The G-10 rundown
USD – the US dollar trading as a safe haven here, second perhaps only to the JPY as long as risk-on, risk-off behavior extends here in the near term.
EUR – the weak German IFO expectations out this morning (92.9 vs. 94.8 expected and vs. 93.9 in December) certainly a disappointment relative to the massive surge in recent ZEW survey numbers, but more importantly, the risk of weak demand from China as it deals with its virus outbreak is a concern for the heavily export-dependent EU economy.
JPY – extremely orderly bid into the yen relative to past episodes of risk off behavior and the bounce-back overnight in USDJPY is a mirror image of the action in US treasury futures – as long as we remain in risk-on/risk-off mode, will likely see this correlation continue.
GBP – sterling looking reasonably stable and then some, given risk off concerns and the disappointment of the reaction to Friday’s solid UK PMI survey data – the Bank of England cut odds have dropped and it would make some sense for the BoE to wait and see here, though a bad further stumble in markets on the coronavirus this week could be a factor in the mix of the MPC’s decision.
CHF – absorbing a very modest safe haven bid, if any at all, and we wonder at some point whether the SNB’s foreign equity holdings could become a source of relative weakness to JPY in a big way on a larger risk-off move.
AUD – the Aussie getting about the worst of it within G10 FX from the coronavirus fallout and for good reason as it so heavily exposed to Chinese demand. The NAB surveys from Australia out tonight and CPI later this week.
CAD – risk off and tumbling oil prices are not the loonie’s best friend – surprised that USDCAD hasn’t traded even higher here after the recent Bank of Canada dovish tilt on top of that, not to mention another weak Retail Sales number on Friday.
NZD – kiwi absorbing less of the fallout from the corona virus than AUD and could point to new local lows here in AUDNZD, but failure in NZDUSD to new lows point to a further run lower as long as this risk off move extends.
SEK – krona generally does not like risk aversion, so we see EURSEK back toward the recent highs, but nothing breaking unless 9.60-65 comes under siege.
NOK – EURNOK clears 10.00 overnight on the fallout from the corona virus as oil prices are one of the most heavily impacted commodities for obvious reasons. Given EURNOK shorts a likely consensus trade, if the fallout extends – squeeze risk on an extension above 10.00.
Today’s Economic Calendar Highlights (all times GMT)
- 1500 – US Dec. New Home Sales
- 0030 – Australia Dec. NAB Business Survey