The G-10 rundown
USD – the US dollar in solid shape given the US-China trade deal, and we may have to wait for trading to kick off into 2020 to get a sense of direction if the Fed has done enough to keep a lid on liquidity issues into year-end.
EUR – the Euro Zone economy remains in a bad place and we’ll need stronger signs of a resurgence in the Chinese economy for a boost to EU export demand to revive the Euro Zone economy. The EU focus on climate-linked fiscal stimulus may be good for the planet, but will it be positive for real returns prospects for Euro area investors?
JPY – the yen largely weak on as-good-as-it-gets positive risk sentiment, but the situation confused more than lightly by the strong rally in US treasuries on Friday.
GBP – the fresh sterling longs will be vulnerable as the reality of Brexit may not do much to boost the numbers quickly due to the momentum of weak credit impulse built up over the last few quarters. As well, major uncertainties remain around the shape of the eventual trade deal. The flash December UK Manufacturing PMI, matching the cycle worst at 47.4, is a reminder of the low starting point for the UK economy.
CHF – the EURCHF candlestick on Friday was a reverse image of the reaction in some EM markets and fits with the US treasury rally, but not with the strong risk appetite elsewhere.
AUD – very weak price action in the Aussie relative to the market backdrop – need to see a pick-up sooner rather than later to believe that Friday’s bar was an indication of underlying weakness.
CAD – the loonie standing out on the strong side as the USMCA trade deal nearing passage looks to see Canada avoiding any further negative trade focus. But to get USDCAD down through 1.3000 we need a weaker USD and CAD won’t be a performer on any weaker US economic performance we still fear is a risk.
NZD – the kiwi absorbing some collateral damage from the very weak AUD since Friday – but AUDNZD looking heavy again.
SEK – the Scandies behaving more in line with the playbook in equity markets as positive risk sentiment has driven notable SEK strength and on balance, any removal of global trade uncertainty is a SEK-positive, as is the Riksbank’s assumed rate hike on Thursday. Still, risks for SEK could be budding on any eventual US-EU trade spat.
NOK – EURNOK looking very heavy after the close on Friday and if risk appetite sustains a bid into year-end could take out the pivotal 10.00 area despite the seasonality headwinds for NOK.
Today’s Economic Calendar Highlights (all times GMT)
- 1330 – US Dec. Empire Manufacturing
- 1445 – US Dec. Flash PMI
- 1500 – US Dec. NAHB Housing Market Index