The G-10 rundown
USD – the modest reaction to the Fed’s provision of more generous than expected liquidity is a warning sign that it may take something far more forceful to turn the US dollar lower here. EURUSD remains in limbo after failing to take out the key first resistance last week toward 1.1100.
EUR – the euro enjoying the chunky rise in EU yields last week, in part driven in Europe by hopes for a Brexit deal – continued strength likely needs to see more of the same, otherwise the risk that the EURUSD price action, for example, once again bogs down.
JPY – as noted above, the JPY slide the most directly linked currency to the bond slide (higher yields). We like USDJPY lower – or at least the yen generally higher – for the long run unless US bond yields have bottomed for the cycle.
GBP – last week made clear that the speculative shorts weren’t ready for the good news, but this latest move has likely cleared a significant portion of those shorts, and the path to Brexit still remains tricky. Price action could prove treacherous in both directions in the near term.
CHF – disappointing for CHF bears to see that EURCHF can’t hold the 1.1000 level after last week’s events. Full on reversal risk back lower for the pair if global long bond yields lurch into a fresh slide.
AUD – the Aussie getting a modest boost on the handshake US-China trade deal, but if more RBA rate cuts and eventual QE await on an Australian credit crunch, it’s tough to call a bottom for the trade-weighted AUD just yet. Note the rejection of local highs in AUDUSD this morning so quickly after the trade deal news.
CAD – Canada had a jobs report like only Canada can – wildly positive +70k full time jobs and this sends fresh USDCAD speculative longs in full reversal, making the chart look very bearish locally, but we’ve been chopping around between 1.3000 and 1.3600+ for…a full year!
NZD – a smart rebound in AUDNZD suggests the lows may be in for the pair after its recent gentle round of consolidation, unless this Wednesday’s Q3 NZ CPI brings a positive surprise.
SEK – hopes around Brexit and a strengthening Euro bringing an even stronger SEK, helped out further by last week’s strong Swedish CPI print, but EURSEK is some ways away from a capitulation lower just yet (at least needing to take out the 10.80-75 area.)
NOK – EURNOK sell-off has been weak stuff so far and if oil and risk appetite don’t bring in the cavalry for the NOK here, risk of a test of the highs.
Upcoming Economic Calendar Highlights (all times GMT)
- 0900 – Euro Zone Aug. Industrial Production
- 2000 – New Zealand Sep. REINZ House Sales