The G-10 rundown
USD – the Powell Fed is going to bring liquidity and Trump wants to focus on currency – we may finally be reaching critical mass to turn the tide against the US dollar
EUR – the EURUSD move higher today looks important, but needs to find further sustenance from the US-China trade talk outcome. But regardless, the issue of the EURUSD being at the end of its policy rope remains as a broad supporting factor for the euro, that could be supercharged by a clear fiscal focus in EU policy somewhere down the road.
JPY – the yen a bit more insulated than the euro from any US-China “currency pact” talk because of the US-Japan limited trade deal, and the market is fearing a BoJ move at its meeting later this month, but the JPY looks too weak here relative to the bond market unless risk appetite goes into full upswing mode.
GBP – market may need firmer indications on No Deal Brexit risks to weaken further now that it has made a major reassessment after the August-September sterling rally.
CHF – the factors discussed above could also drag EURCHF significantly higher.
AUD – trading awfully quietly, even through all of the headlines overnight. Certainly, almost any form of deal, limited or otherwise, could support an AUD rally – supported technically by momentum having long ago left the scene in the AUDUSD sell-off.
CAD – the loonie could prove vulnerable in the crosses (think AUDCAD in particular) if the US-China trade talks prove more productive than anticipated
NZD – the kiwi having a hard time gaining momentum here versus the AUD, but we have to await outcomes of the US-China trade talks. A limited deal would likely favour AUD more than NZD, so hard for traders to decide whether to jump in here for fresh AUDNZD longs or wait for a deeper consolidation.
SEK – a minor beat on inflation may not be enough to turn the tide back higher for SEK, though a narrative shift here on the euro as per our discussion above could be something that changes the market’s assessment for SEK as well. A lot of wood to chop to reverse the EURSEK chart, in any case.
NOK – EURNOK toying with the highs, having not yet taken out the high for the cycle yet – as we note above for SEK, the most supportive thing for NOK would be a stronger EUR
Upcoming Economic Calendar Highlights (all times GMT)
- 1130 – ECB Meeting Minutes
- 1230 – US Sep. CPI