The G-10 rundown
USD - the USD has drifted back and forth without conviction and the background factor suggesting that it is actually remarkably strong is that the Fed’s liquidity provision and three rate cuts have not yet engineered a major retreat.
EUR – as indecisive as ever here, but the single currency generally at risk on further negative news on the global economy and from negative outcomes for US-China trade talks. EURJPY looking interesting for downside potential, given JPY comments below.
JPY – historically highly responsive to US data, the heaviness in JPY crosses is notable and could deepen significantly on concern that the US-China relationship headed for further deterioration.
GBP – surprising to see the market continuing to bid up sterling when little has shifted in expectations terms. The higher it goes, the less potential for further upside if the consensus scenario of a Tory majority obtains.
CHF – residual bids in CHF on concerns that US-China trade relationship not headed in the right direction? Certainly, the EURCHF chart very inconclusive between 1.0850 and 1.1050.
AUD – the Aussie should be reactive to US-China trade talk news of sufficient clarity, but also watching a couple of interesting data points on the calendar Down Under, including tonight’s NAB Business survey. A longer-term, overarching risk for Australia is climate policy as the country has a uniquely dirty footprint linked as well to China (coal and iron ore) in an ecologically fragile corner of the world.
CAD – a whipsaw week for USDCAD last week on the less dovish Bank of Canada and then the disaster of Canada’s jobs numbers for November. CAD most at risk on weaker oil prices and any US data misses, but also sensitive to the trade tension.
NZD – the kiwi is over-achieving here but not sure where the catalyst for a reality check arrives from (outside of US-China trade noise triggering a downdraft).
SEK – a lot of tension in the SEK outlook. Supportive at the moment is the Riksbank’s determination to hike rates to zero this month and the backdrop of strong risk appetite, but potential negatives are extremely poor data in Sweden and any risks to the global outlook from the US-China trade talks.
NOK – the technical situation looks promising tactically for EURNOK bears as oil prices have also bulled up a bit higher on the latest OPEC shenanigans, but any NOK upside could quickly get cut short if the US-China trade talks sour. Also, seasonal headwinds for NOK into year-end.
Today’s Economic Calendar Highlights (all times GMT)
- 1315 – Canada Nov. Housing Starts
- 1330 – Canada Nov. Building Permits
- 2205 – Australia RBA’s Lowe to Speak
- 0030 – Australia Q3 House Price Index
- 0030 – Australia Nov. NAB Business Survey