The G-10 rundown
USD – The USD strength, especially now that EURUSD has broken down and that CNY continues to head lower, sets the clock ticking faster for eventual intervention, whether from the Fed or from the Trump administration. I would expect loud presidential tweets threatening a new approach at minimum soon from DJT.
EUR – the 1.1000 level was a critical one to break and sets loose EURUSD to the downside as we await next week’s ECB and where the focus will lie
JPY – yen managing to rise to the top of the heap on risk-off behavior, suggesting more upside potential from this source if global market mood continues to sour.
GBP – Critical vote today – see chart caption above. FT’s big read at the weekend discusses the particulars of the “Corbyn revolution” and gives an idea why the material threat of a left-Labour government could see significant further downside risk for sterling.
CHF – risk-on, risk-off likely will see CHF tracking JPY in the crosses.
AUD – Aussie gets a minor boost as RBA fails to panic this time around, but the dovish guidance makes it clear that the cutting continues.
CAD – Bank of Canada is the pivotal event risk, with the strong USD felt more in USDCAD if the Bank of Canada waxes dovish as we expect. Oil fundamentals don’t look supportive for CAD either.
NZD – we continue to like AUDNZD higher, possibly to 1.1300 area in coming months. Long term fundamental supports from relative current account fundamentals and valuation.
NOK – our commodities strategist Ole S. Hansen outlines the supply risks to the oil price in today’s Market Call podcast and risk from weak risk appetite further compounds the downside risk for NOK – but let’s see a newly daily close in EURNOK clear of 10.05
SEK – the krona tries to get a boost from the strong Manufacturing PMI yesterday, but risk off weighs, as likely could the Riksbank if they climb down from their insistence in maintaining a bias to hike rates.
Upcoming Economic Calendar Highlights (all times GMT)
- 1400 – US Aug. ISM Manufacturing
- 1700 – New Zealand Aug. QV House Prices
- 2100 – US Fed’s Rosengren (Voter) to Speak
- 2230 – Australia Aug. AiG Services Index
- 0130 – Australia Q2 GDP
- 0145 – China Aug. Caixin Services PMI