The G-10 rundown
USD – the greenback trying to maintain a head of steam here, but not particularly impressed with the rally this morning relative to the size at times of the weakness in risk assets – a possible sign that the Fed has done its job with sufficient liquidity provision until proven otherwise.
EUR – the more liquid euro seeing less volatility than the smaller currencies and the broader Euro could back up higher (EURGBP, EURAUD, etc..) even if EURUSD continues to consolidate lower in the event this risk-off move extends.
JPY – JPY crosses worth watching for whether we suffer total reversal of the recent run-up – pairs like GBPJPY and AUDJPY in particular, as backdrop of lower safe haven bond yields and weak risk appetite are yen’s best friend. Assuming broad JPY correlates positively with USD here as safe haven, with interest in who wins the relative race as well (106.00 area next major one for USDJPY.
GBP – sterling falling out of bed to start this week as we discuss above.
CHF – the 1.0700-1.0650 area in EURCHF is the last pivot zone ahead of the 1.0500 area that the SNB seems dead-set on defending.
AUD – the best basic risk proxy among G10 currencies and positively correlated with the reflation trade in commodities as well, with Aussie weakness recently in line with weakness in industrial commodities and, for example, BHP Billiton equity price. The 0.6675 area in AUDUSD the next important one if 0.6750 zone gives way.
CAD - considerably more upside needed to drive a reversal in USDCAD – starting with 1.3850. That only looks doable if we see a proper rout in equities and oil here.
NZD – kiwi starting to overachieve again – watching the AUDNZD level as 200-day moving average approaches just below 1.0550 and perhaps 1.0500 to see if the NZD bears can corral the move lower in a still structurally bullish chart.
SEK – EURSEK is consolidating back higher and could squeeze higher still if risk appetite suffers another meltdown. First level of importance up at the 200-day moving average around 10.65 but there is plenty of further retracement potential higher without erasing the significance of the huge reversal from the 11.40+ top to the recent lows near 10.30.
NOK – EURNOK touched the ultimate psychological tactical resistance of 11.00 in early trading today on the run lower in risk appetite. The NOK bulls are in control there but are under increasing capitulation threat if we move back above 11.00 or especially the 11.21 level.
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