The G-10 rundown
USD – the US dollar is the risk-on/risk-off driver at the moment with next Friday’s Jackson Hole speech from Fed’s Powell the key event risk on the horizon.
EUR – Italian yields benign for the moment, as is the USD, allowing euro pairs to bounce, but how do we return to normalcy any time soon here – the populist agenda is completely at odds with ECB purchases ending and EU rules. Meanwhile, the Turkish risk is possibly only contained for the moment.
JPY – the yen crosses are bouncing with the marginal improvement in risk appetite but a look at Chinese equities suggests little cause for celebration.
GBP – sterling drops against the euro whenever the latter sees a bit of relief. Absurdly strong UK Retail Sales likely linked to a hot, sunny summer, but don’t trigger a reaction – it’s all about deal/no-deal Brexit and the concern that the risk of the latter is rising.
CHF – doesn’t take much relief from Turkey and Italian yields to see a relief rally in EURCHF, but headline risks can return at any time and we see the potential for 1.1000 on fresh existential strains linked to Italy or additional negative headlines out of Turkey.
AUD – a modest relief rally in the Aussie, as we discuss above, but Chinese markets and key metal prices are an immediate source of concern.
CAD – CPI up today looks like a tactically important event risk for whether USDCAD spills higher and oil prices are also perched near big downside pivot levels – so potential for considerable tactical volatility here.
NZD – NZD avoiding the spotlight very successfully – generally negative on the currency, but whether it can outpace the Aussie to the downside is our chief interest. Given the more dovish RBNZ we would have expected 1.1200 or higher already now, but China is a bigger distraction for AUD at the moment.
SEK – SEK likely sidelined ahead of Swedish elections, but not too early to consider EURSEK downside strategies.
NOK – Norges Bank said yesterday that everything has developed as expected and given the previous tip-off that it will hike rates in September, that’s what we should expect. Given NOK edging weaker, looks like the market focusing on weak oil market and expecting a very dovish hike in September. Upcoming Economic Calendar Highlights (all times GMT)
• 0900 – Eurozone Final Jul. CPI
• 1230 – Canada Jul. CPI
• 1400 – US Aug. Univ. Of Michigan Sentiment