FX Update: Time for some consolidation?

Highlights in the coming week’s event risks: (times are GMT where shown):

Note that the list may not be complete and please consult our daily Quick Take for a more complete run-down day to day of incoming event risks.

• Bank of Japan’s Ueda to speak (Mon 0100). After the drubbing the yen has received of late despite a steep rise in Bank of Japan hike expectations, the currency could be sensitive to any rhetorical hints. EURJPY downside looks interesting from a rate spread perspective as the EUR yield advantage in 2-years is at the lowest since late 2022.
• Australia RBA’s Kent to speak (Mon 0630) and RBA meeting minutes (Tue 0030). Interested in AUD catalysts in general (if unlikely to get them from the RBA) as AUDUSD works into the lower third of its post-pandemic range. Lots of possible catalysts in the months ahead in the shape of China’s response to whatever Trump delivers. Weak copper is a concern for AUD. Right now, market is looking for no rate cuts until well into next year.
• US Nov. NAHB Housing Market Index (Mon 1500). A leading US housing market indicator – weakness a risk with US 30-year mortgages rising back above 7.25% after hitting as low as  6.6% in September.
• ECB President Lagarde to Speak (Mon 1830) and Wed (1330) – Watching for clues on 25 or 50 for the December rate cut as market leans far more in favour of the former now.
• US Oct. Housing Starts and Building Permits (Tue 1330)
• Canada Oct. CPI (1330) Unlike in the US, Canada’s official CPI data has continued dropping, with core Trimmed Mean at 2.4% in Sep, though expected to rise to 2.5% for October.
• China Rate Decision (Wed 0100) China has been slashing rates, but the market wants stimulus announcements more than monetary easing.
• UK Oct. CPI (Wed 0700) Important one for sterling status –a higher than expected level not necessarily GBP positive given weak growth – more stagflationary in nature.
• US 20-year Treasury auction (Wed 1800) – the 20-year has the highest yield on the US yield curve – what is demand picture as we look ahead to Trump 2.0.
• Nvidia earnings (Wed after 2100). Not considered an FX catalyst, but this company’s earnings reports are crucial for broader risk sentiment.
• UK Government borrowing figures (Thu 0700) Market may not react, but interesting to watch these monthly figures under the new Labour budget.
• US Weekly Initial Jobless Claims (Thu 1330) – the week prior saw the lowest claims number since April.
• Japan Oct. National CPI (Fri 2330) Given the gathering anticipation of BoJ hike in December, this could trigger considerable volatility in either direction.
• UK Sep. Retail Sales (Fri 0700) – ancient history, but interesting if fails to show continuation of strong upward trend of last few months.
• France, Germany and Eurozone flash Nov. PMIs (Fri 0815,0830,0900) The flash PMIs will be out everywhere, but the European ones get perhaps the most attention.
• UK Flash Nov. PMI (Fri 0930)
• US Nov. Final University of Michigan Sentiment (Fri 1500)

Table: FX Board of G10 and CNH trend evolution and strength.

Note: the FX Board trend indicators are only on a relative scale and are volatility adjusted. Readings below an absolute value of 2 are fairly weak, while a reading above 4 is strong and above 6 very strong.

The JPY comeback attempt on Friday will take another day to register in the trend readings (writing this as of mid-day Friday, so, depending on how JPY closes the week), but other currencies have been weaker than the yen recently. The US dollar worked up an enormous head of steam and can afford some consolidation without losing its uptrend. Elsewhere, the gold slide has been so decisive that it is showing strong negative readings, requires zooming out to argue for a bullish trend picture there. Note SEK paying for the Riksbank’s outspoken dovishness (and concerns for weak EU and Chinese growth).

Table: FX Board Trend Scoreboard for individual pairs.
The ATR readings are cooling nearly everywhere, but JPY crosses still have elevated “heat”. Note that the EURUSD negative reading is at the most extreme of all trends, possible sign of overreach in the short term. CHFJPY is on the edge of a trend change if the JPY rallies here after 38 trading days in a positive trend.