The G-10 rundown
USD – the big dollar is down for the count at the moment, but the patterns in recent trading suggest that it is merely the flipside of global risk sentiment and the technical reversal of the prior USD rally is not yet profound enough yet to say that we have reversed course.
EUR – the euro not terribly impressed with the Eurogroup’s agreed rescue package as the single currency is notably lower versus CHF and JPY despite a risk on tone – looking vulnerable even against GBP and would eventually suspect the USD as well if sentiment turns lower.
JPY – the yen rather firm, perhaps as the global yield-curve control is in evidence and prevents. Impressed with the JPY’s resilience here and those looking for a trade to go against the “hopium” tide might have a glance at CADJPY and AUDJPY shorts.
GBP – sterling in an impressive show of strength – some springback possibly from Boris Johnson emerging from his personal Covid19 crisis, but also the weak euro weighing as well as the UK’s easier path to stimulus on all fronts. Next test would be how the pound performs broadly if risk sentiment sours.
CHF – the weekly SNB sight deposits rise another CHF 7 billion – intervention ongoing and makes expressing a CHF long view difficult as EURCHF continues to look heavy.
AUD – the Aussie remains our favourite risk proxy for risk sentimentin G10 – especially via AUDUSD and AUDJPY. Note that Australia’s NAB suffered a catastrophic decline to -66 in March from -2 in February – and that relative to a global financial crisis worst reading of -31.
CAD – one of our favourite ways to express a contrarian view on this bounce would be via CAD shorts, especially if the oil price remains low or lower for the front few months in crude, where the market is pricing an increasingly aggressive price rebound from very low spot prices.
NZD – the AUDNZD pairs showing a firm turning of the corner back higher with this latest move as high as 1.0500. Constructive on strategic long positions here and on dips for a repricing toward 1.10-1.15 to stat.
SEK – not impressed with EURSEK here as the pivot zone below 11.00 hasn’t given way yet despite a rather constructive backdrop. Need to see EURSEK through perhaps 10.75-70 to call a reversal of the long established weak SEK trend.
NOK – difficult to seek EURNOK back through 11.00 until we are firmly on the other side of Covid19 and have normalized crude prices. Barring that, a disappointment in energy markets could lead to another probe back higher, though suspect Norges Bank will leaning against anything disorderly.