EUR 8.46 For Business Accounts Only

The Morning Track ceasefire

- The Morning Track – Ceasefire by Bob Savage
http://trackresearch.com/articles/the-morning-track-ceasefire/

A truce on one front doesn’t mean the war is over on another. This is the lesson from overnight as the EU/US agreement to talk about trade and stop escalation of tariffs doesn’t extend to China. This is important because it cast some doubt on the storyline that Trump intends to back down on all other trade fronts and get to deals now. NAFTA being the key focus with C$ and MXN in play because of this. Other news appears to be more important – Saudi halting oil shipments because of attacks in Red Sea, ECB meeting and expectations are for more clarity on the
plan to wind down APP by year-end and some comments on re-investment, Facebook and its miss on earnings after hours, then there was the economic data all mixed with consumer confidence lower in Germany, higher in Italy and flat in France. The details about confidence are important to read today with the hit from geopolitics high – trade tariffs being the most notable – and that means the bounce today after the ceasefire from Trump could lead to a bigger bounce back in Europe than many expected. This may bleed over to the US despite the small asset allocation shifts we have started to see with bonds beating stocks in the passive flows. The stories that matter ahead may still dominate all trading today and through month-end with ECB, BOJ, FOMC, BOE decisions all key. The balancing act for markets is in the bounce back of stocks and financial conditions. A weaker USD, higher stock market and flat bonds won’t make for a dovish FOMC. Similarly, all eyes are on the ECB tod
ay with EUR undervalued by 10%, growth holding and the animal spirits returning. The relationship of the USD up and stocks down is going to be key today and worth watching as the chart suggest the currency front is not included in the trade ceasefire – watching 94.93 against 94.25 pivot (55-day) and 93.71 July 9 lows.