The G-10 rundown
USD – impressive that the US dollar maintains a bid despite the massive provision of Fed liquidity, and we’re very interesting to see how the US dollar behaves over the transition to the New Year on all of the focus of liquidity issues into year end. For now, the comeback is sufficiently strong to keep the bears at bay.
EUR – the very weak sterling offering a bit of contagion for the euro as well, and disappointing for EUR bulls that EURUSD is shying away from the pivotal 1.1200 level again. Also disappointing is that a boost in sentiment on the Chinese outlook in the wake of the US-China trade deal hasn’t done more to support the single currency.
JPY – the yen is the one currency showing some consistent beta to the melt-up in risk appetite into year-end here, and will likely prove high beta exposure to any shift in the mood - especially if US data proves weaker from here and changes the narrative.
GBP – post-Brexit transition period could stretch out over the horizon and lead to BoE cuts next year, a risk the market is not sufficiently pricing. Interesting to see which candidate emerges in the days/weeks to take the BoE governorship.
CHF – quite inert to all of the hubbub affecting sterling and the JPY – really not sure what to do with the franc except ignore it until it shows signs of life.
AUD – the Aussie really dragging here and can only imagine where it would be if the backdrop was more pessimistic. The market pricing 60% odds of a February cut after the RBA minutes overnight..
CAD – the firmer USD finally felt in USDCAD as well after the recent run lower and it looks like the run below 1.3150 was too much for now. The CAD sensitive to oil prices and the US economy outlook as USDCAD trades dead in the middle of the last several months’ range and implied volatilities recently hit record lows.
NZD – the kiwi continuing to absorb some weakness from the weak AUD and AUDNZD is working through the last bits of its range back to 2016 if it drops below 1.0400.
SEK – a modest consolidation in EURSEK this morning after its run lower, but the next pivotal test for SEK is the Thursday Riksbank and how the bank spins guidance on a rate hike back to zero interest.
NOK – EURNOK steering away from the downside break NOK bulls are gunning for as we are seeing some consolidation after the strong move down from 10.20 to just ahead of 10.00. The beginning of 2020 and end of NOK’s seasonality changes may prove more pivotal than this Thursday’s Norges Bank meeting.
Today’s Economic Calendar Highlights (all times GMT)
- 0930 – UK Nov. Jobless Claims Change
- 0930 – UK Oct. Employment Change
- 0930 – UK Oct. Unemployment Rate
- 1330 – Canada Oct. Manufacturing Sales
- 1330 – US Nov. Housing Starts/Building Permits