The G-10 rundown
USD – the dollar does well against EUR and JPY when risk appetite is strong on the strength of megacap stocks and does well elsewhere (especially against EM) on risk off. Curious to see how EURUSD and USDJPY behave on a real equity market correction (I suspect we would see a weaker USD in these pairs)
EUR – the euro really struggling as the economy is in the dumps and set to remain weak on external demand woes from the coronavirus for now, with little prospect for policymakers ridingg to the rescue as the EU’s largest economy Germany is mired in political disarray
JPY – the JPY still fairly firm in some of the crosses as safe haven yields have not risen much on this attempt to get equity markets back into full rally mode. Watching whether 120.00 breakdown attempt in EURJPY reasserts here tactically.
GBP – sterling maintaining an even keel through this morning’s data as traders are more forward looking – the coronavirus will have an impact on the UK as well from travel activity and on supply chain disruptions as well. The December trade balance was in surplus for the UK for the first time since 1985! Of course, that came after a string of record deficits on stocking up ahead of Brexit.
CHF – EURCHF exceptionally heavy given the backdrop and speaks to the weakness of the euro. The pair is running out of room ahead of the 2017 lows.
AUD – as we note above – the AUD at an interesting inflection point here – plenty more support needed to suggest anything but that the currency remains in the dog house.
CAD – USDCAD may be overdone here in the short term to the upside if we have a further bounce back in oil prices and risk appetite, but still looking for new highs for the cycle on the damage done and a slowing CA economy.
NZD – watching for risks of a dovish tilt from the RBNZ tonight over the RBNZ’s OCR decision – a hint at a cut on the impact of the coronavirus. This could drive NZDUSD to test the cycle lows.
SEK – the weak euro is not help for SEK, although a strong risk appetite backdrop is – the pair should explore lower half of range toward 10.41 if risk-on can maintain a head of steam..
NOK – NOK getting some support from the back-up in short rates after the very hot CPI print yesterday and as oil prices rebound slightly – a lot more work to do to get EURNOK rally neutralized, starting with a sub-10.000 run.
Upcoming Economic Calendar Highlights (all times GMT)
- 1100 – US Jan. NFIB Small Business Optimism
- 1400 – ECB President Lagarde to Speak
- 1500 – US Fed Powell Semi-annual Testimony
- 1500 – US Dec. JOLTS Job Openings
- 1915 – US Fed’s Kashkari (Voter) to Speak
- 0100 – New Zealand RBNZ Official Cash Rate
- 0200 – New Zealand RBNZ Orr Press Conference
- US New Hampshire Democratic Primary