The G-10 rundown
USD – the USD remains firm but lacks a pulse tactically as we await whether the US-China trade deal sparks any interest.
EUR – the EURUSD suffered a bearish reversal, but has yet to follow through lower, even if the chart is tactically bearish as long as we remain below the 1.1150-75 area.
JPY – US yields ticked down yesterday on a weak CPI release – expect any further strength to drive JPY resilience, especially if a bit of equity market consolidation is thrown into the mix. Alternatively, consider CADJPY and NZDJPY downside.
GBP – sterling was putting up a bit of a fight after poking at key levels in EURGBP near 0.8600, but still skeptical that it can mount any pronounced rally unless we see a breakthrough in this very early stage of EU-UK trade deal negotiations, especially after a very weak December UK CPI print (cycle low since 2016 at 1.4% year on year vs 1.7% expected) and as the market firms its view of an imminent BoE rate cut.
CHF – EURCHF rushing to new lows for the cycle yesterday as the US has recently placed Switzerland back on its watchlist of currency manipulators, suggesting that SNB has little room to operate against CHF appreciation and the natural background pressure is on the CHF to strengthen, given Switzerland’s current account surplus expanding back to an incredible 10% of GDP after dipping below 7% in early 2018. This could prove one of the few trades going at the moment if CHF is rerated lower here to 1.0500 or even lower.
AUD – AUD struggling against the US dollar again – but has gone nowhere since pumping into year-end and then dumping to start the year. One place to consider AUD resilience is in the crosses like AUDNZD and AUDCAD on the angle that the terrible bushfires will trigger a fiscal stimulus and insurance-related flows.
CAD – the Loonie one of the “safer” areas to trade USD strength as there is more room in positioning and mean reversion terms and the Canadian rate outlook remains unrealistic in our view.
NZD – AUDNZD has posted a bullish reversal, now it is about follow through higher, which may require a negative NZD catalyst, though we also eye the 0.6600 area in NZDUSD and whether a break encourages additional flow as longs run for cover.
SEK – the ex energy Swedish December CPI number a bit soft this morning as we awaiting an economic upswell in the EU and/or fiscal stimulus there and/or in Sweden for a more profound SEK-positive catalyst.
NOK – three weeks of very compressed volatility after the market front-ran the end of year weak NOK seasonality – NOK needs fundamental support from a more pronounced upswing in the global growth outlook plus another bump in the oil and gas (natural gas exports as import for Norway as oil in recent years and will become more important in the years ahead).
Upcoming Economic Calendar Highlights (all times GMT)
- 1000 – Euro Zone Nov. Industrial Production
- 1330 – US Jan. Empire Manufacturing
- 1400 – Canada Dec. Existing Home Sales
- 1530 – US Weekly DoE Crude Oil and Product Inventories