The G-10 rundown
USD – weaker against risk currencies, firmer against the yen, the big dollar continues to coil in a range and not sure where it is to find energy unless the market were to lurch into a new risk off phase. It will take some time to gather evidence on the shape of the recovery in the US, so data reactivity is on pause for now. Next week features the first very large US treasury auction as the US Treasury is set to issue a torrent of USD 3 trillion in debt in coming months. That bears watching.
EUR – the pressure on the euro has eased slightly and any EU existential catalyst from the EU MFF budget, etc. may have to wait until June. Until then, any negative catalyst would have to be from Italian politics. EURUSD is languishing near the 1.0800 area and still has a bit of range to work with before we can call a breakdown.
JPY – with equities bobbing back enthusiastically higher and safe haven long bond yields poking higher as well, yen is easing lower again and the volatility is seeping rapidly out of USDJPY, with no signs of downside fear in the options market.
GBP – sterling caught a minor bid this morning as the BoE did not move with any additional measures at today’s meeting, though with its dire outlook of a -14% GDP fall and concerns for “scarring” of the economy from the Covid19 damage, fresh action will be forthcoming.
CHF – the Germany-Italy spreads have nudged higher again today – but EURCHF inert with traders wary of SNB intervention.
AUD – Australia trade data and hopes that the country will avoid the worst of the shock after an ugly Q2 have the Aussie strongly on the bid again after a weak session yesterday. The tactical line in the sand is near 0.6500, but above there perhaps 0.6675 after the local 0.6570 high.
CAD – USDCAD symptomatic of the coiling and coiling nature of this indecisive market – risks to Canada and its currency look somewhat underappreciated as the credit crunch works through the country’s private leverage bubble and the oil industry is in for massive consolidation and production cuts.
NZD – the NZD suffering at the hands of the surging AUD and we like AUDNZD higher strategically – a bit concerned for a medium term setback if the global growth outlook stumbles.
SEK – EURSEK has mostly reversed the panic rally – valuation is finally making its mark, perhaps, but the government’s push against Riksbank intent to purchase corporate bonds suggests that the central bank will be restrained from here – a boost for the currency as we take a sell-on-rallies stance for EURSEK, though a real test for SEK would be how the krona behaves if there is any such thing as a large-scale corrective sell-off in equity markets any more.
NOK – The Norges Bank chopped rates to zero – a bit of a surprise, but by guiding flat for the foreseeable future there isn’t much of an impact. EURNOK looks heavy still and willing to entertain a EURNOK breakdown below 11.00 hear but unwilling to consider a large extension until oil stages a more major recovery or the euro weakens more broadly on fresh existential concerns..
Upcoming Economic Calendar Highlights (all times GMT)
- 1230 – Czech Central Bank Meeting
- 1230 – US Weekly Initial Jobless Claims
- 1400 – Canada Apr. Ivey PMI
- 1430 – US Weekly Natural Gas Storage
- 1600 – US Fed’s Kashkari (Voter) to Speak
- 1900 – US Mar. Consumer Credit
- 2000 – US Fed’s Harker (Voter) to Speak