The G-10 rundown
USD – EURUSD is the missing piece for a broader USD sell-off as we continue to eye the 1.1500 zone for further potential. Elsewhere, USD is struggling against risk-correlated currencies, but the move pausing a bit here, perhaps as market second guesses how far it has run with Fed expectations in the wake of Powell’s comments on Friday.
EUR – the euro makes a move and note that the break higher takes all other euro crosses with it, as euro shorts against riskier currencies were recently popular. EURGBP strength on Brexit dysfunction could be a positive at the margin. Broader shift in EUR strength possible as long as 1.1500 holds in EURUSD.
JPY – A follow up move lower in USDJPY suggests the consolidation off the flash crash lows may be over and we are headed towards a retest. Broader JPY outperformance more likely if risk appetite is weak.
GBP – we have argued for some time that the most likely scenario will be a significant extension of the Article 50 Brexit deadline as the May deal is set for failure in a parliamentary vote next Tuesday. EURGBP is threatening resistance and could actually progress higher if a long postponement of the deadline is the ultimate result as a further extension of uncertainty is perhaps worse than a no deal for delaying investment and economic activity in the UK.
CHF – EURCHF rebounding mildly off the key 1.1200 level.
AUD – AUD resilient against a struggling USD, but struggling against a resurgent EUR and JPY as risk appetite has soured in early trading. AUDUSD potential toward 0.7400-0.7500 on a sufficiently positive US-China trade deal.
CAD – USDCAD may trade with low beta to other USD pairs unless oil prices extend aggressively higher after the recent notable comeback after Bank of Canada brings little new to the table.
NZD – the AUDNZD rally hanging in there as long as 1.0550-75 supported – NZ Building Permits up late today.
SEK – a risk off tone and the bid in EUR pairs taking EURSEK further away from the downside pivot levels – see little upside potential unless a new risk deleveraging is suddenly afoot.
NOK – EURNOK still contending with the 9.75-80 zone, the sticking point for a more significant NOK rally. Upcoming Economic Calendar Highlights (all times GMT)
1330 – US Weekly Initial Jobless Claims
1230 – ECB Meeting Minutes
1330 – Canada Nov. New Housing Price Index
1330 – Canada Nov. Building Permits
1335 – US Fed’s Barkin (Non-voter) to speak
1530 – US Weekly Natural Gas Storage
1700 – US Fed’s Powell to Speak w/ Q&A
1740 – US Fed’s Bullard (Voter) to speak
1800 – US Fed’s Evans (Voter) to speak
1820 – US Fed’s Kashkari (Non-voter) to speak
2230 – US Fed’s Clarida (Voter) to speak