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EUR 8.70
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http://trackresearch.com/articles/the-morning-track-talking-points-2/
US Treasury Secretary’s set the US dollar policy while US President’s guide the trade and foreign policy that support it. This all started in earnest with the Louvre Accord, became boring with Rubin and his “strong dollar†policy, was shaky with some others but has unwound this morning with US Treasury Secretary Mnuchin stating a weaker USD is good for trade, tacitly endorsing the dollar decline. Markets listen and the dollar index touches fresh 3-year lows. GBP maybe the shock leader above 1.41 as its jobs report has wages rising and better employment. EUR is right behind on better flash PMI reports but ECB Draghi tomorrow is a potential drag along with the technical 1.2350 barrier. One has to discern if the Mnuchin comments at the WEF in Davos are talking policy or just talking. The reason Rubin switched to a stronger USD was linked to bond yields and the need for foreign capital. US bonds haven’t yet reflected much concern today about the weaker dollar, bu
t when that becomes painful for growth or business, watch out. Talking policy continued to dominate other currencies today – witness the Riksbank Skingsley comments driving SEK stronger vs. EUR. The Deputy Governor on Bloomberg TV said it makes sense for the Swedes to hike before the ECB. The news and the anticipation of Trump at Davos Thursday/Friday make clear that the moves in FX today won’t be easier until the weekend. Markets are glued to FX effects with Europe and Asia reflecting these concerns and intervention fears rising. Many see the USD weakness at odds with rate policy and other talking points about growth in the US but capital flows and the broader distaste abroad for US leadership detract. The US dollar index has a bigger risk of loss to 88 but the January selling maybe nearing a burn-out point – that might just be the Friday reversal risk to fear.
The Morning Track talking-points-2
- The Morning Track - Talking Points by Bob Savagehttp://trackresearch.com/articles/the-morning-track-talking-points-2/
US Treasury Secretary’s set the US dollar policy while US President’s guide the trade and foreign policy that support it. This all started in earnest with the Louvre Accord, became boring with Rubin and his “strong dollar†policy, was shaky with some others but has unwound this morning with US Treasury Secretary Mnuchin stating a weaker USD is good for trade, tacitly endorsing the dollar decline. Markets listen and the dollar index touches fresh 3-year lows. GBP maybe the shock leader above 1.41 as its jobs report has wages rising and better employment. EUR is right behind on better flash PMI reports but ECB Draghi tomorrow is a potential drag along with the technical 1.2350 barrier. One has to discern if the Mnuchin comments at the WEF in Davos are talking policy or just talking. The reason Rubin switched to a stronger USD was linked to bond yields and the need for foreign capital. US bonds haven’t yet reflected much concern today about the weaker dollar, bu
t when that becomes painful for growth or business, watch out. Talking policy continued to dominate other currencies today – witness the Riksbank Skingsley comments driving SEK stronger vs. EUR. The Deputy Governor on Bloomberg TV said it makes sense for the Swedes to hike before the ECB. The news and the anticipation of Trump at Davos Thursday/Friday make clear that the moves in FX today won’t be easier until the weekend. Markets are glued to FX effects with Europe and Asia reflecting these concerns and intervention fears rising. Many see the USD weakness at odds with rate policy and other talking points about growth in the US but capital flows and the broader distaste abroad for US leadership detract. The US dollar index has a bigger risk of loss to 88 but the January selling maybe nearing a burn-out point – that might just be the Friday reversal risk to fear.
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Robert Savage
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