The G-10 rundown
USD – USD strength doesn’t look terribly convincing coming into this morning as EURUSD bobs back above 1.1400 and even the riskier currencies are taking back some territory. If the market is right and the Fed risks committing a policy error that it will have to reverse, the more hawkish than expected meeting outcome may not feed much further USD strength.
EUR – An Italian budget deal is official and helps at the margin; in the coming weeks it is only the fallout from an ugly turn in the Brexit talks that might hold the single currency back from a rally. Note the strength in the single currency in the crosses. Productive on the outlook for a higher EURUSD to kick off 2019 if the pair can close above 1.1450-1.1500.
JPY – USDJPY looking heavy into the first key pivot levels below 112.00, with the 200d-day moving average down near 111.00 the next focus. Assume the JPY maintains the upper hand as long as US treasuries show continued signs of safe haven seeking.
GBP – sterling tilting lower as EURGBP pulls above 0.9000, but we need clarity on next steps for Brexit to see a strong directional move. Bank of England hardly likely to bring anything new to the table today.
CHF – EURCHF celebrating the clearing up of Italy’s budget situation for this time around with a modest rally and interesting to note the lack of a CHF bid given the ugly risk sentiment.
AUD – the employment report overnight a mixed bag – headline payrolls growth looked strong, but all of it and more was part-time employment. The unemployment rate ticked up, but for the good reason that the participation rate rose 0.1%. More importantly, AUD sold off heavily against the G3 on risk off – but CNY may provide a anchor for AUDUSD soon if China keeps the USDCNY rate stable.
CAD – USDCAD rising to 1.3500, but CAD firmer against the market’s weakest links overnight. If USDCAD can remain clear of 1.3400, the next resistance area comes in around 1.3800. EURCAD has broken major levels, including the 200-day moving average.
NZD – the kiwi outperformance of late more firmly in the rear-view mirror as Q3 GDP prints below expectations at 0.3% q/q.
SEK – the Riksbank rate decision is unfolding here as I am writing and they have gone ahead and hiked! This should be positive for SEK and USDSEK could be even more interesting than EURSEK if EURUSD is bid. Press conference up shortly and the policy and especially the lowered inflation forecast updates from the Riksbank are taking some of the steam out of SEK’s attempt to rally.
NOK – the krone getting squeezed to new lows over recent session, but this may reverse sharply early next year as Norges Bank resumes purchases, although it would be helpful for both oil markets and risk appetite to stabilize. Upcoming Economic Calendar Highlights (all times GMT)
0930 – UK Nov. Retail Sales
1000 – Riksbank Press Conference
1200 – UK Bank of England Meeting
1330 – US Philly Fed Survey
1330 – US Weekly Initial Jobless Claims
2330 – Japan Nov. CPI