK supportive.
The G10 rundown USD – a case of whiplash as USD trades all over the shop depending on the pair in focus. Weak risk appetite would favour USD strength against EM, but less so elsewhere. Watching US 2-, 5- and 7-year treasury auctions of gargantuan size this week with interest.
EUR – less weak than one might have thought, given the terrible flash PMIs for March on Friday. Uptick in the German IFO survey this morning. One angle is that the euro could find support on weak risk appetite due to the unwind of carry trades funded in euros.
JPY – the yen is the high beta currency to current market drivers as we discuss above.
GBP – the market looks optimistic on sterling’s prospects, given the swirling uncertainties. See
my Friday article on Brexit for further thoughts.
CHF – the franc is suddenly playing its old safe haven role and may remain correlated with the JPY in the crosses, but EURCHF soon at painful levels for the Swiss National Bank if it hits the 1.1200 area, the lowest level since the summer of 2017.
AUD – Friday’s session saw less pressure on AUD than one might normally expect, even as Australian yields are in freefall, pricing in coming Reserve Bank of Australia accommodation. Next step mostly likely whatever awaits from US-China trade negotiations.
CAD – the USDCAD rally in good order even after a small CPI upside surprise on Friday (offset by an ugly Retail Sales print from January and downward revision of the December data). But USD momentum not impressing elsewhere in the G10 space.
NZD – kiwi priced for near perfection, given the backdrop and we fail to see how the Reserve Bank of New Zealand would serve as a positive catalyst, especially if the market mood sours further this week. That said, the market has overcome prior dovish broadsides from Orr and company in recent months.
SEK – the path lower for EURSEK made a bit challenging by weak Eurozone data and the rocky ride in risk appetite – watching 10.40-35 zone in EURSEK as the next important test for whether a more profound SEK rally can materialise.
NOK – the Norges bank last week very supportive for NOK, but the market backdrop turned hostile with Friday’s risk-off tone. Next couple of sessions a pivotal test for whether NOK can overcome and resume its rally against the euro.
Upcoming Economic Calendar Highlights (all times GMT)
1000 – US Fed’s Harker (non-voter) to speak
2115 – Australia RBA’s Ellis to speak
2145 – New Zealand Feb. Trade Balance
0030 – US Fed’s Rosengren (Voter) to speak