The G-10 rundown USD – no one seems to know what to do with the US dollar, perhaps as market conditions are pulling the currency in two directions simultaneously. Risk off is traditionally USD supportive as markets prefer the liquidity of the US dollar, but the fear is perhaps that US treasuries are inferior safe havens this time around as it was the rise in US yields that has driven at least some of the markets’ instability.
EUR – the euro will be held back by Italian budget concerns until that 2019 budget has passed muster. A Brexit fiasco could also weigh in the euro crosses. Technically, EURUSD is in limbo between 1.1800 and 1.1500.
JPY – as noted above, the JPY thrives in these conditions and an extension of global deleveraging would likely drive further strength. Still, the trading ranges look muted relative to the big expansion in volatility in equity markets last week.
GBP – another headline-driven sell-off after the market got ahead of itself in pricing in progress in Brexit negotiations. Traders are warned that “it ain’t over ‘til it’s over”.
CHF – the EURCHF nipped in the bud, likely on Brexit disappointment via a GBPCHF correction as much as anything else. Disappointing for CHF bears if EURCHF can’t maintain above 1.1400-ish.
AUD – AUDUSD channel has been mesmerising in its regularity and any squeeze here needs to fully challenge the top of the channel and close above – currently around 0.7200 – to begin to signal that the downtrend is under siege.
CAD – the ugly correction in oil prices and risk off keeping the pair clear of 1.3000, with the rate spread suggesting no reason to look for CAD outperformance. The recent rally is bullish is the pair maintains altitude here.
NZD – CPI data up late today – a rare glimpse of fundamental NZ data. AUDNZD is mired in limbo and we await a pulse before expressing a view, though we are looking ways to short the kiwi.
SEK – last week’s strong CPI print inspired a rally and now we look for follow through – which would be a more straightforward affair were it not for the backdrop of nervous asset markets and EU existential risks.
NOK – EURNOK getting into interesting territory as 9.40 approaches as the pair hasn’t closed below this level in a year. With oil under pressure and less interest in coming Norges Bank activism relative to the Riksbank after last week’s Swedish CPI release, would expect more NOK to underperform SEK.
Upcoming Economic Calendar Highlights (all times GMT) 1230 – US Oct. Empire Manufacturing
1230 – US Sep. Retail Sales
1430 – Canada Bank of Canada Survey
1600 – Eurozone ECB’s Nouy to Speak
2145 – New Zealand Q3 CPI
