The G-10 rundown
USD – USD pressuring to the upside here, and we use the cycle lows in AUDUSD and the 1.1000 area in EURUSD as proxies for the general USD outlook.
EUR – very ugly PMI data out of Germany this morning (managing a new low for the cycle at 41.4 for the flash Sep. manufacturing PMI) this morning putting new pressure on the euro, and recent Germany comments on lack of interest in fiscal not helping at the margin.
JPY – the yen staying anonymous in the background lately, but could be set to firm against high yielders if market complacency on USD liquidity issues proves ill founded.
GBP – Thomas Cook collapse not a nice headline for the UK, but sterling near the highs against the euro here, even if 1.2500 was too high for GBPUSD as we await the Supreme Court decision on Boris Johnson’s proroguing of Parliament.
CHF – the weak flash PMI’s out of Europe this morning taking EURCHF sharply lower and recent German signals on lack of interest in fiscal stimulus also applying pressure – a test of the lows and below 1.0800 a risk here for EURCHF as SNB intervention is no doubt set to rise.
AUD – looking for how AUDUSD behaves in a test of the lows scenario, with added vulnerability for the Aussie on any further signs that US-China trade negotiation hopes are foundering.
CAD – upside danger in USDCAD on a close well above 1.3300 as the market’s confidence that the Fed is addressing the USD liquidity issue sufficiently may be poorly placed.
NZD – an important week for the little kiwi as the RBNZ is set to announce rates on Wednesday and we may need a dovish surprise to drive further relative NZD weakness as rate spreads versus Australia have stalled around 0 basis points at the short end of the curve.
SEK – weak EU PMI’s are bad news for SEK and EURSEK looks set to test the highs for the cycle if the market continues to sour on the outlook for Europe.
NOK – EURNOK ripping higher into 10.00 on the weak EU news, which tends to multiply through the Scandies. It’s impressive to see the price action despite last week’s hike, admittedly a dovish hike.
Upcoming Economic Calendar Highlights (all times GMT)
- 1230 – US Aug. Chicago Fed Activity Index
- 1300 – ECB’s Draghi to Testify
- 1345 – US Flash Sep. Markit PMI
- 1350 – US Fed’s Williams (Voter) to Speak
- 1700 – US Fed’s Bullard (Voter) to Speak
- 1700 – ECB’s Chief Economist Lane to Speak