The G-10 rundown
USD – interesting to see how the USD closes today after an eventful week and given the EU news overnight, but next week could quickly change the plot in either direction on the heavy US data calendar.
EUR – watching the flash June eurozone CPI data as the German headline inflation has printed above 2.0% for two months in a row. But interpreting inflation data is difficult given the ECB’s heavy-handed forward guidance. Still, fading EU existential risks could drive the single currency higher versus CHF, GBP, and perhaps even JPY if the latest wobbles in risk appetite also fade.
JPY – the yen looking very weak on the combination of high energy prices and the strong boost to risk appetite in Europe from the migration deal. The volatility is set to continue on a busy macro calendar next week, especially linked to the fate of US yields.
GBP – sterling out in the cold here as EURGBP has broken the local range above 0.8800 (and did so before the EU deal on migration overnight) and now looks toward the bigger resistance levels into 0.9000. An EU showing more solidarity is not a positive for the UK’s side in Brexit negotiations.
CHF – EURCHF rally on the overnight deal a no-brainer and could extend if the market sees this as providing sufficient evidence of solidarity to crush Italian yields back lower. Strong US data next week and fading EU existential worries could see USDCHF powering higher as well as the massive 1.0000-1.0050 area can be overcome.
AUD – an interesting reversal in AUDUSD overnight on the shift in the market’s energy. We have an RBA meeting next Tuesday – the market perhaps reluctant to take the AUD lower just yet. More downside there may . In the meantime, we like AUD lower against CAD and higher versus NZD
CAD – CAD rather firm ahead of an important week of data next week and a GDP data point today. The July 11 Bank of Canada rate hike odds could move toward 100% next week on strong data and we like CAD in crosses like AUDCAD and NZDCAD. USDCAD runs into important pivot zone if it dips into 1.3125-1.3050.
NZD – the AUDNZD looking to establish a real trend now if we can avoid negative China focus, especially if China’s yuan move is a one off adjustment that now calms. The next important NZ data points are some ways off – technically watching whether the 0.6800 break in NZDUSD holds and if AUDNZD can surge to new territory above 1.0960.
SEK – would have though that the positive EU news would be even more positive for SEK, but that has so far not proven the case. To avoid a full pull to the top of the range, EURSEK needs to find resistance around the 9.50 level. Next week looking more interesting for SEK on the Riksbank meeting Tuesday and a number of Swedish economic data points.
NOK – if risk appetite avoids further weakness, would expect NOK to firm a bit more here, given he upgrade to the Norges Bank outlook and the surge in crude oil prices.
Upcoming Economic Calendar Highlights (all times GMT)
• 0800 – Norway Jun. Unemployment Rate
• 0830 – UK Q1 Final GDP
• 0830 – UK May Mortgage Approvals
• 1230 – Canada Apr. GDP
• 1230 – US Personal Income / Spending
• 1230 – US May PCE Deflator / Core
• 1345 – US Jun. Chicago PMI
• 1400 – US Jun. Final University of Michigan Sentiment