The G-10 rundown
USD – until proven otherwise, the US dollar trades as the flipside of risk sentiment, with some nuances depending on the pair – for example whether JPY keeps pace during further deleveraging. The US authorities are not done stimulating yet and the stimulus in the pipeline may be too slow – i.e., that helicopter “cash” is a cumbersome process of sending out physical checks that take longer than Treasury Secretary Mnuchin’s claimed three weeks. The longer the wait, the higher the risk of a aggravating damage from the economic impact of the shutdowns.
EUR – peripheral spreads pushing back wider this morning after last week’s disastrous EU video-summit. How does Europe get on the same page? Euro may languish until it does – especially versus JPY if risk sentiment comes under pressure again.
JPY – the JPY bulling higher again into Japan’s financial year end and with safe haven yields under even more pressure today. Reminder to look out for any change in behavior over quarter end.
GBP – sterling have moved with extreme beta to recent swings in market sentiment, will that remain the case or is it worth it for sterling bulls to set up shop soon in EURGBP – on the argument that sterling is cheap and the UK is more ready and willing on fiscal measures and stabilizers in the needed size.
CHF – the amplitude of the recent EURCHF bounce was not impressive and the existential angle dogging the Euro at the margin and keeping CHF supported. SNB leaning against further CHF upside.
AUD – the Aussie bounce getting a bit ambitious over 0.6100 unless we are headed for a more profound extension of the recent thaw in risk sentiment.
CAD – note the comments on NOK below, even as some grades of Canadian crude have sold for as little as five dollars per barrel, although CAD has not priced as much impact from all of this as NOK and 1.4000 looks an important support area for USDCAD here.
NZD – the RBNZ also moving to support the corporate sector with targeted purchases and milk powder prices are weak – do we have that turn higher yet in AUDNZD – not there technically, yet.
SEK – the RIksbank has relaunched QE – a better SEK bounce comes with the EU turning the corner and better fiscal solidarity in Europe. EURSEK is focused higher as long as 10.85-11.00 zone continues to support.
NOK – we may have reached the point at which the lower oil prices are not impacting NOK any more, as longer dated oil prices have actually risen from last week’s lows even as the front end of the crude oil has collapsed further and could trade down to almost unimaginable prices if demand shortfalls stretch out from here for another few months. Fading more downside from here in NOK, and suspect that the Norges Bank has an eye on things as well.