The G-10 rundown
USD – since the beginning of the year the US dollar has been both strong during a risk off bout after the US-Iran issue and now with risk on and positive US macro data – not sure where the USD negative scenario is hiding here – we can’t find it.
EUR – the EURUSD has broken down and will have a hard time getting up if the narrative doesn’t change to a focus on EU fiscal stimulus or some other positive EU catalyst.
JPY – USDJPY was the big mover yesterday intraday and has emphatically reversed higher and will likely go much higher still if the US 10-year benchmark yield pulls to 2.00% and above, as that level coincides with testing the cycle highs short of 110.00.
GBP – sterling going nowhere as we await for signals from the budget and from the EU side on the eventual shape of a trade deal post-Brexit. As well, the go-go trade for sterling trades late last year was GBPUSD, which has now faltered badly under the weight of USD strength.
CHF – EURCHF easing off the downside pressure after sub-1.0800 traded briefly, but the divergence in CHF and JPY is notable in the crosses as CHF fails to respond to the jump in risk appetite and bond yields.
AUD – the Aussies has now fully reversed lower versus the USD, but how much downside energy can AUDUSD develop into the US-China trade deal signing and a heavily short speculative market?
CAD – an interesting test for USDCAD over the next couple of sessions as we discuss above.
NZD – a solid bounce in AUDNZD from yesterday’s lows and NZDUSD continues its stumble – thinking that downside risks outweigh upside risks in NZD crosses on valuation and the risk of the RBNZ eventually weighing in.
SEK – the vigorous resumption of the rally boosts the krona – but at these levels we prefer a stronger fundamental catalyst to believe in a more notable SEK rally (fiscal or better EU numbers/EU fiscal, etc.).
NOK – EURNOK downside momentum is dead as NOK fails to join the enthusiasm for riskier currencies, where traders seem to prefer EM longs relative to traditional risk-correlated G10 smalls.
Upcoming Economic Calendar Highlights (all times GMT)
- 1200 – Mexico Dec. CPI
- 1300 – US Fed’s Clarida (Voter) to Speak
- 1315 – Canada Dec. Housing Starts
- 1330 – US Nov. Building Permits
- 1430 – US Fed’s Kashkari (Voter) to Speak
- 1630 – US Fed’s Williams (Voter) to Speak
- 1845 – Canada Bank of Canada Poloz ”Fireside Chat”
- 0030 – Australia Nov. Retail Sales