The G-10 rundown
USD – as noted above, feels like theflipsideof risk appetite – watching how the USD behaves if US yields become a gamechanger and rise significantly from here – feels like markets could be in for a scramble – next event risk is FOMC meeting December 16.
EUR – at least one ECB member dialing down expectations for a big move at the ECB meeting next week – for now, just about understanding the quality of the break above 1.2000 in EURUDS – the level that must hold to keep the focus higher. Would be surprised if EURUSD remains any sort of leader in participating in a fresh bear leg for the USD, if that is what we are in for (reflation narrative favours other currencies more)
JPY – flat versus a very weak US dollar as higher yields and global strong risk sentiment are no friends for the JPY – which only thrives when disinflation fear and risk aversion return.
GBP – sterling in its own world and back to midrange now – do we risk a fudge and an extension of talks? Any deal is likely to be very flimsy stuff with strings attached – and disappointing that sterling hasn’t done better given the backdrop. Still, interesting to watch what happen if GBPUSD looks above 1.3500, a major chart point.
CHF – the rising yields punish the most negative yielders and safe havens – trigger area in EURCHF not until 1.0900+ however. Watching the key break of the 0.9000 area in USDCHF with interest as well.
AUD – a strong trade surplus number overnight from Australia, with retail sales up tonight and the country is in a different place with its Covid numbers relative to the US or Europe. Disappointing for the bulls if 0.7350-0.7400 can’t hold here.
CAD – the key 1.2950-1.3000 zone gave way today -needs to hold for the USD bears, and as noted above feels passive to developments in equities/risk.
NZD – the strong Tuesday milk auction took NZD to its highest levels versus the AUD for the cycle, but yield spreads at the short end of the curve can’t really move any more in NZD’s favour, so tough to argue for more downside in AUDNZD unless milk prices go ballistic and/or AUD gets bogged down in even worse tensions with China.
SEK – the krona is “misbehaving” relative to the backdrop, with strong risk sentiment normally more supportive. This aggressive sell-off looks at risk of setting in motion a further squeeze to perhaps 10.400 if 10.300 falls.
NOK – the krone has likewise run out of steam and doesn’t “fit” with moves elsewhere – need to investigate – oil prices likewise not supporting.
Upcoming Economic Calendar Highlights (all times GMT)
- 1330 – US Weekly Initial Jobless Claims & Continuing Claims
- 1445 – US Nov. Final Markit Services PMI
- 1500 – US Nov. ISM Services
- 1530 – US Weekly Natural Gas Storage
- 0030 – Australia Oct. Retail Sales