The G-10 rundown
USD – China man-handling its currency higher as their top trade negotiator is set to visit Washington over the next two days. Another factor possibly affecting USD direction over the next few weeks is the US Treasury’s boost to USD liquidity ahead of the debt ceiling extension deadline expiring on March 1.
EUR – the euro rising mostly at the weak US dollar’s expense, as we fail to see an isolated positive catalyst for the single currency – the 1.1500 level post-FOMC is the upside focus of note in EURUSD.
JPY – the yen stronger versus the US dollar but not strong elsewhere as EURJPY pokes above resistance, for example. Hard to gin up enthusiasm for the yen unless global rates and risk appetite are cratering as 10-year JGB’s are flouting the Bank of Japan's YCC policy and trading at a yield of 0%.
GBP – a potentially pivotal day for sterling, but not sure how the mix of amendments clarifies the situation dramatically today, aside from perhaps indicating a pointed determination to avoid a cliff-edge Brexit on March 29. EURGBP could revisit support and then some on a positive spin from today’s developments.
CHF – EURCHF back threatening resistance at 1.1350 and not sure how to spin this development, given the backdrop.
AUD – the Aussie incredibly resilient given the backdrop of developments with that resilience built on some combination of the currency CNY strength, hopes for US-China trade deal, hopes for a dovish climbdown from QT from the FOMC meeting. Meanwhile, we’ll have a look at the Q4 CPI out overnight as the Reserve Bank of Australia is likely set to ease policy this year.
CAD – ugly oil sell-off yesterday doing the loonie no favours. USDCAD perhaps showing low beta to the USD through the end of the week on the flurry of event risks in coming days.
NZD – NZDUSD poking higher and the range high of 0.6970 is the next resistance level – highly reactive to any shift in China’s commitment to continue supporting the renminbi.
SEK – EURSEK poking at the 200-day moving average and range highs above 10.35 yesterday – not yet breaking but struggling to built a positive narrative around Sweden outside of weak SEK valuation.
NOK – EURNOK wants to go lower but having a hard time, given the chunky sell-off in oil markets yesterday. Rate expectations are oddly holding up very well for Norway and providing support at the margin. Watch out for the latest retail sales report tomorrow and the credit growth indicator on Thursday which, like its Swedish counterpart, has been steadily falling and is cause for concern. Upcoming Economic Calendar Highlights Today (all times GMT)
1300 – UK Parliament Amendments selection
1400 – US Nov. Home Price Index
1900 – Voting on Amendments begins
1500 – US Jan. Consumer Confidence
0030 – Australia Q4 CPI