The G10 rundown, express edition
USD – the US dollar rebounding smartly from recent weakness despite collapsing yield spreads as US yields dive all along the curve – a strong sign of safe haven seeking.
EUR – EURJPY has broken lower and we watch within the G-3 for whether the single currency is the weakest (EURUSD breaking down) if current risk sentiment conditions worsen.
JPY – riding high on the sovereign bond rally and weak risk sentiment – requires constant fuel from these sources to driver further strength.
GBP – don’t see how we draw any immediate conclusions on Brexit until the new Tory leader is determined and the stance that the new leaderships signals. GBPUSD risks to 1.2500 and perhaps then some if risk sentiment generally worsens.
CHF – absorbing safe haven flows, which could intensify and test the SNB’s mettle if Germany-Italy yield spreads continue to widen.
AUD – the parabolic rise in iron ore prices finally faltering over the last couple of sessions, which removes some support for AUD, still a proxy for the US-China trade showdown and general risk sentiment.
CAD – trigger level to the upside nearby in USDCAD at 1.3500 and could slip higher to test the highs for the cycle if the Bank of Canada cooperates with dovish guidance.
NZD – the Reserve Bank of NEw Zealand financial stability report released to few fireworks, but reminds us that the RBNZ is in favour of higher bank capital requirements, which would impact NZ growth and eventually the currency. The AUDNZD turnaround looking more compelling overnight as the nosedive in NZ short rates intensifies.
SEK – EURSEK attempts lower have proven weak and the backdrop is not SEK-supportive. Important test today for SEK with the Q1 GDP release.
NOK – tentative signs of resistance to further NOK strengthening yesterday and NOK vulnerable on worsening of risk sentiment. Norway credit growth indicator up this morning. Upcoming Economic Calendar Highlights (all times GMT)
0730 – Sweden Q1 GDP
0755 – Germany May Unemployment Change / Rate
1400 – Canada Bank of Canada Rate Decision
1700 – Mexico Central Bank releases Inflation Report
2245 – New Zealand Apr. Building Permits