The G10 rundown
USD – there is no directional signal here as we await next Wednesday’s FOMC.
EUR – the euro backed off recent broad strength yesterday, but has not stumbled further today. Looks passive for now as we await interesting political developments next week (choice of next EU Commission President).
JPY – absorbing safe haven flows, but will need to see US long yields continuing lower to support that development.
GBP – relative stability as we watch for signaling from Boris Johnson and whether his path to assume leadership remains clear – and eventually how the EU side responds to his attempt to restart talks. We’re constructive on the longer term outlook for sterling if the narrative shifts to a “Managed Brexit” from a “No Deal” Brexit risk.
CHF – The Swiss National Bank's’s raised inflation forecasts for this year and through 2021 and lack of stiffer language on intervention to keep a ceiling on the CHF suggests an open path to 1.1000 in EURCHF if lower yields and safe haven seeking continue.
AUD – Aussie remains weak on the rate outlook, though we have conflicting signals here as iron ore continues to shoot the lights out and the mining giant BHP Billiton is trading at an almost eight-year high.
CAD – the momentum seeping out of the recent sell-off in USDCAD but a lot of work to do to get a full reversal – may need a data catalyst or two – for example, a CPI miss next week or fresh lows in oil prices despite the tankers incident.
NZD – next test for the NZD in the crosses in next week’s tardy GDP release for Q1 GDP.
SEK – the Swedish May CPI release came in hot – at 2.1% YoY at the core vs. 1.9% expected (1.7% ex. Energy). Let’s see if this is enough to drive a fresh test of the 10.60 area in EURSEK.
NOK – struggling to find a pulse despite the gyrations in oil – all about next week Norges Bank meeting and the guidance on rates after an assumed 25 bp hike as the Norges Bank remains the lone hiker. Upcoming Economic Calendar Highlights (all times GMT)
1030 – Russia Key Rate Announcement
1200 – Russia Central Bank Presser
1230 – US May Retail Sales
1300 – Canada May Existing Home Sales
1315 – US May Manufacturing Production
1400 – US Jun. Flash University of Michigan Confidence