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http://trackresearch.com/articles/the-morning-track-haven/
There is a utopian feel to markets when they rush to safe-havens to weather out political and financial storms. The implication is that you can wait it out and return to trend and profits. This is always a “hope†trade more than a “fundamental†one. Buying JPY and selling equities dominated Asia. The mood-shift yesterday on President Trump backing away from a certain China ZTE deal and casting doubt on the surety of the June 12 North Korea summit left US markets hurting. Talk that OPEC was considering production increases flipped oil adding to equity woes – but all that was yesterday’s news. Today is about finding a “haven†– a shelter from the storm. One of the quirks of English is that heaven and haven sound alike but come from different roots. One describes a joyous afterlife where God resides, the other a harbor, a shelter for boats. That maybe a good way of thinking about today and recognizing the confusion over what is “safe†and what is “u
topian†about trading risk today. The key news stories driving overnight started with an RBNZ paper discussing non-traditional monetary policy – code for QE that sparked some selling of NZD, throw in a weaker Australian construction output and AUD followed mixing badly with China/US trade war fears. The weaker Japan flash PMI poured cold water on a 2Q sharp recovery while European flash reports were even worse making the 1Q soft patch extend into 2Q. The EU markets were hit on the open with talk of more US trade troubles – as Trump pushes for a 10% cut in steel and aluminum exports. The Italian political fears remain a concern with more articles talking about Italy being too big to fail and too big to save. The pain trade in EM also continues with TRY off almost 5% approaching 5 - driving more contagion fears elsewhere. All of this puts the search for safety back in play with JPY the first focus with 110 breaking and opening a larger reversal risk to 108 again. Expec
t the JPY to reflect the risk-off better than gold or CHF given the present mix. If we hold at 109.80 that maybe enough to suggest yet another mood swing and return to utopia – all likely dependent on the reading of FOMC minutes later today.
The Morning Track haven
- The Morning Track – Haven by Bob Savagehttp://trackresearch.com/articles/the-morning-track-haven/
There is a utopian feel to markets when they rush to safe-havens to weather out political and financial storms. The implication is that you can wait it out and return to trend and profits. This is always a “hope†trade more than a “fundamental†one. Buying JPY and selling equities dominated Asia. The mood-shift yesterday on President Trump backing away from a certain China ZTE deal and casting doubt on the surety of the June 12 North Korea summit left US markets hurting. Talk that OPEC was considering production increases flipped oil adding to equity woes – but all that was yesterday’s news. Today is about finding a “haven†– a shelter from the storm. One of the quirks of English is that heaven and haven sound alike but come from different roots. One describes a joyous afterlife where God resides, the other a harbor, a shelter for boats. That maybe a good way of thinking about today and recognizing the confusion over what is “safe†and what is “u
topian†about trading risk today. The key news stories driving overnight started with an RBNZ paper discussing non-traditional monetary policy – code for QE that sparked some selling of NZD, throw in a weaker Australian construction output and AUD followed mixing badly with China/US trade war fears. The weaker Japan flash PMI poured cold water on a 2Q sharp recovery while European flash reports were even worse making the 1Q soft patch extend into 2Q. The EU markets were hit on the open with talk of more US trade troubles – as Trump pushes for a 10% cut in steel and aluminum exports. The Italian political fears remain a concern with more articles talking about Italy being too big to fail and too big to save. The pain trade in EM also continues with TRY off almost 5% approaching 5 - driving more contagion fears elsewhere. All of this puts the search for safety back in play with JPY the first focus with 110 breaking and opening a larger reversal risk to 108 again. Expec
t the JPY to reflect the risk-off better than gold or CHF given the present mix. If we hold at 109.80 that maybe enough to suggest yet another mood swing and return to utopia – all likely dependent on the reading of FOMC minutes later today.
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Robert Savage
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