The G-10 rundown
USD – not following through higher – what will reactivity be to a the trio of factors we list above: the Fed (can’t get more dovish than market expects?), the economy (market too complacent on downside risks), and the US presidential election (odds too tilted for Trump?). It’s a difficult mix.
EUR – the euro inert as we await the implementation and timeframe of physical as well as the result of the ECB’s policy review. Interesting to note ECB’s Holzmann out talking up the deleterious effects of negative rates yesterday and president Lagarde speaks today.
JPY – the yen on its back foot as all cylinders firing in favour of risk appetite into today, including bonds tipping back lower after yesterday’s rally.
GBP – a weak CPI yesterday (core year-on-year at cycle low 1.4% vs. 1.7% expected) saw a modest reaction. Neutralizing our our former tactical pessimism as sterling looking resilient here.
CHF – EURCHF is into new territory below 1.0800, watching whether there is enough of a psychology shift from the idea that SNB is far more reluctant to intervene against further CHF strength. See yesterday’s piece trading EURCHF downside.
AUD – the Aussie making life difficult for the bears – as with the EURUSD – in failing to follow through lower versus the US dollar. Having paused for so long after the bearish reversal, the tactical view is rapidly neutralizing, but we need to vault above . Meanwhile, prefer AUDNZD and AUDCAD as possible vehicles for a more constructive AUD outlook in the crosses.
CAD – USDCAD getting bogged down here – with CAD most at risk from a turn south in the US and Canada’s US-dependent economy from here and we suspect a strong risk of downside pressure on the BoC rate outlook.
NZD – a massive December House Sales number out overnight, but December Card spending (retail activity) was very weak at -0.8% month-on-month. We still look for upside potential in AUDNZD toward 1.0600 to start, but note that push below 0.6600 in NZDUSD saw a sharp rejection yesterday.
SEK – we are getting lulled gently back to sleep here – need a fundamental catalyst to jolt SEK stronger – meanwhile, technical focus is on whether 9.60-2 resistance zone holds.
NOK – EURNOK has been dead for more than three weeks and risk/reward does not look attractive for testing in current area. Areas of stress are 10.00 and 9.80 for next steps – meanwhile a strong fundamental upswing in the EU and global economy needed for a more supportive backdrop for NOK.
Today’s Economic Calendar Highlights
- 1330 – US Jan. Philadelphia Fed Business Survey
- 1330 – US Dec. Retail Sales
- 1330 – US Weekly Initial Jobless Claims
- 1500 – US Jan. NAHB Housing Market index
- 1800 – ECB President Lagarde to Speak
- 2130 – New Zealand Dec. BusinessNZ Manufacturing PMI
- 0200 – China Dec. Retail Sales, Industrial Production
- 0200 – China Q4 GDP