EUR 9.28 For Business Accounts Only

The Morning Track intrigue

- The Morning Track – Intrigue by Bob Savage
http://track.com/articles/the-morning-track-intrigue/

Politics are driving markets today with risk-off mood starting with the New York Times reporting that Trump asked FBI Comey to drop the investigation into Flynn. This sparked cries of obstruction of justice and more pressure on Congress to act with a fuller investigation into the Russia ties to the Trump campaign and the President. Of course, there are many outside the US that worry about things inside it – and this is one of those examples. The FBI has two mandates to criminally investigate domestic acts and to aid in counter-terrorism. The Russia investigation is more the latter and this maybe the key point today. Intrigue about the controversy in the US has managed to squash many other stories which maybe recalled later when the dust settles. The USD is sharply lower again, US bonds are bid and US stock futures lower – like the rest of the world. On the face of it, markets are more mild mannered with the sense of crisis more in FX than anywhere else. Some of th
is continues to be the contrast to Europe where Macron and Merkel look powerful but that may hide the underbelly of inequality, blocked social mobility and ongoing bank issues that plague the EU. We have seen this trade pattern over the last few months where US political doubts reach a pitch overnight and fizzle during the day. The risk-off mood against the USD may not last if the data from overnight continues to be the 2Q norm for the rest of the world as Japan machine orders miss, as Australian confidence wanes, with S&P keeping the Australian negative outlook reflecting fiscal consolidation plan doubts, as UK wages lag as EU construction slows – but no matter as intrigue over the unknown political risk in the US dominates for now and momentum beats mean-reversion. The US dollar index is looking at 97.64 100-week support then 96.50 downtrend channel for bigger overshoots.