EUR 8.70 For Business Accounts Only

The Morning Track flashes-2

- The Morning Track – Flashes by Bob Savage
http://trackresearch.com/articles/the-morning-track-flashes-2/

While the FOMC hiked rates as expected. Little else followed. The PBOC hiked its 7-day repo rate by 5bps – but that too was widely expected. The BOE today did nothing like the RBNZ earlier. A May hike in the UK is priced and unlikely to shift today. The economic data has been notably disappointing elsewhere with the flash PMI reports from Japan and Europe suggesting moderation – blamed on trade worries, the natural cyclical limits from overheating and the bad weather. Flashes of light in the midst of a bog of economic data – that is like drinking a martini lit aflame – it may taste the same but has very different effects. We are in a turning point for market mood where the hope that the USD is going down may be limited by the reality of quarter-end squeezes and higher rates, where the fear of US/China relations getting worse limits the ability for the USD to rally either or for rates to signal growth more than deficit worries. This is a market caught in the bog,
like I am caught in Dublin with rain always better than snow. The only barometer for the present RORO world (risk-on and risk-off) that seems to be working is JPY. Watching 105.22 to see if the fire in the bog burns to the point where we can all see something more clearly.