USDJPY eyes new highs

Next week is Easter holiday week here in Denmark and we will have spotty coverage until Tuesday, April 23, though I should pen one or two updates next week. I publish next week’s calendar highlights below in addition to today’s calendar highlights below the G10 rundown.

The G10 rundown

USD – the greenback looking mostly firm with the odd exception of the EURUSD, but volatility has been so constrained of late that we need to see the energy level picking up here to believe a move is afoot – perhaps USD strength driven by higher long yields. 

EUR – the single currency firm against the JPY, where it likely performs in a rising yield environment. EURGBP also poking at the top of the range. Doesn’t appear that EURUSD will show high beta to any USD strength.

JPY – weak as we note above, with the key USDJPY at major resistance. US-Japan trade talks set for early next week – for now, markets not seeing these as a risk for JPY strength, but let’s watch how the tweets develop.

GBP – we consider the long Brexit delay generally brings negative risks – watching whether this means merely additional range trading or brings down animal spirits sufficiently to engineer a move out of recent trading ranges in EURGBP (above 0.8650-0.8700) and GBPUSD (below pivotal 1.3000).

CHF – EURCHF has almost fully reversed the move toward the 1.1200 level – perhaps driven by the final confirmation that we avoid a cliff-edge Brexit scenario. We suspect that CHF direction will track JPY direction and USDCHF looks technically pivotal if it works up above 1.0100 again.  

AUD – yesterday’s sell-off spoiling the very half-hearted attempt at a break higher – keeps the outlook uncertain.

CAD – we would like to buy USDCAD if oil shows a more forceful turn back lower and if risk appetite heads for consolidation lower. But a break above 1.3450 area is the technical trigger.

NZD – NZDUSD perched right at break-down levels and deserves focus next week as we watch for USD direction.

SEK – small beat on the core CPI yesterday and reassuring house price data couldn’t engineer any interest in SEK buying. We’ll sit on our hands and would suggest a risk of a squeeze if the price action rises above 10.50.

NOK - the break lower in EURNOK getting no further traction, and raises the risk that NOK bulls (supported in their thinking by a vicious widening in the NOK’s yield advantage) will run into trouble if we continue to stall and oil prices retreat.

Economic Calendar Highlights Today (all times GMT)

0900 - Euro Zone Feb. Industrial Production
1230 – Canada Mar. Teranet/National Bank HPI
1400 – US Apr. Preliminary University of Michigan Sentiment
1630 – UK BoE’s Carney to Appear on IMF Panel

Selected Calendar Highlights for Next Week

Mon: US Apr. Empire Manufacturing, US Fed’s Evans (Voter) to speak
Tue: Australia RBA Minutes, US Feb. Earnings / Unemployment, Germany Apr. ZEW Survey, US Mar. Industrial Production
Wed: China Mar. Industrial Production / Retail Sales / Q1 GDP, UK Mar. CPI, Canada Mar. CPI, US Fed Beige Book
Thu: Australia Mar. Employment Data, Euro Zone Apr. Flash PMI’s, UK Mar. Retail Sales, Canada Feb. Retail Sales, US Mar. Retail Sales
Fri: Japan Mar. CPI, US Mar. Housing Starts / Building Permits