The G-10 rundown
USD – the USD in limbo ahead of a pivotal Fed meeting, which is about Fed balance sheet issues and the link to USD funding and how honestly these are discussed and the guidance related thereto, more than any discussion of the economy and rates.
EUR – Euro bounced yesterday, perhaps on the implications of the Fed’s QE and the sense that the Fed will be forced to ease from here, while the EU can fund its own fiscal, given its large external surpluses.
JPY – would have thought easing oil prices and comeback in treasuries would do more to support JPY – general max complacency in risk appetite may be a driver of JPY still on defensive
GBP – market is oddly enthused about the pound, we are cautious, as any positive story will be flow related on hoped-for Brexit catalysts, as the credit impulse tells a scary story of hard recession incoming.
CHF – high risk complacency and the ECB lacking any further bite and hope for EU shift to fiscal likely behind EURCHF trading up against 1.1000, with 1.1065 a larger level a bit higher.
AUD – the latest Australian jobs data up tonight as traders have taken a shine to AUD lately on resurgence in risk sentiment and hopes for the US-China trade talks next month. AUDUSD in a pivotal area.
CAD – USDCAD in limbo as we await market’s assessment of the USD post Fed – ugly manufacturing sales data out of Canada yesterday, by the way.
NZD – the Q2 (a bit old…!) GDP release tonight from NZ in focus for relative strength via AUDNZD as we need new catalysts to drive interest in further NZD weakness.
SEK – the krona is on the defensive after terrible unemployment data with the backdrop fairly supportive, so if we shift to an unsupportive backdrop (concern that the Fed will remain behind the curve), risk of EURSEK pulling to new highs for the cycle.
NOK – if Norges Bank is going to hike again, it might as well get it over with at tomorrow’s meeting – but the hikes in the bag have done little for NOK – even with the more supportive backdrop of late. Odds only slightly in favor of a Norges Bank pass tomorrow. Worth noting that short rates in Norway near highs for the cycle.
Upcoming Economic Calendar Highlights (all times GMT)
- 0830 – UK Aug. CPI
- 1230 – US Aug. Housing Starts and Building Permits
- 1230 – Canada Aug. CPI
- 1800 – US FOMC Meeting
- 1830 – US Fed Chair Powell Press Conference
- 2100 – Brazil Selic Rate
- 2245 – New Zealand Q2 GDP
- 0130 – Australia Aug. Employment Change/Unemployment Rate