The G-10 rundown
USD – the USD weakened a bit further overnight, but the move merely takes the currency back into the ranging swamp that so many USD pairs have become mired in over the summer.
EUR – a bit more strength overnight, driven by an easing existential worries linked to Italy (Finance Minister Tria out this morning sounding the right notes on fiscal rectitude, etc.) and possibly on EURGBP flows.
JPY – the yen firming a bit again this morning after going nowhere yesterday and needs to continue to firm to encourage the EURJPY bears who have been teased by a break of 129.00 area support that is currently in jeopardy. GBPJPY is working through the last shreds of its 2018 range…
GBP – new lows for 2018 versus the euro late yesterday and into today raise the temperature, but the bigger level in EURGBP is 0.9000. The last major Fibonacci of note in GBPUSD, meanwhile, comes in just below 1.2900. Below that and we look toward 1.2500 if the USD is broadly bid.
CHF – Italy’s BTP yields opening sharply lower this morning, letting the air out of the EU existential risk trade that is EURCHF.
AUD – AUDUSD is hopelessly stuck, awaiting developments to spark a view. Positioning and the nearby upside pivot zone suggests a squeeze risk higher, and a solid recent boost to iron ore prices are an additional positive. If China announces a new fiscal stimulus, the upside risk could pick up further.
CAD – a sharp rally in USDCAD firmly rejects the attempt down through the pivotal 1.3000 for now – not sure of the immediate catalyst, but a technical hook for bulls to get involved again here, with a close above 1.3100 further deepening the sense that the upside potential remains the focus.
NZD – AUDNZD pivotal around the 1.1000 level as we have discussed above, and NZDUSD close to a fresh downside break if the market can scare up a view on the USD.
SEK and NOK – SEK drifting weaker ahead of the uncertainty of September 6, if the move deepens, we might have a look at downside option spreads or the like as political uncertainty may not have much to do with the direction of the economy post-election. NOK is putting us to sleep and we await CPI data on Friday for both Sweden and Norway.
Upcoming Economic Calendar Highlights (all times GMT)
• 1230 – Canada Jun. Building Permits
• 1245 – US Fed’s Barkin (FOMC voter) to speak
• 1430 – US Weekly DoE Crude Oil/Product Inventories
• 1700 – US Treasury 10-year Auction
• 2100 – RBNZ Official Cash Rate
• 2200 – RBNZ’s Orr Press Conference
• 0130 – China Jul. CPI / PPI