FX Update: Euro weakness stands out, also after modest risk-off overnight

The G-10 rundown

USD – the dollar strength has faded slightly, broadly speaking, as hopes for a bounce-back in the global economy has generated more enthusiasm for risk-correlated EM currencies, but this so far merely looks like a pause in a trend.

EUR – the euro scraping to new lows and broadly weak – interesting test for the single currency if this bout of risk off deepens and shows that the euro has become negatively correlated with risk appetite.

JPY – the yen picking up a solid bid overnight on risk off and safe haven bonds bouncing – the usual stuff. Need far more volatility in global markets to spark more volatility here – but vols are so cheap for longer term JPY calls that owning a bit of longer term vol worth consideration.

GBP – sterling more than firm as the focus on the weak euro keeps sterling well bid versus the single currency – but is there enough here to take GBPUSD back well above 1.3000? The Jan. RICS housing survey for the UK overnight blasted to a much better than expect +17%, suggesting confident consumers.

CHF – the EURCHF pairs shows how profound the weak euro trend is here as CHF thrives in relative terms almost no matter the backdrop. The pair has slipped to new lows since 2015 here, with the sense that there is little to support after the US treasury put Switzerland back on the currency manipulation watchlist.

AUD – to remain extremely sensitive to news on the resumption of activity – or lack thereof – in China. Technically, status of attempt through 0.6700 in AUDUSD dominates the focus.

CAD – USDCAD is in consolidation mode after the steep run higher and bulls in control as long as the pair remains above perhaps 1.3200 (the 200-day SMA a bit above there), although a further recovery in oil could keep the pair rangebound and directionless for a time.

NZD – the kiwi got quite a boost from the RBNZ this week, but overnight action shows how sensitive the currency is to coronavirus news. Key chart point around 65.00 in NZDUSD if the kiwi is to stage a recovery.

SEK – EURSEK breakdown in progress as we await whether there is enough in the mix to take the pair below the important 10.40 area – original thesis being we needed more in the policy mix from the EU and Swse

NOK – EURNOK found support ahead of the key 10.00 as the oil rally found resistance overnight – too early to say NOK is out to of the woods yet.

Upcoming Economic Calendar Highlights (all times GMT)

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