USD fades despite strong data

The G-10 rundown

USD – the USD rally is on ice for the moment particularly versus more risk correlated currencies. Given the reaction function to solid US data on Friday, the USD may be rangebound to weak until next week’s FOMC meeting if risk appetite remains relatively stable.

EUR – the euro is in recovery mode and has plenty of room to consolidate given the extensive damage done on most euro charts. EURJPY is already bumping into a key level soon if 129.00 is achieved, while the first bigger EURUSD retracement doesn’t come in until just above 1.1900.

JPY – the JPY is weakening the most as global rates rise on fading EU existential pain and as risk appetite – at least in the major equity markets – recovers. A key hurdle to further JPY weakness is already coming into view in the 110.00-25 area in USDJPY.

GBP – sterling is staging a minor recovery within a constricting EURGBP range – the recent euro swoon with no notable volatility in EURGBP shows how vulnerable sterling remains without more clarity on Brexit or a pick-up in the UK economy and the Bank of England rate outlook.

CHF – the recent CHF strength is easing as the worst of the EU existential fears fade, though the recent sell-off has done structural damage to the upside prospects. The first major resistance at the 200-day moving average is now above 1.1650.

AUD – as noted above, the Aussie volatility looks high beta to the next moves in risk appetite and the Australia-specific even risks through the Wednesday GDP data, with AUDUSD staring down very pivotal levels soon if it continues to rally.

CAD – USDCAD is finding resistance in the 1.3000 area so far and the lid may be on for now if US rate expectations remain flat for now and risk appetite can stage a comeback. The chart situation looks tense in the bigger picture due to the shrinking range.

NZD – AUDNZD is in an interesting charge back higher ahead of tonight’s RBA meeting. We are kiwi bears, but it's hard to take a fresh look at NZDUSD shorts here unless risk appetite fades or the entire US yield curve begins to lift again.

SEK – SEK should outperform the euro if the EU existential threat continues to fade in the near term. As Sweden gears up for elections in early September, could the weak krona prove a popular issue? Swedish tourists this summer will not enjoy their foreign holiday bills.

NOK – if risk appetite and oil can maintain altitude and the EU existential threats ease a bit further here, it is difficult to understand why EURNOK can’t explore the next range lower on the chart towards 9.25.

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