The G-10 rundown
USD – the bounce in the US dollar not breaking anything just yet, but it won’t take a lot more to change the narrative. We also wonder if EM can sustain its recent strength as hard to imagine USDCNY falling materially below 7.00 and any further rise in US long rates (anything beyond 2.00% level in US 10-year) might begin to weigh.
EUR – As mentioned above, the sell-off a setback but not yet a game-changer for the EURUSD bulls. US-China trade deal disappointment a risk for the failure of the late rally.
JPY – USDJPY watching US yields with both eyes – where the 1.90-2.00% level must remain capped for USDJPY to remain well south of 110.00. Given extreme complacency, trade deal disappointment and sharply lower yields would likely see a JPY cross wipeout.
GBP – sterling edging to the strong side versus a weaker Euro, but GBPUSD still well capped. How does BoE deliver anything worth reacting to tomorrow? Nigel Farage’s Brexit is set to field candidates at the December election, but the Telegraph reports that he may focus chiefly on Labour seats and may avoid putting up candidates in districts with Tory euro-skeptic candidates.
CHF – no signal here – but a curious lack of upside given the all out risk melt-up and higher yields.
AUD – AUDUSD indeterminate here – strong in crosses on stronger CNY and hopes for trade deal, but still stuck in neutral versus the US dollar.
CAD – USDCAD is stuck in neutral and looking pivotal only below 1.3000 or above 1.3200, with support from the Bank of Canada’s recent dovish shift requiring considerable “new news” to overcome.
NZD – a disappointment in NZ employment data sets the AUDNZD bull market potential back in motion – watching the close today for whether this can extend higher to next resistance levels
SEK – EURSEK still trading heavily and the backdrop supportive if hopes for a global growth bounce extend from here - Swedish short rates to new local highs.
NOK – Norway’s short rates also extending aggressively higher and oil also supportive for NOK – pressure remains for a EURNOK sell-off to extend if seasonality issues can be overcome here. More profound reversal in EURNOK only if it can work down through 10.05-00.
Upcoming Economic Calendar Highlights (all times GMT)
- 1000 – Euro Zone Sep. Retail Sales
- 1300 – US Fed’s Evans (Voter) to Speak
- 1330 – US Q3 Unit Labor Costs / Nonfarm Productivity
- 1430 – US Fed’s Williams (Voter) to Speak
- 1500 – Canada Oct. Ivey PMI