USD strength remains despite shifting sands

The G10 rundown

USD – the USD is maintaining a bid despite the sharp shift in the backdrop (weaker equities, stronger treasuries) points to more broad strength as the side of least resistance.

EUR – EURUSD is trading heavily again after yesterday’s sell-off saw the largest trading range for the pair in weeks.  Our question is whether the breakdown happens ahead of the ECB or after – whether the ECB rolls out a TLTRO now or later seems immaterial as this is a weak policy option. Interest in EURJPY downside potential as well as noted above.

JPY – as noted above, yen may have bottomed in broad terms and possibly even in USDJPY if US long treasuries remain supported and volatility/downside returns to equity markets.

GBP – sterling traders preferring to sit on their hands, perhaps waiting for the series of Brexit votes next week. After reversal in GBPUSD, prefer expressing potential for further sterling strength via EURGBP, as long as the price action remains south of 0.8650 tactically.

CHF – EURCHF perhaps weighed down by the expectation of a downbeat/dovish ECB this week – price action bottled up there. 

AUD – in its latest statement, the RBA persists in keeping a hopeful outlook, but the market isn’t really buying it. Bears perhaps reluctant to sell AUDUSD as we await the terms of a US-China trade deal, but we still prefer downside resolution in AUDUSD below the 0.7050-0.7000 area.

CAD – the Bank of Canada likely to wax more cautious than the RBA at tomorrow’s Bank of Canada meeting. If oil and risk appetite roll over here as well

NZD – AUDNZD our chief interest in detecting any reason to trade NZD versus AUD and the latest price action providing few clues – a key test with tonight’s Australia event risks.

SEK – EURSEK blasted through all retracement levels and tested the recent highs this morning – frustrating recent hopes that the bearish reversal would bite – now bearish hopes rest on the double-top (last couple of weeks) and triple top (price action since May) scenarios.

NOK – a shift to risk off and consolidating oil prices not helpful for EURNOK bears – let’s see how the price action shapes up if the pivot high from February around 9.84 is taken out.

Upcoming Economic Calendar Highlights (all times GMT)

0930 – UK Feb. Services PMI
1000 – Euro Zone Jan. Retail Sales
1300 – US Fed’s Rosengren (voter) to speak
1500 – US Feb. ISM Non-manufacturing
1500 – US Dec. New Home Sales
1535 – UK BoE’s Carney to speak
1600 – New Zealand Feb. House Prices
2210 – Australia RBA’s Lowe to speak
0030 – Australia Q4 GDP