The G-10 rundown
USD – the greenback is lost in the desert and at a loss for a volatility catalyst. A heavy calendar next week – both macro and political – could see a bit more action on any particularly pointed data surprises. The key EURUSD pair needs to show more dynamism to gin up an isolated USD view – either south of 1.1000 or north of 1.1200.
EUR – there is little to like in Europe in economic or policy outlook terms, but the euro is possibly resilient here on carry trades unwinding as all risk-correlated currencies are under pressure and position squaring may be keeping the Euro aloft at the moment. Italy and France both printed negative GDP in Q4: -0.3% and -0.1%, respectively.
JPY – without a consistent risk-off picture across both fixed income and equties, yen simply languishes without direction within the G3.
GBP – we respect the sterling surge on the back of the BoE’s non-cut here but wonder how long it can continue if the backdrop remains pessimistic on coronavirus concerns.
CHF – the CHFJPY pair one of the more interesting technical setups here as the late reversal looks bearish – EURCHF seems to have low beta to the market’s gyrations from a safe haven perspective.
AUD – the AUD under severe pressure here and for good reason as key commodities prices are under extreme pressure and Australia’s economy is so leveraged to Chinese demand. AUDUSD is trading below the lowest daily close since 2009 as it looks below 0.6700. An RBA cut next Tuesday could deepen the slide if virus concerns continue next week.
CAD – the commodity currencies all on the defensive and USDCAD looks ready to challenge the top of the range above 1.3300 if this drags on any longer, and even the trend line currently coming in around 1.3400. The latest monthly Canadian GDP print up later today.
NZD – the kiwi is more forcefully breaking down against the safe haven currencies and in danger of a full downdraft into the cycle lows below 0.6300 if the backdrop remains hostile on fears for Chinese demand for NZ exports/risk off.
SEK – EURSEK looks in danger of a full squeeze back into the upper range to 10.90+ here after weak EU growth figures this morning if it holds above 10.65 and if risk aversion deepens.
NOK – a worrisome December Credit Growth Indicator released this morning, which shows credit growth slowing sharply to a cycle low of 5.1% YoY and underlining the Norges Bank comments that it sees some domestic softness. New lows in short Norwegian rates this morning – and EURNOK has broken up.
Today’s Economic Calendar Highlights (all times GMT)
- 1000 – Euro Zone Q4 GDP Estimate
- 1000 – Euro Zone Jan. Flash CPI
- 1330 – US Dec. PCE Inflation
- 1330 – Canada Nov. GDP
- 1445 – US Jan. Chicago PMI
- 1500 – US University of Michigan Jan. Sentiment