EUR 9.38 For Business Accounts Only

The Morning Track pareidolia

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

Today is the end of a long week – 8 down days for equities – with US payrolls and unemployment looking to be the confirmation that the economy is alright, or at least good enough, for the FOMC to normalize rates and for the markets to forget that the election Tuesday can change it all. There is a confirmation bias to the markets, we are all expecting the report to stimulate a familiar pattern when no such thing exists. This is like seeing a picture of Jesus on your morning toast, or a reverse head and shoulders formation in your EUR/USD. Call it pareidolia – and blame the Greeks for it. The Chena River Ice Monster in Alaska maybe the social media example for the week, beating out the Loch Ness Monster, and surely today’s jobs report. We all want to see sharks, crocs or beavers and instead it may just be frozen rope. The simple answer is always the best one when explaining markets and videos. So when the US NFP comes in below the 175,000 consensus today, blame
Hurricane Matthew rather than the Fed or the Economy but don’t expect the equity or bond or FX markets to be first to that conclusion. There was a bit of news today that made some heads spin as Turkish police rounded up the Kurdish lawmakers and the TRY dives another 1% to new record lows. The Eurozone Service PMIs didn’t surprise but were clearly weaker than flash reports and suggest 0.3% q/q 4Q growth flat is the new up for the ECB. The Australian retail sales were better but the 3Q report was still negative and so the RBA is stuck on hold as the SOMP argues. In fact the world is looking for a confirmation of growth that sustains and smiles rather than monsters and darker surprises. Unfortunately, the risk-off, stay in bed mood for today reflects most clearly in JPY which has stalled at 105 and reopens 100 risks today.