The G-10 rundown
USD – the USD under real pressure here, and again, it looks like pressure broadest on the greenback if we get soft data and resilient risk appetite, while exceptionally bad data could begin to creep into risk spreads and mean that USD weakness is more selective.
EUR – EURUSD trying to turning higher and may have weaker beta to the weak US data than USDJPY, but still very interesting with more obviously interesting levels in EURUSD coming up just above 1.1200.
JPY – often the most sensitive to US data – but only likely to strengthen broadly on the combination of weak US data supportive bonds and weakening risk sentiment at the same time.
GBP – sterling sufficiently resilient and the USD sufficiently weak to see GBPUSD pushing on the 1.3000 area and likely set for more upside if the USD weak elsewhere after today’s data.
CHF – the franc torn between robust risk appetite and lower bond yields. Tough to pay attention here any more- but the 1.1050-60 area an important trigger zone if the pair to rally.
AUD – yesterday’s AUD rally dented on the US-China trade deal doubts, but not sufficiently to argue we have seen a reversal just yet in AUDUSD, which looks pivotal here on the USD outlook over key incoming data.
CAD – CAD managing to stabilize versus the weak USD, but has weakened sharply in the other crosses after the BoC’s dovish caution this week. On that account, USDCAD could prove low beta in a weakening USD environment.
NZD – we head into the US data with NZDUSD testing a very well etched upside down head-and-shoulders formation neckline around 0.6435 overnight and this morning.
SEK – some kind of shift in the market’s assessment of SEK going on here, as the krona largely shrugs off a very weak PMI (46.0 vs. 47.0 expected and 46.33 in Sep.) this morning and heads higher. Suspecting that a strong EUR could mean an even stronger SEK if EURUSD is breaking higher after today’s US data.
NOK – a strong PMI from Norway helping EURNOK back lower and we like the setup for a more significant sell-off on a close south of 10.20 – a classic momentum divergence pattern.
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