FX Update: Brexit tunnel vision, AUD eyes jobs data

The G-10 rundown

USD – the greenback a mixed bag here as focus elsewhere, but major data surprises either way could reinvigorate interest – up later today we have the US Retail Sales for September, a data series that was strong for the five months prior to the weak number in August.

EUR – the EUR tracking GBP with low beta on the swings in Brexit news. Need to see EURUSD clear 1.1110 and some positive catalyst on the policy or economic data side for a sense that the pair is turning the corner here.

JPY – USDJPY popped to new highs yesterday in the wake of surging global risk sentiment on the apparent Brexit breakthrough, but the key level remains 109.00+ in USDJPY, which will need to see new local highs in US long yields to clear.

GBP – there are perhaps two more surges higher possible here in sterling – first a minor one if the uncertainty around the DUP is swept away and the two sides come to terms and then the second one if the UK Parliament has the votes to approve Johnson’s deal. But the options market is already skewed to pricing more risk of upside volatility in sterling.

CHF – EURCHF hovering around the pivotal 1.1000 and reactive to Brexit outcomes as well as the next leg of long bond yield direction (higher yields CHF negative).

AUD – one of the coincident indicators for employment is consumer confidence and the October Australian Westpac consumer from last week dropped heavily to the lowest of the cycle. The Labour market data series is volatile, but often mean reverts month-to-month. August showed a strong surge of +34k in payrolls.

CAD – Canada’s CPI data up today and wondering if the market a bit complacent on the risk of loonie downside despite the recent rally – a big miss in the would likely catch this market off-guard.

NZD – the Q3 CPI was a bit hotter than expected, but the year-on-year number still dropped to +1.5% and the brief rally in NZD was quickly wiped away – keeping interest in downside NZDUSD. More interesting is the relative strength in AUD vs. NZD over tonight’s Australian jobs numbers.

SEK – the krona a bit more reactive than its Scandie counterpart to positive news on a Brexit deal (implications for EU growth, etc.) but EURSEK has yet to take out the technical outlook-altering 10.80-75 area.

NOK – the krone has reached the danger zone for a further squeeze higher as it significantly clears the 10.00 level, even without conditions that would normally be associated with maximum risk.

Upcoming Economic Calendar Highlights (all times GMT)

• 1230 – Canada Sep. CPI
• 1230 – US Sep. Retail Sales
• 1300 – US Fed’s Evans (Voter) to Speak
• 1400 – US Oct. NAHB Housing Market Survey
• 1430 – EIA NatGas Storage change
• 1500 – DOE Oil and Product Stocks
• 1800 – US Fed’s Beige Book
• 0030 – Australia Sep. Employment Change