EUR 8.46 For Business Accounts Only

The Morning Track extending

- The Morning Track - Extending by Bob Savage
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Sometimes we all want to ignore the calendar. In markets this is called extend and pretend when payments due are pushed out to future times along with fear. In programming, the extending of a connection is either regular or more abstract. So too, global markets today which try to balance against a big geopolitical theme about Trump trade deals vs. the more mundane price action and minor economic data. Markets continue to push back on any big worries despite ongoing weakness in Turkey, more North Korea doubts on denuclearization, pain in Italy bank shares, weaker confidence in Italy, flat in France with job worries notable and weaker retail sales in Sweden. Nevertheless, hope for extending the end of summer rally continues with the USD weaker, NAFTA talks for Canada in play and with China pushing the CNY stronger. Trade hopes for Europe are higher with Trump speaking with Merkel Monday but deals for China remain in doubt despite the Mexico trade agreement yesterday. UK f
ocus is on BOE and Brexit still. "Carney has been quietly approached by the Government to stay on for another year, despite saying he would only serve six of a seven-year term. The Londoner understands the Treasury is keen for him to stay on until 2020 so that he can provide continuity during the turbulence of Brexit. It is also understood that they are struggling to find a candidate strong enough to replace him. UK PM May noted that a no-deal Brexit was not “the end of the world.” Both leave focus on GBP with EUR breaking back into the safe-range above 1.17 with 1.18 barriers next in play while GBP languishes below 1.30 still. The balancing act for trading risk today is about signals for the moment being trusted with illiquidity and month-end noise being in play. The USD weakness looks most obvious in the CHF which maybe the key story with positions oversized and emerging market performance diverse leading to more unwinding of the cheap funding Swiss Franc. Unwinding c
arry trades, buying safe-havens despite negative rates – these are things that make extending the rally harder to believe. Pay attention to CHF .9750 today with a close below opening risk for 0.9450 in September with 200-day at .9748 and 55-day at .9925 resistance.