The G-10 and CNH rundown
USD – as long as yields don’t rise too quickly to spook risk sentiment, the USD getting the worst of it and could be set for new cycle low s on a weak close today. Watching real yields closely and a busy week from the Fed next week (Powell semi-annual testimony, and Clarida out speaking later in the week)
CNH – the yuan not leading the way in rising against a weaker USD here and interesting to note that AUDCNH is trading near the cycle highs.
EUR – a bad head fake for the EURUSD bulls in yesterday’s sell-off, which we suddenly find wiped away in early trade today. But EUR unlikely to prove a leader in any global reflation scenario – and reality on the ground in the EU still sad on Covid lockdowns, etc. (but some hope in the flash Euro Zone Manufacturing PMI improving to a nice 57.7 even if the Services PMI was a lousy 44.7)
JPY – even the JPY managing to rise against the US dollar today. Note that long JGB yields are also coming a bit untethered, with the . Still, on further rises in yields and risk sentiment, would expect broad JPY weakness even if the yen manages to firm further against the greenback.
GBP – the EURGBP sell-off extended to 0.8650 and GBPUSD even had a look above 1.4000 this morning. There is more revaluation potential higher for GBP, but at some point, the same structural concerns for sterling as for the USD will weigh (Gilt issuance vs. BoE QE and more important, if UK negative real rates worsen on higher UK inflation from the fiscal outlays)
CHF – weakening sufficiently here to deserve a bit of attention. Look at the action in GBPCHF, for example. But more focus if rising yields and distaste for negative yielders finally sees EURCHF 1.0900 falling.
AUD – as noted above, should do well in the current environment anticipating commodities inflation as copper prices roar higher and iron ore posted another strong session overnight. Watching whether AUDUSD can stick the close to the week.
CAD - oil prices finally finding some two-way volatility, which is holding CAD back a bit in the crosses, but USDCAD looks ready to have a go at 1.2500 soon, and possibly lower.
NZD – not much to differentiate AUD and NZD here, although would expect AUD to outperform if current themes heat up further. NZDUSD looking ready for more upside if it closes north of 0.7250 for the week here.
SEK – if we pull back to new highs for the cycle in European equities and the vaccination hopes pick up in the least here, surely EURSEK can manage a break below 10.00 soon.
NOK - giving up some gains in the crosses on the oil volatility, but would still expect NOK to outperform if markets remain in an optimistic mood and oil stabilizes quickly.
Upcoming Economic Calendar Highlights (all times GMT)
- 1330 – Canada Dec. Retail Sales
- 1445 – US Feb. Flash Markit PMIs
- 1500 – US Jan. Existing Homes Sales