The G-10 rundown
USD – a key stopper for disorderly USD rise has been put in place with the Fed and other central banks opening up the swap lines, but can the Fed backstop the entire world? Global intervention on the agenda as this is too big for the Fed.
EUR – ECB President Lagarde apparently apologized to the ECB governing council after the disaster of last week’s press conference, but EU peripheral spread are blowing wider again this morning – the next months are critical for proving the viability of the Euro Zone. Cash drops must come and soon…
JPY – the USDJPY found resistance at the ultimate levels around 108.00 with a bit of price action sloshing – we should have stuck to our guns on that one – focus on risk toward 100.00 now as long as the contagion lasts, but there will be some interesting levels to sell JPY at against hard assets and commodities whenever this crazy move bottoms out. Bank of Japan buying up everything in sight overnight – but it’s not working yet…
GBP – sterling is getting a drubbing here and we like the idea of scaling into exposure versus the euro first and eventually the US dollar, although considerable concern that the UK government has done a poor job on handling the virus outbreak, with risk of a more extreme crunch if the country needs to correct sharply.
CHF – doing its job at the moment as safe haven, but a slow mover higher versus a strong euro here.
AUD – the RBA switches to QE and offers repos – we’re already there. Now eyeing the GFC lows around 0.6000 in AUDUSD as the next test
CAD – oil and risk appetite point lower for CAD. Bank of Canada surprised on Friday with a 50 basis point chop but still at +0.75 percent for a policy rate! More chops to come and we continue to look higher in USDCAD.
NZD – the RBNZ chopped 75 basis points just ahead of the Fed overnight, leaving the policy rate at 0.25% and with nowhere to go except into QE and FX intervention if the NZD continues to grind higher versus the AUD.
SEK – the krona needs massive fiscal stimulus and Sweden may be behind the curve with the virus response. Could get disorderly as long as markets remain this dysfunctional.
NOK – the lows in NOK will coincide with the lows in oil, barring Norges Bank intervention. There will be an amazing comeback – but from what level?
Calendar (times GMT)
- 1230 – US Mar. Empire Manufacturing Survey