Risky currencies came under pressure, with concerns about the global growth outlook weighing on investor sentiment following soft economic data from the US and China. The moves in G10 currencies were broadly in line with those suggested by our Financial Fair Value (FFV) model, indicating that global factors such as equity and commodity prices were indeed major drivers of the FX market. Our model shows that SEK is significantly undervalued against EUR, while JPY’s undervaluation against USD remains elevated, suggesting a near-term risk of correction in these currency pairs. After soft March data, the market is likely to pay closer attention to China flash PMI on Tuesday, which could potentially move the market along with US data. RBNZ and the BoJ rate decision, as well as euro area PMI and Australia CPI, are also worth watching as determinants of relative currency performance.
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Barclays