EUR 9.28 For Business Accounts Only

The Morning Track do-half

- The Morning Track – Do Half? by Bob Savage
http://track.com/articles/the-morning-track-do-half/

When in doubt, do half. This still rings in my ears when the fundamental faith in a position starts to find doubt. This is the mantra of FX hedging as well. Price action in a light volume week can also give false signals but the news headlines overnight prove the wisdom of the Street. The host of fears from talk that China is putting troops at the North Korean border and to the polls that show France now has a 4-way race – those geopolitical event risks – make it clear enough to cut positions into thin holiday week. Countering those doubts is the data with a stronger German ZEW, as expected UK CPI and higher PPI. Lost between the cracks was the moderating Australian business confidence and lower than expected EU Industrial Production. The FOMC Chair Yellen comments were just unclear enough – wants to be ahead of the curve but gradual – to leave the US rates lower with the Asian risk-off mood. Europe rallies back because the view of EM and EU is that growth is
breaking out like Spring Flowers. This moderates the worst fears and leaves it clear that nothing much matters until there is more hard news or soft data. This puts the focus on JPY rather than on EUR as the safe-havens of gold, JPY and bonds all gained a bit in Asia and give back in Europe – making clear that the US is a tie-breaker to the present mood with the liquidity function of the FOMC turning the tap ever-so gradually. JPY looks vulnerable still to the 110 barrier break regardless as the rallies continue to fail even after the unknown becomes known. Only a break of 111.70 would get my glass back to risk.