EUR lower as Rome seeks EU confrontation

The G-10 rundown

USD – the USD enjoying strength on the euro’s and yen’s woes for now, but not convinced that USD strength is the focus at the moment, given the lack of a more forceful move in US rates.

EUR – the euro lower on fresh existential concerns. The single currency will remain headline prone and we have Italian finance minister Tria in Luxembourg today. If the EU makes nice, the euro could turn around quickly, but will they want to show that they can be pushed around? 

JPY – USDJPY bulling up into the last shreds of the range back eighteen months or more ahead of 115.00, even without long US yields setting new highs for the cycle. The trend looks strong if the risk appetite mood stays relatively positive here.

GBP – sterling is bid against the euro. Watch out for stop-loss driven selling in sterling, however, if the USD strength drives GBPUSD through the pivotal 1.3000 level. As we discuss above, the UK political situation looks untenable for delivering a Brexit, so some sort of delay to the whole process, and a new narrative, looks increasingly likely.

CHF – extreme gyrations in EURCHF as Friday’s meltdown on fresh Italy woes reversed sharply ahead of the weekend. We were reminded over the weekend of the ongoing, awkward relationship between Switzerland and the EU, where a new deal is needed to replace the patchwork of deals that have accumulated over the years. Given Brexit, the EU is presenting a stern face here as well. 

AUD – low expectations for the RBA tonight as Australian short rates have hit the skids over the last week. AUDUSD looks ready for new lows for the cycle if the 0.7200 area falls.

CAD – CAD pulling sharply stronger – look at EURCAD and even CADCHF and CADJPY – and more fuel in the tank there even as USDCAD's progress lower may prove a bit slow if the greenback firms further.

NZD - watching the kiwi’s relative strength versus the Aussie over the RBA tonight – in the bigger picture, we see more upside and than downside risk in AUDNZD.

SEK – tricky for SEK if the mood in Europe gets too negative as, but the medium-term picture suggests we have a well-defined top in place for EURSEK, encouraging a sell-the-rallies stance.

NOK – new highs in Brent – can the 9.40 area in EURNOK survive for long if crude continues higher – we focus lower toward 9.25.

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