EUR 8.14 For Business Accounts Only

The Morning Track bell-jars

- The Morning Track – Bell Jars by Bob Savage
http://trackresearch.com/articles/the-morning-track-bell-jars/

Expectations for US policy are low and that leaves upside today. There is the Japan PM Abe meeting with Trump, the IMF WEO outlook and the ongoing diplomacy around Syria where the US wants Saudi, UAE and others to replace the US troops and pay for it all. The sticky point maybe Yemen. The problems for such a peace remain Iran and Russia. The Russia cyber-attacks are an example of the new cold war. Trump holding back more sanctions maybe an olive branch. The barometer of measuring such chances remains oil. Perhaps the higher price today is about OPEC squeezing it with production cuts extending through 2019 or maybe it’s to pay for the Syria mess. There are other peaceful hopes at play. South Korea and North Korea are discussing plans for a formal end to the war to replace the 1953 armistice – that drove KRW stronger. The China data overnight was as expected, no surprises, and perhaps most importantly, the TIC data late yesterday showed that China increased its holdings
of US bonds to 6-month highs in March eases one feared tool in the trade scuffle. The US, on the other hand, banned US companies from selling to China Telecom ZTE. As for Europe, the weaker UK earnings and German ZEW brought any doubts about the USD back to flat. We are stuck in a bell jar with too many observers and too many expectations for trend when the reality is noise and frustration. The two trending FX pairs overnight NZD lower and EUR/CHF higher reveal the symptoms and the suicidal nature of trading in this environment. Safe-havens are not needed when uncertainty is so high and the best path is to have no expectations. The reversals of EUR and GBP overnight are telling us something and put the USD at 90 an important barometer for those that have to balance rate hikes against growth.