EUR 9.28 For Business Accounts Only

The Morning Track loose-lips

- The Morning Track – Loose Lips by Bob Savage
http://track.com/articles/the-morning-track-loose-lips/

The USD is lower as political intrigue continues to nag the market – the latest being that US President Trump shared classified information with a Russia diplomats last week compromising the US ally that provided the intelligence. Expect that the talk of a bigger Trump cabinet reboot will follow before his Friday foreign trip and further clamp down on leaks to the Press. This sent the USD and bond yields lower into Asia, but that misses a larger story about the overnight news where the RBA Minutes were dovishly focused on housing, the Riksbank announced it was likely to switch its target to CPIF – also dovish – and the data from Europe was robust from German ZEW to a larger trade surplus to a robust 1Q GDP. The biggest driver on the day was in the UK where CPI was much higher and suggests the BOE may need to be more clear about seeing through its inflation risks. All this leaves the USD lower as well as politics – and makes the momentum for risk look divergent as
Asia rallies with the PBOC injecting money today, the BOJ Kuroda promising easy money until it works while Europe worries about a change in forward guidance. Talk matters today more than the data – like it has since November – but the mood in the rest of the world to the US will be under scrutiny. Politics are war by words and the US President is likely to respond accordingly adding to potential market volatility. There are two other stories that matter today – Ford cutting 10% of its workforce and the investigation into WannaCry pointing to North Korea along with the threat of another classified tool driving further cyber attacks named Esteem Audit. All of this puts the world into a rather anti-US tilt – making the USD support that much more important on the day. Watch 98.30 support with risk that a break there opens 96.50 in a hurry.