EUR 9.28 For Business Accounts Only

The Morning Track calendar-effect

- The Morning Track – Calendar Effect by Bob Savage
http://track.com/articles/the-morning-track-calendar-effect/

The timing of it all matters today with the later Easter this year and the base effect of oil prices unwinding sharply the spike in European inflation and with it the hawkish talk from the ECB. ECB Liikanen said today that the Eurozone is still in need of “a very substantial degree of monetary accommodation for underlying inflation pressures to build up and support inflation in the medium term.” Markets are rethinking the bid to the EUR accordingly, but they aren’t so sure about risk as the oil rally stalls but the carry trade lives on in emerging markets with focus on Mexico and South Africa decisions today. The calendar also brings some certainty to April as China confirms its leader Xi meets the US leader Trump April 6-7. The other stories overnight didn’t change things much – better Swiss KoF suggesting more growth, more on UK Brexit timetables making it clear 2-years is a long time, tight French Presidential race between Le Pen and Fillon killing anyone’s
interest until after May just to be certain and the Czech National Bank keeping its upper limit on the CZK in place despite rising inflation – those worries remain in playare just an excuse to wait it all out. If you have a long set of time when nothing bad is expected to happen (ie low volatility is expected), then current economic and price trends hold and collecting yield becomes attractive again. All of which leaves the markets looking at oil as the demand barometer that might be telling us something different than the soft survey data and some of the recovery data from Europe. If oil fails to hold its bounce today, expect more bond buying, and with it less sureness that equities can hold bid, leaving safe-haven buying of JPY, CHF and gold again under a microscope.