The G-10 rundown USD – an important week ahead for the greenback, though with the risk that the market is waiting for the US-China trade deal to emerge before driving more notable USD flows. We also have PCE inflation up today. The FOMC could further eliminate rate hike inclination, though the bigger signal on that front may be reserved for the June meeting and the accompanying materials. That outing also
comes after this notable meeting, which could drive the formal arguments for a more dovish policy mix.
EUR – the Spanish election perhaps a microcosm of the coming EU parliamentary election, which could show an advance for right-leaning populist parties, but a fractious general result. EURUSD focus is lower as long as we trade below 1.1200.
JPY – strong US long Treasury market the likely driver of JPY resilience and this provides clanging dissonance for the otherwise bid tone in risk sentiment.
GBP – little volatility in sterling and nothing new expected from the Bank of England this Thursday. The collapsed shorter implied volatility offers more compelling risk/reward if developments begin to point to a new referendum risk well ahead of the new October 31 Brexit deadline (three-month GBPUSD volatility now below 7% after trading above 10% in late March, for example).
CHF – room for USDCHF to consolidate back to 1.0100-25 without calling a technical reversal, but focus there only if USD strong and EURCHF rally picks back up above 1.1400.
AUD – the Chinese growth sentiment has come off the boil, as have the stock prices for Australia’s mining giants, and rate cut odds for next week’s RBA have accelerated after last week’s CPI miss. Only USDCNY and trade deal optimism holds AUDUSD above 0.7000
CAD – the oil slide keeps the USDCAD consolidation from biting too deep and we continue to focus on a rally extension after the Bank of Canada waved the white flag last week and flattened its rate adjustment bias to neutral.
NZD – the next test for the kiwi Wednesday’s NZ Q1 employment data, where the trend has slowed, though at very low unemployment levels. The NZDUSD back-up needs to halt ahead of 0.6725-50 if the bears are to maintain the case for a downtrend.
SEK – consolidation so far orderly after the big slide last week on the dovish Riksbank meeting – looking for test of cycle highs above 10.70 in EURSEK as long as 10.55 area holds.
NOK – Norges Bank expectations faltering a bit already before the vicious slide in crude oil prices on Friday. EURNOK squeeze risk higher remains if the oil slide deepens, and the price action remains above 9.65.
Upcoming Economic Calendar Highlights (all times GMT) 07:30 – Sweden Mar. Household Lending
08:10 – UK BoE’s Carney to Speak
09:00 – Euro Zone Apr. Confidence Survey
12:30 – US Mar. PCE Inflation
14:30 – US Apr. Dallas Fed Manufacturing Activity
01:00 – China Apr. Manufacturing and Non-manufacturing PMI
01:45 – China Apr. Caixin Manufacturing PMI
Economic calendar Highlights for the rest of the week
Tuesday: China Apr. Manufacturing and Non-manufacturing PMI, Euro Zone Q1 GDP Estimate, Germany Apr. CPI, Canada Feb. GDP, Mexico Q1 GDP
Wednesday: New Zealand Q1 Employment report, UK Apr. Manufacturing PMI, , US Apr. ADP Employment Change, US Apr. ISM Manufacturing, US FOMC Meeting
Thursday: Euro Zone Apr. Manufacturing PMI, UK Bank of England Meeting,
Friday: UK Apr. Services PMI, Euro Zone Apr. CPI, US Apr. Change in Nonfarm Payrolls, US Apr. Average Hourly Earnings, US Apr. Unemployment Rate, US ISM Non-manufacturing, US Federal Reserve speakers at Hoover Institute Policy Conference
