EUR 8.82 For Business Accounts Only

The Morning Track waiting-4

- The Morning Track - Waiting by Bob Savage
/articles/the-morning-track-waiting-4/

The wait for the FOMC meeting is on and markets overnight continued to stretch for yield and risk with WTI oil over $59, USD lower, equities mostly bid. The delays in US/China deals or in a Brexit resolution are to be ignored – as the wait is too long for traders to consider or investors to fear. Nevertheless, some are excited about the UK constitutional crisis as the Speaker Bercow blocks the PM from putting up for vote her failed Brexit deal again for the third time without significant changes. The excitement for the day is in the data and the policy responses expected to follow. The UK manages to ignore 44-year lows in unemployment as the rest of the world focuses on its politics. Australian housing markets are worse than in the 2008 crisis. This begs the question of RBA responses ahead, unless the jobs report tomorrow surprises stronger. The inversion of the yield curves in Australian and Canada are notable stories and perhaps foreshadow a larger slowdown or more
central bank responses. The relationship of both to China and to commodities and to the risk of higher US rates stands out. There is clearly a bearish tone to both currencies and yet the focus was elsewhere overnight, even though Australia had significant stories from the RBA minutes to the weaker housing prices. There is something to be said for waiting, and yet as a trader, the opportunity is in the quiet times when no one particularly cares or worries. This maybe that time for the A$ and C$ as they trundle along with a market on auto pilot. The A$ .7010 support looks more important than ever before and worth watching for a larger reversal in risk-moods should the FOMC fail to deliver like the ECB. The ECB has its own set of issues as the ZEW bounce in sentiment hides the future expectations weakness and the reality that wages aren’t yet supporting the inflation goals to offset the gloom from trade hits and construction weakness. The AUD maybe the best base to wait
this all out.