EUR 9.28 For Business Accounts Only

The Morning Track politika

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

If politics is the affairs of the city-state, then policy is the prudence in managing those affairs. Today is about prudence and central bank policy with the BOJ already doing nothing even as it raises its growth rate and lowers its inflation outlook. The Riksbank similarly left its negative rate policy unchecked but surprised by doing SEK15bn more in QE and so drove up the EUR/SEK. The ECB will be the central driver today just as the Trump tax policy was yesterday in setting the tone. The heart of the day is about the risk for the ECB to discuss a tapering path in its negative rate and QE policy – as it inevitably will need to return to normal like the FOMC – as the profligacy of easy money promotes the licentiousness of unchecked leverage and speculative bubbles - neither of which make for happy investors or virtuous economies. The sideshow of trade policy is also at play – for the ECB its in the details of “Brexit” talks and for the US its in the rethinking
of global for bilateral deals – all of which drove down MXN and CAD yesterday and recovered it overnight as NAFTA renegotiation was more the point than is actual removal for the new US President. The fact that politics and policy are from the same word makes trading that much more difficult – for as we should have learned all problems start with language and the terms for which we use to describe them. The godfather of the study for such was Aristotle – with his Ethics describing the happy life lived in virtue – separate from his Politics which describes how the community must play a role in bringing about virtue. In the present geopolitical clash there is no virtue and there seems to be even less community, making the citizens of the market less happy and less certain. The people that are next in the spotlight for discomfort are the French with the polls narrowing between Macron and Le Pen, this puts the ECB decision for any real shift to June rather than now.
As for the currency to watch – its GBP today with better CBI retail sales survey and an upbeat mood to the GBP as it breaks 1.2905 previous highs – wit the risk that the June election is just noise on the path to 1.37 again and the short-term focus moving to 1.2990 and 1.3055 the Sep 28 highs.