The G-10 rundown
USD – the US dollar is weak as we would have expected on the trade deal announcement and the Fed’s repo announcement also helping the bears at the margin – need for this move to hold in the coming couple of sessions and we have a real breakout.
EUR – New ECB president Lagarde succeeded in avoiding strong first impressions in terms of policy signals, though she did voice support for negative rates. She took a stab at avoiding market labels, claiming that she would neither be dovish or hawkish but owlish (wise) – good luck with that. For now, the euro absorbing strength at the margin on the UK election outcome.
JPY – the least supportive possible backdrop waxed dramatically yen-hostile on an entirely different level on Trump’s touting of a trade deal breakthrough and on the UK election result.
GBP – the “as expected” outcome may mean that there is little additional upside to wring from sterling in isolated terms (think EURGBP more than GBPUSD if the USD is lurching into a weak phase) as important questions remain for sterling as we outline above.
CHF – I continue to struggle with understanding franc drivers here – a burst of EURCHF upside yesterday on the UK election result after seeming to ignore the entire GBP situation for quite some time- but even that already seems to be fading. Pass.
AUD – all developments yesterday Aussie supportive and AUDUSD has finally traded clear of the channel – but not holding particularly well as of this writing – there isn’t much room for backfilling.
CAD – all factors CAD supportive here and USDCAD trying to trade lower, but has a lot of work to do to work clear of the range to 1.3000 after an ice age for volatility.
NZD – more than a bit disappointed that yesterday’s developments didn’t do more to support AUDNZD as NZD might have lower beta to hopes centered on sentiment on the Chinese outlook basing and turning higher. Next week sees Q3 GDP release – as Q4 is almost over – the tardiest of G10 GDP data.
SEK – the SEK getting maximum support on all fronts at the moment and a continuation of the current regime could see EURSEK down toward the next major area into 10.25-20. Until then, important flash Euro Zone PMIs early next week and then the expected rate hike from the Riksbank next Thursday.
NOK – the US-China trade deal news is the most supportive for NOK on the hopes for global outlook and crude oil getting a nice bump as well – EURNOK could easily challenge 10.00 quickly here despite all of the year-end seasonality headwinds, etc, if the positive market mood continues.
Today’s Economic Calendar Highlights (all times GMT)
- 1330 – US Nov. Retail Sales
- 1600 – US New York Fed’s Williams (Voter) to Speak