The G-10 rundown
USD – the greenback has hung in remarkably well through this resurgence in risk appetite as Fed expectations have been lowered. But there is no momentum and we are all awaiting the next headline risk.
EUR – price action suggests traders have given up on directional moves for the moment as we are all awaiting the break of the obvious EURUSD range levels – positioning via options seems preferable to getting caught up in the feints of spot moves that don’t follow through
JPY – USDJPY still hasn’t fully recovered from last week’s reversal, but downside interest only likely to pick up if and when risk appetite rolls over. Bond markets also continue to leave JPY traders guessing.
GBP – the UK data today could move sterling, especially on a strong uptick in Jobless Claims for January, which is more recent than the December employment and earnings data. This could feed into fears that even a delay of Brexit is sterling negative if it continues to drive a delay in business investment. Honda moving house from Swindon
no help at the margin either.
CHF – crossfire of factors here as wildly positive risk appetite (CHF-negative) contrasts with a depressed economic outlook for the Eurozone; the potential for fresh ECB easing (CHF positive) leaves little directional impulse for now.
AUD – the backup rally in AUDUSD so far relatively benign for the bears, but we wonder whether traders must sit on their hands until knee-jerk reactions to incoming US-China trade negotiation headlines have faded. On the one hand, the terrible domestic credit outlook is a powerful negative while the resurgence in key commodity prices, especially iron ore, have provided some offsetting support.
CAD – the consolidation phase in USDCAD has been quite orderly and we prefer to keep the focus higher as long as the price action remains in the 1.3150-1.3200 zone or higher.
NZD – we have long remarked on the overvaluation of the kiwi, but waiting for a catalyst that trigger’s a market reassessment. Recent tensions with China
are not supportive, but this would need to escalate significantly to deserve more market attention.
SEK – CPI miss today carrying considerable weight, as the CPI coming off now despite the still very weak SEK (and it was readily apparent that achieving multiple prints above 2.0% for the core CPI over the last year have only been driven by persistent SEK weakness). This suggests the Riksbank is in a sorry place, dealing with housing weakness and the weak economy.
NOK – the EURNOK sell-off resumption hasn’t impressed given the fundamental backdrop of improved risk appetite and a significant ramp in oil prices – we are cautiously bearish EURNOK, but would like to see momentum building again and soon. Upcoming Economic Calendar Highlights (all times GMT)
08:30 – Sweden Jan. CPI
09:30 – UK Dec. Average Weekly Earnings
09:30 – UK Dec. Dec. Employment Change / Unemployment Rate
09:30 – UK Jan. Jobless Claims Change
10:00 – Germany Feb. ZEW Survey
11:30 – Sweden Riksbank’s Ingves to Speak
13:50 – US Fed’s Mester (Non-Voter) to Speak
15:00 – ECB’s Praet to Speak
15:00 – US Feb. NAHB Housing Market Index