The G-10 rundown
USD – the USD strengthening appears an unstoppable force until the Fed gets ahead of the liquidity situation or the Trump administration picks up where the Fed can’t and intervenes.
EUR – the ECB’s Lautenschläger (of Germany) quit in protest against QE, apparently not wanting to serve under Lagarde as her last date will be Draghi’s last date. Does she fear that ECB policy only risks getting more unconventional and political under Lagarde?
JPY – the JPY not cutting much of a profile as risk appetite recovered and bond yields bounced – was passive in the face of a stronger US dollar yesterday as the US and Japan signed a partial trade deal overnight that does not yet put to rest fears that Trump eventually slaps auto tariffs on Japanese imports.
GBP – sterling on its backfoot as it should be given the intense uncertainty of how the Brexit situation unfolds, with each passing day bringing more damage to the UK economy via a weak credit impulse.
CHF – the franc backing down a bit as yields have poked back higher.
AUD – Aussie short rates look heavy in recent days and the August Job Vacancies data overnight the worst in years. AUDUSD could be set for test of lows here if nothing counters the strong USD pressure.
CAD – USDCAD stuck in one of its narrowest ranges ever and market feels asleep at the wheel here – asymmetric downside risk on any combination of weaker US and/or CA data, oil prices continuing lower, or weakening risk sentiment. Technically, USDCAD needs to clear 1.3300+ resistance again.
NZD – the RBNZ keeps policy expectations modest as Governor Orr spoke against the likelihood of unconventional easing overnight – may drive a bit more consolidation in NZD crosses but doesn’t change our strategic outlook for AUDNZD.
SEK and NOK – searching for a pulse here. Need a sense that EU prospects are bottoming out and fiscal on the way to boost the Scandies. A shift to weaker risk sentiment would be a challenge for both currencies.
Upcoming Economic Calendar Highlights (all times GMT)
- 1230 – Final US Q2 GDP Revision
- 1230 – US Weekly Initial Jobless Claims
- 1330 – ECB’s Draghi to Speak
- 1400 – US Aug. Pending Home Sales
- 1430 – US Weekly Natural Gas Storage
- 1500 – US Sep. Kansas City Fed Manufacturing
- 1700 – US Treasury 7-year auction
- 1800 – Mexico Central Bank Rate Announcement