FX Update: GBP woes extend. Euro eyes EU council meet

The G-10 rundown

USD – the US dollar is holding up rather well, but risk appetite indicators are stuck in limbo, as are many USD charts at the moment. The market not reactive to data nor the Fed’s balance sheet actually shrinking over the last couple of weeks.

EUR – the euro awaits the tone from today’s EU council meeting. A press conference with Von der Leyen and others late today in which we look for the degree of solidarity, or lack thereof, on display.

JPY – the yen perhaps reaching the maximum of its potential at the moment unless we are set for a new round of risk off from some unknown catalyst.

GBP – sterling struggling badly, still nominally not in full retreat versus the USD unless the 1.2356 area Fibo retracement in GBPUSD is taken out. A long wait for Brexit talks to resume and for evidence on the shape of the recovery to take shape in coming months – and the GBP rout could deepen on any new risk aversion.

CHF – the euro sagging here to the lowest portion of the important 1.0650-1.0700 pivot area ahead of the EU council press conference – the close today an important setup for next week’s action.

AUD – the AUD keeping quiet in the range in AUDUSD terms as risk appetite supports, but some of the recent commodity reflation trades have eased. A bit concerned for AUD on the risk of a resumption of US-China trade tensions as Trump looks increasingly cornered.

CAD – not impressed with CAD’s performance, given surge in oil prices and firm risk appetite – waiting for catalysts either way. Risk of tensions with China rising as the latter indicts two Canadian citizens on spying charges.

NZD – the RBNZ meeting is up for next week. Remember the last meeting when the RBNZ was laying the groundwork for a negative interest rate regime? Few signs of that as many central banks have remarked that the outlook hasn’t proven as , but then again, kiwi has already rebounded, so don’t see much upside potential here for the kiwi next week.

SEK – can’t gin up a reason for SEK weakness here save for Sweden perhaps feeling isolated by travel concerns linked to its less harsh Covid19 shutdown and worries of a resurgence in cases. EURSEK next resistance level above local highs up toward the 200-day moving average near 10.66 at present.

NOK – not much more to get out of the NOK here unless crude oil prices launch a new phase of additional strength above the local range – the 200-day moving average in EURNOK, near 10.48 currently, provided very precise support at the bottom of the run lower last week – upside breakout area of 11.00+ only looks a risk if we get a new cycle of growth concerns and significant sell-off in oil and equities.