EUR 9.38 For Business Accounts Only

The Morning Track winners

- The Morning Track – Winners by Bob Savage
http://track.com/articles/the-morning-track-winners/

Reading the sports pages first is one way to combat news fatigue about losers, war and famine. There is always a winner. So too in FX markets, with the victors of risk-aversion leading with JPY and CHF today. But there are some other stories that matter – like the NZD up 1% against the A$ and against the USD - with a better milk auction, higher inflation expectations and an unemployment report at 8-year lows. Rate rose 4bps in 2Y swaps when almost everywhere else yields are lower. The lesson being that in the present environment, better data drives policy to normalization and that means the game sees winners and losers. The trouble is that the gains in JPY and CHF are not about economics but fear and that will elicit a different policy response. The sports page is also useful to consider when betting on markets and many see the price moves over the last 48 hours as a response to removing the “certainty” of the US election outcome and shifting it to a “odds” ga
me with 25-30% chance for Trump election leading to a rush for black swan options with the “trifecta” being a Republican sweep of the Presidency, the Senate and the House. The losers overnight remained clear – emerging markets – with EM equities off the most in 3-weeks, their bonds rallied but that was limited as their currencies weakened against the USD. The biggest story for today maybe in the FOMC and how they handle the winners and losers. The sports page betting leaves the JPY as the favorite currency to watch as it mean-reverts with 102.60 looking more important for a larger washout risk move.