EUR 8.14 For Business Accounts Only

The Morning Track sharing

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

Today is about sharing. The worldview on global trade can either be one where each nation gets a “fair” share, or one where a growing pie allows everyone to benefit. There is the rub – global growth matters and seems on a collision course still with higher rates and less faith in sharing. Better news, better markets. Risk-on mood hits Europe after stronger China PMI, better EU GDP than feared, PMI reports better than flash reports. The politics also net supporting as Italian President Mattarella pushes back on new elections. Of course, this means the USD is lower and there are politics involved there as well – with the Mueller suggesting a Presidential Subpeona may be coming. Throw in tough talk from the Trump team on NAFTA deal needing to be done or tariffs following and you have less confidence than yesterday. Consumer confidence was the surprise headline for Japan as it dropped in April suggesting a limit to higher prices. The Service PMI there was higher refl
ecting higher confidence in business in passing on higher prices. This is the conundrum for markets – higher inflation needs to bring higher wages else it means less demand. The story plays out across the data dump today with PMI reports highlighting this point. This leaves the long wait for the US FOMC meeting to figure out what else matters. The EUR break of 1.20 yesterday didn’t hold and that may be important as markets try to hold onto a positive spin that higher real growth means higher real rates don’t matter. The EUR 1.1914 lows from January are in play again unless we see 1.2014 200-day moving average hold at the close with a break of 1.2055 needed to trigger a larger washout for USD. A stronger USD has been taken as risk friendly except when It’s just about everyone else being weak. That is the lesson so far and puts the EUR into the lead as risk barometer of choice.