– FX markets continue to punish the printers
FX markets have continued to punish the printers (JPY, CHF and GBP) but excuse the USD (despite the Fed’s printing press) given improved cyclical data. Our economist’s forecast for a contractionary US core retail sales print (-0.3% m/m vs. +0.2% consensus) will test the USD today, especially against the commodity currencies. Our technical analyst highlights that AUDUSD has already broken out of a bearish channel, and now targets the 1.0374-1.0413 region (see chart). NZD could gain some support ahead of Thursday’s RBNZ meeting following the release of strong housing figures from REINZ, which follow a similar strong picture relayed by last week’s release of the quotable value survey. The market could begin to speculate on whether the RBNZ makes any reference to rapidly rising house prices. Meanwhile, the lower yielding JPY, CHF and GBP will be impacted by the next move in US treasury yields. The 10 and 30Y auctions today and tomorrow will form an input. GBP and CHF look most vulnerable from this group on our positioning measures, with scores not yet extreme.
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BNP Paribas