The G-10 rundown
USD – the dollar is not sending any notable signals at the moment as traders are handcuffed on all fronts by uncertainty over the meaning and implications of the USD liquidity issues (complacent assumption is that the Fed remains on top of this), geopolitical concerns on the US-China trade. US Vice President is set to make a major speech on China that could bring pressure to bear on risk appetite and hopes for a US-China trade deal if it echoes his stance at a notable broadside against China last year.
EUR – the euro not getting the signal it wanted from the flash PMI’s this morning as France surprised positive while Germany remains mired in weakness with the dire 41.9 flash October Manufacturing PMI barely lifting from the September level and the Services PMI declined slightly to a fresh multi-year low. Not thinking that the ECB is a catalyst for much activity today.
JPY – Japan’s flash October manufacturing PMI at a new low for the cycle and the services PMI dropped a couple of points as well. JPY weakness looking a bit extended relative to the last few days of action in sovereign bond markets.
GBP – uncertainty now on the length of the Brexit extension, with France pressuing for a tighter deadline of mid-November while others would allow until end-January. A decision likely tomorrow. A shorter deadline wouldn’t allow time for an election.
CHF – strong risk appetite this morning supporting EURCHF higher, but possibly drawing more attention are the increasing signs out of Germany on swinging toward the need for fiscal stimulus adding to upside pressure there as well. EURCHF has yet to clear the 1.1050 hurdle.
AUD – AUD treading water after never having taken the pivotal 0.6900 area in AUDUSD – risks to aUD from here incoming data from Australia and US-China developments – including Vice President Pence speech today.
CAD – the oil rally yesterday offers a bit of support for CAD, but our chief focus is on whether the Bank of Canada outlook is justified in the event we have widening evidence that the US and Canada are headed for a recession.
NZD – this is the area to test the downside again for NZDUSD bears, as long as the recent highs stay intact.
SEK – The Riksbank decision benign for SEK and could see EURSEK testing key 10.60 area. For continuation lower through 10.50 and more, we may need to see a path opening up to EU fiscal (Swedish fiscal stimulus would be even more supportive) and continued stable to improving risk appetite.
NOK – the Norges Bank meeting sees a very terse statement issued indicating they continue to expect an unchanged policy rate and only modest mention of the weak NOK: “the weak krone may result in higher inflation ahead”. This statement doesn’t look like a catalyst by itself.
Upcoming Economic Calendar Highlights (all times GMT)
- 1100 – Turkey One-week repo rate announcement
- 1145 – ECB Rate Announcement
- 1230 – ECB President Draghi Press Conference
- 1230 – US Sep. Durable Goods Orders
- 1230 – US Weekly Initial Jobless Claims
- 1345 – US Oct. Preliminary Markit Manufacturing and Services PMI
- 1400 – US Sep. New Home Sales
- 1500 – US Oct. Kansas City Fed Manufacturing Survey
- 1500 – US Vice President Pence to speak on China