EUR 8.61 For Business Accounts Only

The Morning Track broken-screens

- The Morning Track - Broken Screens by Bob Savage
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Are the screens broken? In the ancient days of trading, frustration with a too quiet market that then surprisingly moved led to many a phone being slammed into green flickering computers screens, shattering into a spider’s web of glass. Positions and expectations clashed into the voice broker screams of missed orders and discontinuous prices. This has all changed with digital everything but for the emotions. There is a decided lack of movement ahead of the US non-farm payrolls mixed with awkward positions and the push of FOMO and TINA. Tight ranges in Foreign Exchange markets reflect lower volatility, but there are many different kinds of such - some linked to too much liquidity, others to lack of interest. At 8.31 am, this can all change. Hence the oddity of the fat-tailed distribution risks ahead with a break in 1.1200 or 1.1260 seen as likely to bring a 1.1165 for 1.1315 test in short-order and yet you can by a 1.1250 EUR call for 7 pips. GBP which faces even more u
ncertainty next week thanks to politics and Brexit has seen its implied volatility drop to 10.6% from 14.15% last week (on the first exit day that never happened). This is even more odd give last month’s surprise US jobs report helped extend the fixed income rally that pushed the MOVE index to a 6-plus sigma event. This is the stuff of history for financial markets but this early morning is more about false calm and not broken screens just yet. Another reason to question the screen today is the news flows and the lack of excitement – as the US/China trade deal seems more likely in 4-weeks and as the Brexit delay letter to EU Tusk from UK May is sent asking for June 30 – of course, there is some pushback from France and there is the question about the EU May elections. However, the big two risks worrying markets in 2019 are lower now but have been priced efficiently for weeks. Holidays in Asia (Hong Kong and China and Taiwan all closed) make liquidity and interest low
er. Throw in mixed economic data – weaker from Japan, stronger from Germany and you have the unsteady balance for the USD. This is the broken screen reaction to buying GBP on the rumor of delays and forgetting to sell it on the fact.