USD: Modest hawkish evolution in the FOMC’s language on labor markets signals low bar on data improvement for a September hike. USD gains on this likely reflect the fact that positioning is not yet stretched andshould skew risks to dollar upside on coming data. GDP today the next focus with investors attentive to whether there is upward revision in 2013 and 2014 and whether H1 averages out stronger than the implied 1.3% average of current -0.2% Q1 and expected 2.5%.
EUR: Under pressure again following FOMC. With limited data flow in session ahead and the Fed outcome failing to weigh on risk appetite,further losses could be in store. Confidence numbers today and inflation numbers tomorrow less of a focus.
GBP: Mortgage approvals print was better than expected at 66.6k vs 66.0k. Domestic data less of a mover this week from here into the BoE next week.We see scope for GBP to outperform higher beta currencies amid USD appreciation.
JPY: Industrial production beat expectations but JPY still on back-foot following backup in yields. Conclusion is that USDJPY is trading external factors instead of domestic data. This means that surprises from tomorrow’s jobs, CPI and housing data will take a backseat to those on today’s US GDP or tomorrow’s ECI.
CAD: Commodities moves, positioning and broad dollar swings look likely to drive CAD given the dearth of domestic events till GDP on Friday.With short CAD positioning not yet stretched, we favor selling.
AUD: Nothing overnight from the RBA’s Stevens on Asia panel. AUD likely to trade in line with USD trend.
NZD: Positive response to recent hawkish RBNZ comments signals there remains scope for investors to pare back short exposure and this could leaveAUDNZD and CADNZD vulnerable to declines.
NOK and SEK:Swedish data risks disappointment on slower domestic momentum, GDP today likely to show cost of external slowdown. Today’s GDP a focus with consensus 0.6/0.7%, Citi is 0.1%QoQ.We hold long NOKSEK bias.
CHF: CHF quieter after the leg up earlier this week.CHF looks an attractive short in the current environmentwith domestic policy likely to remain exceptionally accommodative.