EUR 9.38 For Business Accounts Only

The Morning Track too-calm

- The Morning Track – Too Calm? by Bob Savage
http://track.com/articles/the-morning-track-too-calm/

The US dollar rally that started with the US election has stalled. Even with rates as a key support continuing – leaving many blaming positions and others a pre-positioning into the ECB Thursday. Europe has been and remains the focus this week – as if the markets were told to keep calm and ignore the ongoing political risks. In the last 24 hours after the expected resounding defeat of the Italian Reform Referendum - Greece gets some debt deal hopes but nothing material, France gets a new government but no one new, Italy sticks with Renzi until budget law passes but remains stuck with a banking problem. Those stories and the reality that there isn’t much news other than politics, left markets sidelined again last night. We are like a trite poster – calm and waiting for more instructions. Of course there was the usual economic and monetary policy news as well - The RBA was unchanged as expected but with slightly more optimism even as most see 3Q GDP negative. The J
apan wages bounced but not enough to lift consumer outlooks, China cut some taxes but concerns about credit remains. The Eurozone revised 3Q GDP but growth remains weaker than ECB needs for inflation. German Factory Orders jumped more than expected but all because of cars. Swiss CPI remains in deflation despite negative rates and SNB buying EUR. The markets are perhaps too calm about the moves in the last month and overreacting to hope over reality in changes for 2017. All things being equal – after markets absorb bad news well, bulls come out – and then there is the rethinking – we are in that stage where the USD retracement is nearing levels where some will begin to buy and bet on further pain abroad and more joy at home.