EUR 8.90 For Business Accounts Only

The Morning Track silver-linings

- The Morning Track – Silver Linings by Bob Savage
http://track.com/articles/the-morning-track-silver-linings/

Hurricane Harvey has a silver lining, even as the $40bn of damage and deaths (44 last count) and psychological scaring from the storm continue to be tabulated, the flood waters recede, gasoline trades at 2-year highs, and the US Congress is now more likely than ever to raise the US debt ceiling as aid to Texas becomes linked to the Congressional function. This reality removed one peg of USD doubts and helped yesterday until US Secretary Mnuchin like most other politicians in the world talked down the currency moving the US dollar index from 93.35 to 92.61. Everyone can’t have a weak FX market to stoke growth on the margin. The August tally shows that clear with Russia and China the winners of the FX game along with Chile thanks to Copper. The rush to industrial metals has inspired some to call for another commodity super-cycle as global coordinate growth returns in 2017. For the US, the suffering of Houston and the refining sector will require billions to rebuild and
that spending will be a 4Q fillip to the 3Q hit from the storm - call that a copper lining. The overnight news flows set the stage for a bigger battle over the USD direction with China PMI better, Japan 2Q Capex much worse – dragging down 2Q GDP and opening up some doubts about JPY and deflation – Australian PMI better, NZ terms of trade just shy of a record, EU PMI reports in line but for Spain – all of which makes the global coordinated growth story for 2017 hold. So will the USD do as well? Watching 93.20 for a test back to 94 into next week. Remember its Labor Day weekend and after 8.31am don’t expect many to want to do much more than watch the traffic report and find cheap gasoline.