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http://trackresearch.com/articles/the-morning-track-numb/
Monday morning numbness –for some its comfortable - as markets battle for mood control – trying to ignore a worse than expected rise in populist parities in Italy and ongoing trade war fears, all mixed with bad weather from the US to Europe. The tit-for-tat battle over trade continues with Trump threatening an EU tariff on autos should they retaliate to a US steel tariff. As most expected, the Italian election result points to a hung parliament bit with both the Center-right and left doing worse than expected, chances for a grand coalition are lower. These two stories dominated overnight trading despite the Service PMI reports and the China Congress opening with promises of 6.5% GDP. The BOJ Kuroda rate exit talk reversed with two BOJ nominees sounding extra-dovish and the Composite PMI pointing to lower prices. The Service PMI in Europe was weaker and the sharply lower Sentix Investor survey points to larger concerns about mood as the political noise and US tariff th
reats take their toll. Measuring the swing of moods is important work but more for a psychologist than a trader. Shrugging off the Italian result because Merkel gets a 4th term as Chancellor seems too easy an explanation. More to the point, the ECB Thursday has a key role in stabilizing markets with easy money – but that requires a different battle with hawks and doves pointing to EUR/USD, US rates, and a cloudy outlook on global trade. The risk barometer will be EUR today though many will be watching the EUR/JPY as a larger example of the pain trade risks (130 to 125 looming). The EUR 1.2225-1.2270 support is at risk today.
The Morning Track numb
- The Morning Track - Numb by Bob Savagehttp://trackresearch.com/articles/the-morning-track-numb/
Monday morning numbness –for some its comfortable - as markets battle for mood control – trying to ignore a worse than expected rise in populist parities in Italy and ongoing trade war fears, all mixed with bad weather from the US to Europe. The tit-for-tat battle over trade continues with Trump threatening an EU tariff on autos should they retaliate to a US steel tariff. As most expected, the Italian election result points to a hung parliament bit with both the Center-right and left doing worse than expected, chances for a grand coalition are lower. These two stories dominated overnight trading despite the Service PMI reports and the China Congress opening with promises of 6.5% GDP. The BOJ Kuroda rate exit talk reversed with two BOJ nominees sounding extra-dovish and the Composite PMI pointing to lower prices. The Service PMI in Europe was weaker and the sharply lower Sentix Investor survey points to larger concerns about mood as the political noise and US tariff th
reats take their toll. Measuring the swing of moods is important work but more for a psychologist than a trader. Shrugging off the Italian result because Merkel gets a 4th term as Chancellor seems too easy an explanation. More to the point, the ECB Thursday has a key role in stabilizing markets with easy money – but that requires a different battle with hawks and doves pointing to EUR/USD, US rates, and a cloudy outlook on global trade. The risk barometer will be EUR today though many will be watching the EUR/JPY as a larger example of the pain trade risks (130 to 125 looming). The EUR 1.2225-1.2270 support is at risk today.
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Robert Savage
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