EUR 8.84 For Business Accounts Only

The Morning Track weather-2

- The Morning Track - Weather by Bob Savage
http://track.com/articles/the-morning-track-weather-2/

In bad weather you look for a safe-harbor and that is what markets are doing today with JPY, bonds and Gold leading safe-haven gains. The isolation of Qatar by the GCC and the motivation for such grabs headlines along with incessant polling for the UK election Thursday. The UK election is being reduced to opinions about youth vote – with up to 2 million new voters registered and expected to vote Labour but not if it rains and so we become keen watchers of the weather. The role of natural gas, Turkey, Iran and even the US in the Qatar story is worth considering as the economic and policy news from overnight doesn’t change much – RBA on hold as expected but sounds less dovish, though still worried about wages and China. Australian C/A larger with terms of trade lower, Japan wages higher but lower in real terms so not helping growth, German construction PMI higher, Eurozone Investor Sentiment higher, Eurozone retail sales and PMI higher but Italy vulnerable and South Af
rica 1Q GDP negative – pushing the nation into recession. The key issue for trading overnight was in the risk-off mood which reflects first in USD/JPY lower - breaking the 110 barrier and opening 108 targets - all of which tracks US bond yields. The second story is that oil stoically remains offered and that gets us back to Qatar where many see larger trouble. Natural Gas is in focus and in play along with a potential food crisis as 80% of the food for Qatar comes from GCC. Turkey has a military base there along with the US and that maybe central for humanitarian aid should this not fix quickly. The role of gas in world energy will be a focus with benefits to Russia and Australia on first look. The two largest users in Asia Japan and China maybe worth considering as well – and it puts the JPY focus into another light.