NZD blasted on jobs data, USD steady

The G-10 rundown

USD – the US dollar firm across the board as the market may begin to fear that the US economic outlook isn’t softening fast enough to justify a full dovish shift from a Fed that continues to actively tighten via balance sheet reductions.

EUR – watching the bottom of the EURUSD range at 1.1300 as a potential catalyst for more downside volatility. Fresh bad data out of Germany this morning with Industrial Production dropping. EU existential risks creeping back into view as we discuss below in CHF.

JPY – no signal for JPY yesterday from the US treasury market so USDJPY rebounds back toward 110.00 as yields steady and risk appetite still relatively strong. Looking for a pivot to strong side in the JPY crosses if EM rolls over and US yields drop.

GBP – sterling suffering at the hands of the stronger USD, Donald Tusk’s “special place in hell” and a likely delay in the next round of voting in parliament. GBP trades mid-range versus the euro as we await Brexit developments far more than anything the Bank of England delivers today. 

CHF – EURCHF reversal puts the pair back in the well-tread range down toward 1.1200. Italian yield spread stress rising a bit uncomfortably again as the EU expected to cut Italy’s growth estimates later today  – which brings the Italian budget assumptions back into view.

AUD – AUD follow up action to the downside a bit more sedate after the initial shock lower from the Reserve Bank of Australia’s comments. The RBA Monetary Policy Report up tonight. Volatility may quickly slow unless we see something on the US-China trade negotiation front or risk off suddenly rears its head.

CAD – USDCAD backing up into the previous range, which is looking like a reversal if the move above 1.3250 sticks – fits with developments in AUDUSD and NZDUSD, although we prefer CAD to both of the Antipodeans. The Bank of Canada’s Lane out late yesterday fretting about negative factors for Canada relative to the US, including US trade policy, weak oil prices and softer housing market.

NZD – a bad miss on the jobs growth front and rather unsettling rise in the Unemployment rate takes NZD down a few notches as short NZ yields tumble – AUDNZD reversal a bullish development if maintains around 1.0500, the NZDUSD chart also looking lower.

SEK – psychological 10.50 area provides resistance this morning ahead of Sweden’s latest house price data – which showed a huge seasonal bounce (still below year ago levels – but lack of acceleration in the deterioration helpful at the margin. With the return of USD strength, note that USDSEK is poised at the highs since late 2016 near 9.25.

NOK – EURNOK backing up more forcefully as bears will have to pick their fresh entry points now that trend lower has been disrupted. Ultimate resistance at 10.00, most compelling Fibo the 9.90 area 61.8% retracement of the sell-off wave.

Upcoming Economic Calendar Highlights (all times GMT)

12:00 – UK Bank of England Super-Thursday
12:30 – UK BoE’s Carney to speak
13:30 – US Weekly Initial Jobless Claims
14:00 – Mexico Jan. CPI
14:30 – US Fed’s Clarida to speak
19:00 – Mexico Policy Rate
00:00 – Japan Dec. Earnings
00:30 – Australia RBA Monetary Policy Report
00:30 – US Fed’s Bullard (Voter) to speak