EUR 8.46 For Business Accounts Only

The Morning Track noise-4

- The Morning Track – Noise by Bob Savage
/articles/the-morning-track-noise-4/

One man’s music is another man’s noise. Market moves on headlines about trade dominated overnight. Bloomberg reported Monday that more tariffs were being prepared if the Xi meetings at the G20 failed, then Fox reported that Trump predicted a “great deal” with China on trade and Asian shares rallied accordingly, helping the S&P500 futures overnight, but the CNY trades over 6.97 – highest in over a decade - and the headline news battle over Xi/Trump meetings and more tariffs undermines European shares along with the usual suspects. Some will point to the unpleasant reality of the European data today as a key reason for the noise not becoming music – as EU GDP slips to 4-year lows while German flash HICP jumps to 2.5% - leaving the ECB little room to deviate from course and protect markets. The love-affair with central bankers has ended and with it the low volatility. This brings out all sorts of questions about what is the safe-haven and the USD continues to come
out on top for now. The correlation of USD to S&P500 has been high with JPY the traditional focus but EM this year has also been part of the story. The fact that EM currencies are bouncing on China trade deal hopes and CNY is weaker with the EUR and JPY matters today and it makes watching the USD index and a break of 97 important for the 7.00 CNY risk and what that means to EM and to risk moods for tomorrow. Of course, watching the mess of screens and waiting for a signal will have more than its fair share of noise.