The G-10 rundown
USD – as noted in yesterday’s note, the US dollar is the key flipside of the global risk deleveraging and its fall here would be a coincident indicator on seeing more stabilization across global markets.
EUR – watching for mutual fiscal measures and “coronabonds” as a potential backdoor to that eventuality as the key development for Europe. The euro may provide low beta to risk appetite relative to smaller currencies. EURUSD has a lot of work to do if it is going to reverse the recent move lower – starting with 1.10, but really 1.1200 needed.
JPY – we are working into the final week of the Japanese financial year and JPY crosses largely reflecting a correlation with risk appetite outside of USDJPY, where the USD liquidity question dominates. Breaking: the Japanese GPIF pension fund is upping its allocation of foreign bonds to 25%, a rise of 10%.
GBP – sterling reaching for stability and likely to see a powerful bounce if broader risk sentiment improves, despite the more comprehensive Covid19 shutdown measures now in effect for the UK. 1.2000 is the first major resistance for GBPUSD.
CHF – stability in global markets and potential for EU fiscal could encourage some consolidation higher in EURCHF, but the pair continues to look heavy – so little visibility here., and weekly sight deposits suggest SNB leaning heavily against CHF upside.
AUD – surprised the AUD rally hasn’t waxed even more aggressive as of this writing – watching the 0.6000 area in AUDUSD for possibly unleashing another significant extension higher.
CAD – plenty of room for USDCAD to consolidate lower here if the mood improves for a spell without changing trend – even something like 1.4000 is within easy reach, especially if oil has found a major low for the moment.
NZD – ditto AUD comments above, with AUD perhaps set to outperform if the mood improves after NZD outperformed during the panic deleveraging.
SEK – Sweden stands to benefit greatly from an EU fiscal push – where is the Swedish government, however – need them to swing into action on top of EU fiscal for a better SEK boost. Risk at the margin for Sweden, however, as the country has run the most lax policy on the Covid19 outbreak in recent days.
NOK – the highest beta currency within G10 at the moment to swings in oil and risk appetite – next levels of note are 11.50 and then 11.00 – hard to see a full reversal of this move without oil achieving the same, however.