The G10 rundown
USD – the greenback on its back foot, though the rate outlook is quite supportive for additional strength with positioning perhaps the chief hurdle for further gains. Continue to watch CNY and US 10-year yields around that 3.00% level as major coincident indicators as the US August CPI release is rolled out later today.
EUR – we discuss the euro chart above, but if we are about to lurch into another episode of risk on, led by emerging market currencies (not our thesis, but there is room for a relief rally), then the euro will likely languish in the crosses as the focus is elsewhere.
JPY – the yen not enjoying this environment as yield rises pressure the currency in the crosses – USDJPY upside interest only picks up notably if the entire US yield curve can lift.
GBP – we may have to wait for next week for signals from the EU and UK Prime Minister May on a possible Brexit deal. For now, it appear the Tory rebels are trying to mount a revolt
so there is plenty of two-way risk if she is ousted.
CHF – the EURCHF bulls may see the solid recent bullish reversal in EURCHF as worth scooping up as long as we remain north of 1.1200, and as long as the Italian yield situation remains dormant.
AUD – a positive employment report helps for the moment, but the AUDUSD bounce so far fading at around the 0.7200 resistance as we await further key US event risks. Yield spreads suggest we should be trading much lower, but speculative positioning is a bit crowded, making for halting progress lower.
CAD – another spike higher in oil prices inspires a try through the pivotal 1.3000 level in USDCAD – that’s an important one for the bulls in a very messy chart.
NZD – the kiwi fading wilting before the Aussie’s modest rally as it should from a rate spread perspective. Next week’s NZ GDP release is perhaps the next catalyst.
SEK – a decent leg up for the krona as it is tough to argue whether either weak minority coalition scenario will mean much in the way of policy. Meanwhile, the rising Swedish short yields are a boost. Without general risk appetite mishaps, EURSEK could manage a move all the way back to the 200-day SMA, currently around 10.21.
NOK – a big move in NOK inspired by technical rejection of the run higher, the rallying SEK, and stronger oil prices. Unlikely to maintain this kind of momentum, but a move back into the 9.50-40 zone would seem a reasonable prospect. Upcoming Economic Calendar Highlights (all times GMT)
● 1100 - UK Bank of England Rate Announcement
● 1100 - Turkey One-Week Repo Rate Announcement
● 1145 - ECB Rate Announcement
● 1230 - ECB Press Conference with President Mario Draghi
● 1230 - US Aug. CPI
● 1230 - US Weekly Initial Jobless Claims
● 1700 - US Fed's Bostic (FOMC Voter) to speak