Today’s G-10 rundown
USD – the US dollar sharply lower versus the high beta EM currencies responding to the strong bounce in risk sentiment, but the pattern not the same within G10, where the USD firms a bit versus the EUR and JPY on the same development. Still interesting that the market has removed a 100 basis of Fed policy in the forward expectations without more notable weakness in the USD (EURUSD aside – see above chart comments).
EUR – the euro appreciating on a major positioning adjustment that may be far from complete, but not looking for the rate of broad appreciation to potentially slow from here (EURJPY shorts?) after the initial shock.
JPY – the JPY should remain the safe haven of choice as long as bond yields continue lower and on further waves of deleveraging.
GBP – EURGBP bulled up to the 200-day moving average on the combination of speculators finding themselves heavily positioned the wrong way around heading into this episode of deleveraging. Can’t call an end to this just yet, but watching the quality of any retracement here, as with all other EUR pairs.
CHF – EURCHF could be one area to test the notion that the broad Euro rally has been primarily positioning- and carry-trade based.
AUD – the Aussie getting a modest boost as the RBA failed to panic with a fifty-basis point move and amid hopes for fiscal stimulus on the way. But the bounce in AUDUSD, for example, would have to threaten above 0.6700 to begin reversing the well established down trend.
CAD – USDCAD trying to reverse lower recently on the bounce in sentiment, would need to punch down through 1.3300-1.3250 to reverse the recent move higher.
NZD – AUDNZD traders have another chance to test the thesis that this pair gearing for a rally on the principles of longer term valuation and RBNZ playing eventual catchup with rate cuts.
SEK – EURSEK contending in vicious, churning fashion with the 10.60-65 area that contains the 200-day moving average and looks like a pure sentiment play on coronavirus/deleveraging (further fears for global growth pointing higher for the pair, etc.)
NOK – EURNOK rally has room to consolidate to 10.20-25 without reversing and NOK vulnerable to further weakness if oil can’t put in a rally here.
Upcoming Economic Calendar Highlights (all times GMT)
- 1000 – Euro Zone Feb. Flash CPI
- 1200 – G7 Finance ministers and central bankers to hold teleconference call
- 1300 – Norway Norges Bank’s Olsen to Speak
- 0030 – Australia Q4 GDP
- 0145 – China Feb. Caixin Services PMI
- US Democratic Primaries (Super Tuesday)