The G-10 rundown
USD – the USD is turning the screws on global financial markets and the Fed and US Treasury need to go very large and very soon in turning the currency lower to bring any sustained relief to the contagion across global markets – watch the headlines ahead of the weekend!
EUR – the Merkel speech and the ECB move turning the corner for the EU peripheral spreads and getting ahead of the existential concerns for the moment – a bit surprised that the euro itself has not responded more constructively.
JPY – USDJPY has reversed back above the 108.00 area and likely wont find a top until the US Fed, or the market, puts a lid on the long end of the US yield curve, which has traded with enormous volatility over the last several days – spiking real yields higher and taking USDJPY with it as inflation expectations for the US have collapsed.
GBP – compelling long term value for companies looking to invest in services and manufacturing in the UK – the trouble is that this is not the market’s focus for now – and sterling will only turn and begin to stabilize when the USD funding issue turns as well. In the meantime, there is no identifiable “bottom”.
CHF – the SNB stated today that it has stepped up intervention with the virus outbreak, so buying CHF is fighting against the central bank. Governor Jordan stated that fiscal stimulus is needed to fight the virus.
AUD – A powerful bounce overnight, but from impressive new lows in the wake of the RBA’s aggressive move to bring support. Please listen to our Saxo Market Call podcast from today with more on the RBA from our Australian strategist Eleanor Creagh.
CAD – the USDCAD rally has reached the cycle highs, but may not stop here if the markets can’t piece together a sentiment improvement and turn in the USD. The Canadian grades of oil are practically being given away and production will have to slow, with all of the ugly implications for Canada’s economy. Trudeau’s support package of 3% of GDP is weak beer.
NZD – the AUDNZD pair finding support just ahead of parity after the RBA overnight – but there is no telling where that pair could go if the USD isn’t turned and China chooses to let its currency slip more aggressively.
SEK – the Swedish krona twisting in the wind as well here as less liquid currencies are getting smashed across the board. A further twist for Sweden is its less stern response to coronavirus – a running “experiment” relative to other nations’ reactions.
NOK – the liquidity may improve a bit on the Norges Bank statement on NOK and as Norway can’t afford to have the current total disorder in its foreign exchange markets and has deep pockets to address the situation – still, we think the currency is suffering a permanent re-setting lower even if we see a strong bounce at some point when oil bottoms out and sentiment shifts.
Calendar (times GMT)
- 1230 – US Weekly Initial Jobless Claims
- South Africa Reserve Bank Rate Announcement
- China Rate Announcement