EUR 9.28 For Business Accounts Only

The Morning Track luck-3

- The Morning Track – Luck by Bob Savage
http://track.com/articles/the-morning-track-luck-3/

Either you make your own luck or you are Irish. Making the right set of policies and executing them has always been the path to success for governments and central bankers – this is still being tested – FX markets are flashing yellow today for risk – commodities are up and so are the commodity currencies. EM is mixed and the EUR and GBP have reversed while CHF and JPY are bid. Overnight headlines were sparse but focused on the ECB Nowotny Handelsblatt interview where he said the ECB could hike the deposit rate before ending QE – not following the US FOMC model. For his part, US Treasury Mnuchin had to acknowledge the debt clock ticking and formally declared a “debt issuance suspension period” until Congress deals with the US debt ceiling at $20tn. The most unnerving headlines were from US Secretary of State Tillerson who noted 20 years of policy with North Korea have failed and that the US would take military action if provoked. He also warned of pre-emptive
strikes if the nuclear program there continued. This should be scary but for the luck of the day and the week. Markets are coasting on the momentum of easy money – the FOMC continues to normalize interest rates not hike them – the subtle difference means something globally as it is just a spread game with easy policy everywhere helping equities – except in places where they hike – like China. The EUR is clearly the main play of the day and it opens in the US with a sharp reversal back to 1.0720 base even as it looks for 1.0820 or even 1.0980 before returning to 1.0550. The outcome of today’s meetings with the G20 in Germany and Merkel in Washington will matter as will the US data – with Industrial Production the headline to watch.