EUR 9.38 For Business Accounts Only

The Morning Track saints-and-sinners

- The Morning Track – Saints and Sinners by Bob Savage
http://track.com/articles/the-morning-track-saints-and-sinners/

All Saints’ Day Holidays in Europe leave markets watching Asia and awaiting more US data and the start of the FOMC 2-day meeting. We have been taught by the central banker priests to be patient. However, markets are by nature impatient. The new month started with a bang as China PMI reports surprised to the upside. Beneath the surface, the fear that this was a China only affair rose with export and import orders lower and the Korean trade data for October also lower. The UK PMI fell as expected with prices higher helping exports but hurting elsewhere. The BOJ and RBA were both on hold with the BOJ dovish as it cuts its CPI forecasts and the RBA seemingly permanently neutral as it keeps its views intact. BOJ Kuroda noted there is no link between his 5-year term and the BOJ reaching the 2% CPI target. This dependence on central bankers to lead markets leaves many investors less patient and perhaps more inclined to be sinners against the trend. This works when policy s
hifts and fails when it doesn’t. The data definitely mattered more to trading today making many positions look like transgressions if not cardinal sins – with Sweden PMI up to 58.4 from 54.9 driving SEK 0.75% stronger the key example. For the rest of the day, it’s about the US data with ISM perhaps looming larger than normal as the weakness in Chicago and other reports makes the US recovery into 4Q a question. The start of the FOMC is an afterthought. The ability for the USD to hold bid is in play with the EUR/USD bounce on rates notable today but this is more about the US rate path driving by inflation and real demand against the tapering risks for Europe, Japan and elsewhere. So we are all back to USD trading and watching 98 for stops in the US dollar index.