The G-10 rundown
USD – the US dollar on its back foot on the sentiment shift and possibly as the weak ISM brings hope that the Fed brings forward its easing plans.
EUR – ECB hawks apparently leaning against Draghi as we await next Thursday’s ECB meeting (where options like tiering for bank reserves could actually prove EUR supportive). The more important thing to watch for is the prospect of fiscal stimulus, also EUR supportive.
JPY – the yen at risk of consolidating weaker here if risk sentiment stages a comeback and long bonds consolidate.
GBP – relief rally may not have legs as the market may have to shift to considering what yet another Brexit extension will mean for the UK economy, not to mention the spectre of a Corbyn government.
CHF – ditto for JPY comments, a bit surprised we haven’t seen a more pronounced bounce in EURCHF already in today’s action.
AUD – a resumption of US-China trade talks could drive further AUD consolidation as heavily positioned AUD bears must be losing patience after AUDUSD has failed to sustain a move lower after pausing over the prior three weeks.
CAD – losing conviction in USDCAD upside given the sentiment shift here, assuming the latter holds, as even a Bank of Canada dovish guidance lean may fail to push CAD lower if inter-market factors are otherwise CAD-supportive.
NZD – still prefer AUDNZD upside even if some risk of a pause in the important 1.0700 resistance area.
SEK – firmer risk sentiment offers SEK some support, as does a strong August Services PMI from Sweden this morning and a firmer EUR. Even if RIksbank waxes dovish at the Riksbank meeting tomorrow, SEK could yet stage a rally if EU fiscal stimulus is in the pipeline.
NOK – firmer risk sentiment also boosting NOK here, but EURNOK reversal not picking up significance until/unless the pair works down through 9.85-80.
Upcoming Economic Calendar Highlights (all times GMT)
- 1230 – Canada Jul. International Trade
- 1230 – US Jul. Trade Balance
- 1300 – Bank of Canada Rate Announcement
- 1325 – US Fed’s Williams (Voter) to Speak
- 0130 – Australia Jul. Trade Balance