The G-10 rundown
USD – the USD not showing much conviction as the flipside to risk appetite, perhaps as the Fed has so thoroughly stuffed the system with liquidity that it is tough for the market so lean against this pressure.
EUR – the market recognizes that nothing promising for the long term came out of this EU council meeting, but the very near term implications are difficult to gauge here – will continue to focus on Italian BTPs and Euribor for signs of worsening strain.
JPY – the yen playing its part, most interestingly in EURJPY, which has broken free of cycle support, although overall FX volatility looks quiet – perhaps too quiet. BoJ will fire another salvo next Tuesday, but will it register?
GBP – sterling at the firmer end of recent range versus the Euro but doesn’t look a credible “safe haven” from the single currency relative to the USD or JPY if further existential strain registers.
CHF – struggling for a reason to consider CHF in the mix here as this latest weak euro episode has failed to see 1.0500 taken out in EURCHF even as other EUR pairs under significant pressure.
AUD – struggling to see the appeal of the Aussie, though a number of macro strategist are trying to play a normalization story boosting basic commodities first story. Good luck with that. Technically, AUDUSD in an absurdly tight range after enormous sell-off and then the enthusiastic bounce. Next levels to watch are 0.6450 and 0.6250.
CAD – that we haven’t seen new highs in USDCAD speaks to the Fed’s massive liquidity provision and risk assets still much closer to their recent highs than the March lows. Still see CAD as perhaps at most risk from current pricing among G10 currencies from the Covid19 devastation on oil prices and the Canadian economy.
NZD – preference to see AUD as an outperformer in a growth normalization story may be behind AUDNZD outperformance – if so, we’re not enthused for upside in the near term – even if longer term story and valuation points higher for the pair. Weak milk prices also weighing on NZD.
SEK – Is SEK a relative safe haven at some point from a valuation angle if EU existential pressure worsens? The market has generally traded SEK from a pro-cyclical perspective (SEK moving up and down in positive correlation with risk sentiment and global growth outlook), but let’s recall how strong SEK was during the EU sovereign debt crisis back in 2011-12. For now, nothing broken technically in EURSEK, which is pressing on range support, with more notable downside pivot area perhaps 10.75-70.
NOK – all eyes on Brent contracts further forward for whether EURNOK has topped out for now.
Economic Calendar Highlights (times GMT)
- 1030 – Russia Central Bank Announcement
- 1230 – US Apr. Flash Durable Goods Orders
- 1400 – US Final Apr. University of Michigan Sentiment