The G-10 rundown
USD – the Fed needs to not only cut rates but bringing USD funding and QE into the discussion (and indicate a readiness to do something about it) to begin a sustainable weakening of the US dollar.
EUR – possibly interesting ECB speakers out later – particularly Lane, who should be seen as the policy guru from here while Lagarde will be the political head of the ECB. The 1.100 area is the line in the sand on daily closes the other side of tomorrow’s FOMC meeting.
JPY – the yen not doing well, perhaps as the oil price rise is a net negative due to Japan’s total dependence on oil imports – US yields remaining fairly elevated and risk complacency also keeping a lid on the yen.
GBP – sterling still looks price for positive outcomes here – would suggest that the risks of an October 31 cliff edge situation are still a danger and even if not, extensions will provide no relief to the weak growth baked into the cake for the UK.
CHF – risk complacency on all fronts keeping CHF well away from any drama and there has been less pressure on the currency to rise in recent weeks, judging from sight deposit data.
AUD – the RBA minutes show members fretting the outlook for the construction sector and the lack of feed-through into the economy from tax cuts. The RBA remains on course for further rate cuts, but may not move on October 1 in hopes that the US and China can piece together a de-escalation of the trade war.
CAD – the oil price has done little to boost the CAD’s fortunes – USDCAD close above 1.3300 after the FOMC would begin to reset the focus higher.
NZD – Australian and New Zealand 2-year rates at par and may be a bit more difficult to find a policy divergence between the two countries to drive further AUDNZD upside unless we see a distinct NZ-negative catalyst.
SEK – SEK strength needs EUR strength and that hasn’t followed on from last week’s ECB meeting. Market beginning to sniff out that Sweden’s Riksbank is hopeless stuck as unemployment jumped in August (out this morning at 7.4%, the worst reading since 2015 and suggesting that July’s jump above 7.0% wasn’t a fluke).
NOK – market in suspense over the Thursday Norges Bank decision with market sharply divided on the prospects for a hike, but the currency more likely impacted by latest on risk appetite direction post-FOMC beyond an initial kneejerk.
Upcoming Economic Calendar Highlights (all times GMT)
- 0900 – Germany Sep. ZEW Survey
- 1230 – Canada Jul. Manufacturing Sales
- 1315 – US Aug. Industrial Production and Capacity Utilization
- 1400 – US Sep. NAHB Housing Market Index
- 1630 – ECB’s Galhau and Lane to Speak
- 1710 – ECB’s Coeure to Speak
- 2245 – New Zealand Q2 Current Account