FX Update: CNY stable after US cries manipulation

The G-10 rundown

USD – the USD a bit mixed here, fading against the riskiest currencies as the market tries to put together a sentiment bounce on the more stable CNY but stronger against the JPY. Yesterday’s  July ISM Non-manufacturing data point weak at 53.7 versus 55.5 expected and 55.1 in June, but we won’t have interesting incoming US data until next week.

EUR – technically, the EURUSD has reversed, but important for it to hold the 1.1150 area and we like the looks of a EURCAD short as a tactical trade in the event that risk appetite suddenly stabilizes here as China maintains a calm CNY.

JPY – the path to 100.00 in USDJPY lies wide open if the pain trade fails to materialize and global bond yields head lower and the risk asset market rout continues. But JPY longs risk a sudden train wreck if the recent mood swing is reversed and USDJPY trades back above 107.50-108.00

GBP – sterling pushing to new lows versus the euro as UK parliamentary forces attempt to gather to block a No Deal Brexit and the EU and UK sides are at a total stand-off as the EU side said again this morning that there is no basis for further Brexit talks.

CHF – the CHF direction will correlate with swings in risk appetite here and the direction of bond yields as USDCHF has neared an important support zone in the 0.9700 area

AUD – the Aussie relatively stable after the RBA failed to push the panic button and kept rates unchanged as most expected prior the recent aggravation of trade war risks. Still, the  RBA did revise GDP and  inflation forecasts lower. But at least a partially offsetting fundamental boost for  AUD overnight was a record trade surplus print for June, at over AUD 8 billion far above expectations.

CAD – the loonie enjoying relative stability here and USDCAD possibly one of the first places to look if Trump pulls out all of the stops to weaken the US dollar – the pair needs to stay out of trouble below the 1.3250-1.3300 zone for bears to find traction.

NZD – an important RBNZ up tonight as the central bank is expected to deliver a 25-basis point cut and the market will look for further guidance. The employment and earnings data overnight stronger than expected across the board, and NZD ripped higher in response, but the move was quickly corralled – so a close post-RBNZ back near current levels (above 1.0375) begins to look supportive and point to a bullish technical reversal.

SEK and NOK – the downside for the Scandies has extended aggressively, with EURNOK testing the huge 10.00 level and EURSEK not far from its cycle highs of 10.85. The currencies likely to correlate with the immediate direction of risk appetite (the move beginning to look excessive unless yesterday’s all out panic extends – stay tuned.).

Upcoming Economic Calendar Highlights (all times GMT)

• 0730 – Sweden Jun. Industrial Orders
• 1600 – US Fed’s Bullard to Speak on US Economy
• 1700 – New Zealand QV House Prices
• 2230 – Australia Jul. AiG Performance of Construction Index
• 0200 – New Zealand RBNZ Official Cash Rate
• 0300 – New Zealand RBNZ Governor Orr Press Conference