EUR 8.14 For Business Accounts Only

The Morning Track too-early

- The Morning Track – Too Early by Bob Savage
http://trackresearch.com/articles/the-morning-track-too-early/

There are early birds looking for worms today as Spring is delivered to New York. This requires just the right mix of hope and volatility - with US bank earnings and no major economic data the ray of sunshine for the bullish moods. There are many that see this week as a bottom building exercise with US rates up 5bps, commodity currencies AUD and CAD up 1.5% and with equities holding bid despite geopolitical fears about the US response to Syria and its complications to Russia remaining. The US/China trade war is still more talk than action, though the China Naval display in the Taiwan strait maybe less pacisifist in its goals. The role of US rates rising brings back “normalization” talk elsewhere and that shows up in the HKMA intervening last night – first time since 2005 – while the MAS tightened its currency policy stance for the first time in two years lifting the SGD to 1.3115. The obvious issue for higher rates is bubble popping – particularly in real estate
markets globally with Hong Kong on the front lines, but Singapore and China aren’t far behind. The other place where rates mater is in EUR/GBP where the BOE rate hikes in May and the ECB reluctance to move on rates ahead of tapering leaves the cross breaking technically harder and faster. Its too early to say GBP is going back over 1.44 but the cross is telling us the risk is there or EUR is going to 1.22 and lower.