The G-10 rundown
USD – the greenback on the comeback trail, but every modest attempt higher for the last many weeks has quickly been beaten back, so USD bullish hopefuls need the greenback to complete a bigger reversal here.
EUR – the EURUSD sell-off has rejected the new highs but doesn’t begin to fully reverse the late rally unless we work down through 1.1800.
JPY – with risk sentiment weakening and treasuries bid, JPY is strong in the crosses and even against the US dollar today. A pair like AUDJPY or NZDJPY and even EURJPY an interesting way to look for more JPY strength if risk appetite is set to breakdown further for a time.
GBP –the GBPUSD reversal was quick and completely erased the large Tuesday rally bar – bearish rejection until proven otherwise – watching 1.3000 next and the pair can even go all the way to the 1.2750 area without reversing the larger scale up-trend.
CHF – CHF was exceptionally weak yesterday, perhaps a sign that USDCHF was exceptionally sensitive to all things Fed-related. Interesting bullish momentum divergence in that pair, but again, let’s see if we get USD follow through, and EURCHF is already settling back below 1.0800 after yesterday’s spike – ho hum.
AUD – another new high in AUDUSD met with a strong sell-off bar. The prior two of these sell-off bars was eventually rejected after little to no follow through lower. Bearish momentum divergence on that chart, but the damage only really starts with a move down through 0.7050-0.7000.
CAD – no stagflation in Canada as the inflation bump registered elsewhere not in evidence in Canada and its headline July CPI at a +0.1% year-on-year rate, with the trimmed mean at 1.7%, down from 1.8% in June. USDCAD in a downtrend and only a chunky rally that breaks back above 1.3300-50 in impulsive fashion, possibly together with a sell-off in crude oil, begins to shift the narrative until we get a look at Trudeau’s new stimulus plan next month.
NZD – watching for signs of AUDNZD stability after the consolidation and hopefully for the bulls well ahead of the 1.0850-00 zone. Elsewhere, NZDUSD is pressing down on a head-and-shoulders neckline area around 0.6500-25.
SEK – squeeze risk for EURSEK if we start to slip above 10.35 and if risk sentiment heads further south and/or flash August Euro Zone PMI’s are weak this Friday. SEK not even catching a bid from better than expected employment data today (seasonally adjusted unemployment rate steady at 9.2% rather than rising to expected 9.5%)
NOK – The Norges Bank firmly sitting on its hands in the outlook as we await signals from crude oil and risk appetite and NOK likely one of the currencies most negatively correlated with the USD here. More guidance and forecasts from Norges Bank at its September meeting.