EUR 8.84 For Business Accounts Only

The Morning Track 200-weeks

- The Morning Track – 200 Weeks by Bob Savage
http://track.com/articles/the-morning-track-200-weeks/

The focus today is on the USD and its extended weakness post a “dovish” FOMC where the market ignored the “relatively soon” balance sheet normalization and focused on the inflation “below 2%” driving down December rate hike risks to 40% and skipping September entirely. This leaves the world with a weaker USD or perhaps more accurately a stronger FX everywhere else. In technical terms the focus is on the 200-week moving averages that are in play with the EUR, AUD, CHF, CAD and US dollar index. SEK and ZAR already broke out from them. 200 weeks is 1400 days – not quite 4 years – but with holidays it’s a 5Y moving average. The EUR/CHF is also at the 200-week and that is bringing some joy to the SNB, which managed to dump its EUR floor in Jan 2015 and slowly rebuild it on the “down low” and on the cheap in 2 ½ years. USD weakness means higher import costs, helps the Trump agenda for US jobs/trade, drives up commodity prices and makes many central ban
kers abroad wary about “disinflation.” The ECB and the EM world will be key in their statements to understand the threat of the FX move on their recoveries and their inflation targets. The next move for the USD isn’t going to be about the FOMC or the data in the US but about how the rest of the world deals with this 8% drop in 2017. There are reasons to think that the move maybe overdone but with the summer season in full swing, most central bankers and politicians want to be on the beach rather than in the office – leaving markets to extend their technical momentum. Remember it’s not a bottom until you hit something.