FX Update: Conflicting trade headlines keep FX traders sidelined

The G-10 rundown

USD – not impressed with the greenback’s performance on the minor bout of risk off we saw yesterday – interesting to see reactivity to data, as indicated above, though this theme only tested on large surprises, with key data not up until the week after next.

EUR – today sees the ECB minutes, but the ECB interest only picks up from here. Interesting to see a possible change of approach from new ECB President Lagarde on fiscal stimulus as she may campaign for a Euro-wide budget rather than encouraging individual EU members to change their domestic fiscal stance.

JPY – lack of reactivity in evidence here as well as we got both cylinders of support firing in lower rates and a bit of risk off yesterday and yet JPY fails to put in a particularly strong showing.

GBP – can we really expect the market to draw strong conclusions on sterling ahead of the December 12 election – chief question now is how much of a majority Tory government is already in the price. 1-month GBPUSD options volatility quite elevated at near 12.0% and puts have a slight premium as the knee-jerk reaction to a hung parliament perhaps a greater volatility risk (to the downside) than GBPUSD call spreads or EURGBP put spreads are a way to trade for a solid, non-runaway positive reaction in sterling to a Tory victory.

CHF – traders not inspired by the picture here until parity falls in USDCHF and EURCHF is somewhere beyond the 1.0850 lows or above the 1.1050 range cap.

AUD – excruciating lack of price action, though in the crosses, AUD has absorbed a bit more pressure on US-China trade concerns. Westpac money laundering story also an interesting one for risks to the country’s credit impulse if other banks are implicated.

CAD – still on the weak side despite oil bounceback as the Tuesday comments from BoC’s Wilkins have weighed on the loonie – BoC governor Poloz likely to echo many of the same comments in today’s “fireside chat” and US economic weakness concerns add downside risk for CAD.

NZD – A small data point, but New Zealand Oct. Credit Card spending dropped 1.5% month-on-month and the year-on-year figure only up +2.5%, the lowest growth rate in over six years. AUDNZD has neared its 200-day moving average in recent days.

SEK – the price action getting dicey here and SEK may be following NOK’s lead to a degree on the latters reaction to swings in the oil price. Yesterday’s rally cut short just as the prior days sell’off also reversed. Most interesting technical signal would be push down through 10.60 accompanied by EURUSD breakout and something fiscal in the air…

NOK – oil prices reversed sharply, capping the EURNOK rally. The sub-10.05 lows are the pivot for a more determined NOK rally.

Today’s Economic Calendar Highlights (all times GMT)

• 1230 – Euro Zone ECB Meeting Minutes
• 1330 – Canada Oct. ADP Payrolls
• 1330 – US Philadelphia Fed Survey
• 1330 – US Weekly Initial Jobless Claims
• 1340 – Bank of Canada’s Poloz to Speak
• 1500 – Euro Zone Nov. Consumer Confidence
• 1500 – US Oct. Existing Home Sales
• Time? – South Africa Interest Rate Announcement