EUR 8.84 For Business Accounts Only

The Morning Track damp-squibs

- The Morning Track – Damp Squibs by Bob Savage
http://track.com/articles/the-morning-track-damp-squibs/

The North Korean ICBM launch on July 4th set the tone for markets overnight – its first successful launch indicating the ability to hit the continental US – this led to US/South Korea missile exercises, more China talk and a special UN meeting. Also driving markets from the 4th is the disappointment from the RBA and Riksbank not sounding hawkish enough pointing to their FX as a factor. Many traders had hoped for more central bank fireworks. ECB Praet added to the damp squib mood suggesting there is more time needed for inflation to converge – the mission is not yet completed. The exception to this wetness on forward guidance was from BOE Saunders who suggested “UK households should prepare for higher rates.” All that was tempered by the PMI reports where UK missed and Europe slightly outperformed and China missed again with Caixin Services lower. The net result is that 3Q growth outlooks still seem soggy and add to damp squib outlooks for action despite last w
eek’s talk. The key trade for those that want to believe in coordinated upside to rates remains in Europe with the EUR the barometer and its flashing caution with the US data today central to keeping it on trend. Watching 1.1290 for pain trade.