EUR 8.46 For Business Accounts Only

The Morning Track back-to-work-2

- The Morning Track – Back to Work by Bob Savage
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The world post the US Labor Day Holiday is getting back to work on the usual worries, and with the new month, investors seem busier jockeying for positions into the end of the year race for returns. The fear of missing out on a larger rally up in risk assets balances against the significant doubts from emerging markets, ongoing geopolitical fears about US Trump trade policy and increasingly doubts about Brexit. For today, the USD is back in the driving seat winning despite an RBA that was not dovish, helped by weaker UK Construction PMI, ongoing concerns in the EU about trade both with the US and UK and the rising Balkans conflict. The Croatia/Serbia border discussions remind investors of the 1990s war and chaos there. Russia may use this as justification for its Crimea take-over and further EU expansion may stall if the EU blinks. Against that new story, the old one about Italian politics seems to be better – or at least mean reverting – as the League gains in the la
test SWG polls to 32.2% from 17.4% in the March elections and 30.3% back in July. This has lifted periphery bonds but it hasn’t led to EUR/CHF higher. Argentina is going to be under the microscope again today with Macri unveiling his austerity plan yesterday and battle plan against the crisis measured by ARS which is off 0.43% at 38.5 now with 40 the line in the sand to watch. For trading today, the biggest mover is oil and it is mostly due to the Gulf Hurricane Gordon which seems set for disruption of oil production and refineries. Oil breaking out means more trouble for central bankers as the wrong kind of inflation hits consumers and trade concerns hit corporations. This is a day where the USD bid has implications for risk-off more than risk-on. The USD bid maybe more about weakness abroad than at home but the correlation matters more than the causality. A retest of 96.60 seems underway.