The G-10 rundown
USD – the USD bouncing back in sympathy with the consolidation in risk appetite more than anything that was remotely supportive from the Fed yesterday. Watching for any signs of a correlation break on that front.
EUR – interesting to see the euro clawing back higher versus weaker currencies today – a sign that the G3 currencies plus CHF could all rise together if we face further consolidation across asset markets – but key idiosyncratic risks for the EU through next week’s EU Council meeting on the level of agreement with the approach for the EU recovery package.
JPY – the current market backdrop is the ideal driver of JPY strength – but will take a considerable unraveling of global markets to threaten the JPY weakening cycle since late March.
GBP – sterling on its back foot and a weak close today could point to a consolidation toward 1.2500, with the prospect of tough Brexit negotiations stretching out from here and probably out the last minute of this year, if previous patterns of EU and UK behavior are set for repeat.
CHF – the CHF rallying in sympathy with the G3 rally and EURCHF is back to half-way between the 1.0500 area lows and recent 1.0900 spike. 1.0650-1.0700 looks important for establishing whether the pair can stay in the higher portion of the range. EU existential questions a key factor there as well through next week’s meetings.
AUD – the consolidation thus far in AUD is nothing to write home about save perhaps in AUDJPY (much of that JPY driven), but further broad risks here for AUD if sentiment sours for a bit. Watching industrial metals and BHP Billiton shares as coincident indicators.
CAD – the 1.3500 area in USDCAD looks important for establishing whether this bounce can threaten higher and we wonder (as noted on the Saxo Market Call podcast this morning) why WTI oil prices have managed to scrape 40 dollars recently.
NZD – we prefer AUD over NZD for the longer term from a current account and relative monetary policy perspective, with the near term caveat that the NZD could outperform in the near term if the reflation narrative eases
SEK – EURSEK is consolidating back higher – currently 10.50 providing some resistance. Structurally would like to be short, but hard to know if risks extend in near term back toward the 200-day moving average above 10.65.
NOK – EURNOK reached the major milestone at the 200-day moving average around 10.44 and we watch for the amplitude of this bounce and for technical hooks to re-engage for more downside. The key resistance is perhaps 11.00, with 38.2% Fibo of latest wave at 10.915.
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