The G-10 rundown
USD – a move forward with US impeachment hearings might dent confidence, will definitely make for lower odds of cooperation between Trump and Congress on fiscal stimulus\tax cuts, etc… Offsetting is the ongoing risk of the USD liquidity issue and whether the Fed is sufficiently rising to the challenge.
EUR – EURUSD still languishing in the 1.1000 pivot zone with the general frustration of not seeing the path to fiscal stimulus, a path that German industry is trying to open up with a request that the government ends its new borrowing ban.
JPY – perking up a bit in noticing the e drop in yields, but the US and Japan have failed to move in agreement on tariffs, so an ongoing risk of a trade spat keeping a lid on JPY at the margin, perhaps.
GBP – as noted above, even if we can fully remove the cliff-edge October 31 Brexit scenario, we’re not closer to understanding how this shakes out – we see asymmetric downside risk for sterling.
CHF – risk off and strong bond markets pressuring CHF higher again – EURCHF in a probe of the lows here soon and could go lower on a deepening of these developments.
AUD – RBA’s Lowe tried to sound upbeat yesterday, but still clearly willing to ease and he fretted the weak consumption despite a strong labour market – AUDUSD under pressure again and could be ready to challenge the lows for the cycle on further signs that US and China won’t move to a wider détente.
CAD – wakes us up on a close above 1.3300 or below 1.3200 – latest weakening of market sentiment and weak oil prices not helpful for CAD and we think the market’s BoC outlook looks complacent (too high relative to US and other peers).
NZD – the RBNZ downshifting to wait and see mode and overextended NZD shorts have been in for consolidation, but the narrative for a structural AUDNZD rally may resume soon – 1.0700 first important support there.
SEK and NOK – both of the Scandies looking somewhat resilient relative to the market backdrop and weak risk sentiment, but the key EURSEK and EURNOK pairs bogged down in the range.
Upcoming Economic Calendar Highlights (all times GMT)
- 1100 – Czech Central Bank Rate Announcement
- 1200 – US Fed’s Evans (Voter) to Speak
- 1400 – US Fed’s Brainard (Voter) to Speak
- 1400 – US Aug. New Home Sales