EUR 8.14 For Business Accounts Only

The Morning Track pigeons

- The Morning Track – Pigeons by Bob Savage
http://trackresearch.com/articles/the-morning-track-pigeons/

Pigeons and a doves are in the same animal columbine family – and across the world the distinction between the two gets confusing. However, calling someone a pigeon has an entirely different meaning than being a dove. Perhaps the lexicon for central bankers should take this into account as well as their market manipulation of bonds and equities appears to have run out of room for credibility. Markets are prepared for a dovish Mario Draghi. The ECB confirms policy on hold with E30bn bond buying to end Sep 2018 or beyond, with rates unchanged well beyond then. The Riksbank foreshadowed the event ahead with its own dovish tilt earlier today. They kept policy unchanged as expected. SEK initially rallied up 0.3% than fell back 0.6% to EUR 10.4840 – weakest since Dec 2009 as the central bank marks down growth outlooks and pushes further out rate hike plans. What forward guidance Draghi delivers will set the tone for the day. Many still expect a dance around the 1Q economic
slowing and what it means for policy ahead. The key things that Draghi will highlight for Europe losing momentum are – the EUR strength, the effect of trade tensions, the cold weather, the timing of Easter and the rise of volatility particularly in equities. The order and emphasis of each matters to how the rest of the day plays out. EUR at 1.2160 looks particularly vulnerable and the path of the currency post Draghi has been typically lower as the market sees it as the barometer for policy shifts driving growth and inflation. Obviously, the context of trading today is dominated by policy more than economics or geopolitics. Overnight news was light and trading mixed leaving the USD holding near 4-year highs but wind at its back and momentum suggesting 92 tests still despite doves being like pigeons.