The G-10 rundown
USD – less dovish FOMC supports the USD as a knee-jerk reaction, but the USD was doing rather well even during the prior repricing of the Fed rates to the downside, so we question the durability of the reaction or narrative that the Fed is less dovish now.
EUR – conflicting short-term technical in EURUSD – a close back above 1.1250 points the needle higher while the bar is tough to clear tactically for a convincing downside argument – starts with a close below 1.1150.
JPY – higher US rates are JPY negative, but if the market decides it has overreacted the “lack of dovishness” from the Fed, USDJPY could sell-off quickly – the technical are bearish on a decline through the sub-111.00 pivots.
GBP – hard to see the BoE making waves today with ongoing Brexit uncertainty, weaker core inflation and a stable and even firm sterling. Some analysts/headlines are touting the risk of a BoE hawkish surprise, but I don’t get it. If the USD firms broadly and GBPUSD heads back below 1.3000, bears would be happy to pounce on the short side. Until then, caution.
CHF – EURCHF rally looks in good order, but needs to clear 1.1500 to make a real point - that requires a better sense that the euro growth outlook is improving again and maybe even eventual prospects of an EU fiscal stimulus – too early on that front.
AUD – the market is about 40/60 on the probability of an RBA rate cut next Tuesday as AUDUSD trades near the critical 0.7000 area.
CAD – USDCAD has bounced on the FOMC reaction, but not yet enough to call it a full reversal. Need closer to 1.3500 to more firmly point the needle back higher.
NZD – interesting to watch how AUDNZD deals with the RBA meeting next Tuesday as both countries on a similar rate path – we prefer NZD to lose in the end, but from here or from, say, 1.0400?
SEK – may be too much to expect EURSEK to clear 10.72 highs with markets in a relatively good mood and the trajectory of EU data pointing higher for the moment.
NOK – NOK getting a bit too weak tactically relative to the backdrop now – perhaps 9.75 offers resistance in EURNOK barring steep crude oil sell-off?
Upcoming Economic Calendar Highlights (all times GMT)
1100 – UK BoE Rate Announcement / Inflation Report
1100 – Czech Central Bank Announcement
1130 – UK BoE Carney Press Conference
1230 – US Weekly Initial Jobless Claims
1400 – US Mar. Factory Orders