FX Update: A week to watch the USD and US-China

The G-10 rundown

USD – interesting to watch both the US domestic political front with tomorrow’s joint appearance of Powell and Mnuchin before a Senate committee as they face questioning on the CARES act.

EUR – slow burn EU existential questions are constantly there in the background – that story could heat up in June with the next EU council meeting. For now, watching the technical EURUSD developments as noted above.

JPY – Japan’s Q1 GDP growth was better than expected at -0.9% QoQ, showing that Japan managed to avoid the kind of damage that hit the EU, which registered a -3.8% drop for the same quarter. EURJPY downside risks still a theme.

GBP – sterling has rebounded from the worst of the pressure this morning – still solidly above the next key psychological level for GBPUSD at 1.2000, but performance not impressive given where other markets and currencies are trading. The EU’s Barnier said he was “not optimistic” on the outlook for a trade deal late last week. EU-UK Summit up next month.

CHF – EURCHF trading heavily just above the assumed SNB-defended floor of 1.0500 after the SNB reported another rise in weekly sight deposits.

AUD – the AUD riding high as of this writing as US equity futures and the European bourses are shooting out the lights. Enthusiasm for commodity exposure has seen BHP Billiton shares pulling sharply higher overnight. The chief concern for AUD would be US-China trade tension headlines this week. The latest RBA meeting minutes up tonight.

CAD – solid boost in oil prices and no surprises in the Bank of Canada’s Financial system review keeping the USDCAD price action bottled up in the range – awaiting a move outside of the 1.3850-1.4250 range to signal a break.

NZD – one data series we have not commented on in recent years is the foreign ownership of NZ sovereign bonds, which has been steadily declining since 2016 and picked up pace this year and is likely to continue apace given the zero rates and clear RBNZ intention to move to negative rates. NZ runs a sizeable -3% current account deficit and this is a clear additional tailwind for NZD bears.

SEK – for now, EURSEK finding a low ceiling at the 200-day moving average below 10.70. The chart has posted what looks a major top, but the real test for the SEK bullish case would be any more sizable decline in risk sentiment.

NOK – the key resistance around the 11.05 area in EURNOK still intact and getting some support from rising crude oil prices, though it takes a lot to lift longer time prices further out the curve to build a better case for a full reversal lower in EURNOK.

Upcoming Economic Calendar Highlights (all times GMT)

• 1400 – US May NAHB Housing Market Index
• 0130 – Australia RBA Meeting Minutes