Head of FX Strategy / Saxo Bank
- More patience needed for USD upside
- Sweden’s Riksbank surprises markets with QE
- Disappointment for USDJPY bulls
The G-10 rundown by Saxo Bank
The G10 currencies are 10 of the most heavily traded currencies in the world. The G10 currencies are also the world’s most liquid currencies . Traders buy and sell them in an open market regularly with minimal impact on their own international exchange rates. [Ed.]
USD: A bad dream or does this consolidation to the weak side have further to run? Tough to tell here as we watch USDJPY, EURUSD and perhaps GBPUSD as the key pairs of the moment, where a strong USD-favourable USD bar today would suggest that Friday, Feb. 13, was merely a positioning-inspired train wreck.
EUR: Squeezing higher as the market is struggling to find further reason to pressure the currency from a Greece/headline risk angle at the moment. The line in the sand is at 1.1500 in EURUSD. EURCHF is also up pressing on important resistance above 1.0600.
JPY: Last Thursday’s action in JPY crosses mixed, as EURJPY was stable even as USDJPY corrected sharply. The latter is exactly mid-range this morning , and while the failure of the 119.00/25 area is bad news for the bulls, there is still a lot of range to look at to the downside, and locally, the 118.50 area is actually quite important support as well.
GBP: Getting too much of a boost from Friday’s BoE inflation report. Looking for excuses to fade this rally in GBPUSD, with 1.5500 the next resistance area of note. EURGBP showing signs of exhaustion as two probes below 0.7400 so far have failed to hold.
CHF: Heading to the weak side as the ceasefire in Ukraine commenced past weekend (Sunday) and on no new developments in Greece. 1.0650 is the focus in EURCHF and the 0.9300/25 zone in USDCHF after yesterday’s rally attempt in the latter failed to clear the 200-day moving average.
AUD: Stronger as fresh shorts were squeezed on the general USD back-up and lack of fresh dovishness in Steven’s speech overnight. The rally merely keeps us back in the range we’ve been in since late January. Watching 0.7700 and 0.7850 as the next pressure points in AUDUSD.
CAD: A sell-off that disappointed the bulls last week and oil prices are near the top of the range, but this chart has been churning back and forth within the range and weak Canadian rates still suggest the upside risk predominates. 1.2450/75 is the support zone for now in USDCAD.
NZD: A spike above 0.7450 overnight in NZDUSD failed to hold last week – is this impressive resistance area going to continue to contain the pair?
SEK: Weaker on the Riksbank negative rate surprise, but the mere toe-dipping exercise in QE may mean that further SEK weakness is limited – watching the 9.70/75 area next in EURSEK.
NOK: Strong oil prices should mean near term caution on expecting further upside in EURNOK at the moment, but Norges Bank’s governor, Øystein Olsen, said in black and white in a speech last week that he would like a weak krone as a route to improved competitiveness for Norway.
About John J. Hardy
Originally from Texas, John Hardy graduated from the University of Texas at Austin with high honors. He has been with Saxo Bank since 2002 in various roles in FX Strategy and Asset Management. Today, John works as Head of FX Strategy. John has developed a broad following from his popular and often quoted daily FX Update column, received by Saxo Bank clients, the press and sales traders. He is a regular guest and commentator on television networks, including CNBC, CNBC Arabia and Bloomberg. Alongside his column and media appearances, John writes regular ad-hoc commentary focusing on the major currencies, central bank policies, macro-economic trends and other developments. John Hardy is available to comment on FX and the major asset classes from a macro perspective.
Source: Saxo Bank
On the photo: Saxo Bank Headquarters, Copenhagen