The G10 rundown, express edition
USD – the greenback strength persists and USDCNY trading back toward the cycle highs – really only looking for range expansion to pick up if China moves away from its policy of maintaining the CNY floor.
EUR – EURUSD drooping toward the cycle lows – the last two break attempts were rapidly corralled, and this one may be too – or at least not yield to a notable pick up in momentum – without CNY shaking loose of its established trading range.
JPY – long US treasuries caught in a very narrow range, and guess what – so is USDJPY. The JPY’s only hope for upside is risk misery and lower yields and downside only arrives via the opposite – rising risk sentiment and rising yields. At least until we see more policy dynamism from the Bank of Japan or Abe government.
GBP – weakness as we await the size of the Brexit party’s result at the EU parliamentary elections. The 1.2500 area in GBPUSD is the next test for that pair, while EURGBP is nearing its 200-day moving average here ahead of 0.8800.
CHF – absorbing safe haven flows that may be a function of sterling weakness and euro weakness ahead of the EU parliamentary elections – a battle awaits at 1.1200 in EURCHF if the Swiss National Bank is to make good on intervention promises.
AUD – the Aussie struggling and remains vulnerable to further downside if markets decide that a US-China trade deal is receding further over the horizon (market pricing of equities and various other risk measures suggest staggering complacency in my view).
CAD – the loonie correlating with USD direction in the crosses and showing relative firmness as US drops tariffs on steel and aluminium. As well, longer term the market may be eyeing a Trudeau defeat at the October elections and rolling back of his government’s carbon taxes by a Scheer-led Conservative government.
NZD – the Q1 retail sales up tonight. The lack of more significant downside in AUDNZD on the dovish RBA overnight suggests underlying NZD weakness (makes sense as RBNZ set to track RBA in cutting rates in the coming year if inflation fails to pick up in NZ).
SEK – support in EURSEK found well ahead of the key 10.60-65 downside pivot area. More downside risk for SEK correlates with concerns for the economic outlook in EU and globally.
NOK – the krone could prove vulnerable to a test lower if crude oil prices drop – further steepening in backwardation in crude oil suggests long term demand concerns are rising. Upcoming Economic Calendar Highlights (all times GMT)
1000 – UK May CBI Trends Total Orders
1400 – US Apr. Existing Home Sales
1445 – US Fed’s Evans (Voter) to speak
1600 – US Fed’s Rosengren (Voter) to speak
2245 – New Zealand Q1 Retail Sales