The G-10 rundown
USD – The USD is weak and will remain that way as long as hopes for the outlook on what the other side of this Covid19 crisis looks like remain buoyant and risk sentiment is strong. A key test later today with the FOMC.
EUR – the market is unwilling to draw any longer term conclusions on downside risks from the never-ending concerns that in the long term the EMU is doomed, even if short term strains are constantly averted. Watching EURJPY with interesting on the technical break as discussed above.
JPY – stronger than it looks, given the usually hostile backdrop of strong risk sentiment recently, although bond yields globally have been crushed lower and carry reduced by even the weakest of EMs continuing to chop rates, leaving carry traders in the lurch.
GBP – the 0.8700 area in EURGBP has become the local pivot zone as investors feel reluctant, perhaps, to take a longer term view on Brexit and other factors until the Covid19 crisis has eased more considerably..
CHF – after the signs of massive intervention impressed the market and saw EURCHF spiking higher, the price action has been quick to settle back. Untradeable.
AUD – I am getting uncomfortable with this AUDUSD rally at these levels, although still some technical room to run up to 0.6675, the old cycle low from late 2019. At the margin, perhaps hopes for a Chinese recover and large Chinese stimulus announcement ($600 billion) helping to drive this latest surge. Bears don’t have much of an argument unless we quickly reverse this last leg of rallying price action.
CAD – last local pivot in USDCAD comes in just ahead of 1.3850 – prefer to watch for bullish reversals rather than to expect that we entirely reverse the Covid19-inspired rally from the sub-1.3500 base.
NZD – same comments as for AUDUSD for NZDUSD, although the surprisingly steep AUDNZD rally means that NZDUSD has yet to rally above its local 0.6130 pivot, and the bigger resistance overhead is not until the 0.6200 area.
SEK – as noted above, important that RIksbank signals lack of interesting in going back into negative rates for now – but 10.70 areas is an important nut to crack to get EURSEK lower still and a sustained SEK rally needs an improved economic outlook and fiscal stimulus in Sweden
NOK – EURNOK has likely topped for the cycle as long as the crude debacle fails to pick up any further intensity from here, and Norges Bank is on the watch and government stimulus means NOK purchases must be raised. Still, reluctant to call EURNOK below 11.00 without more profound recovery in oil and gas prices.
Economic Calendar Highlights (times GMT)
- 1230 – US Q1 GDP first estimate
- 1800 – US FOMC Meeting
- 1830 – US FOMC Powell Press Conference