EUR 8.90 For Business Accounts Only

The Morning Track stress

- The Morning Track - Stress by Bob Savage
http://track.com/articles/the-morning-track-stress/

This is supposed to be the last week of holiday’s but the stress of the world keeps leaking into markets. Geopolitics trumps economics. The North Korean launch of a missile over Japan ratchets up tensions in the region and tests the restraint of the US. Japan calls for an emergency UN Security Council meeting today to discuss further actions. Japan’s Spokesman Suga noted that while North Korea has made multiple threats and missile launches since last year, a missile flying over Japanese territory is unprecedented, a grave and serious threat to the nation’s safety. The contrast of South Korea and Japan vs. China responses are notable. Risk-off can be seen in the scramble to own safe-havens like JPY, Gold and bonds. The USD is off dramatically in the process along with many stock markets. The USD weakness is driving not just on geopolitics but also domestic doubts about Trump and his leadership – the “fire and fury” comments from 2 weeks ago are clashing with Til
lerson’s push for diplomacy just yesterday. The economic data is going to be important but we don’t know that until Friday. The UK is also on the ropes as it sees the EUR/GBP over 0.93 as Davis hopes for a softer more flexible EU dashed from Juncker comments today. The race to the bottom for FX is now between the GBP and the USD with the US clearly winning. The biggest issue for trading the markets today is about rates and how they play out in a market running for cover. The 2.10% and 2.05% 10Y US bond yields are the next big levels to watch.