View from London: Searching for Prime Numbers

07/11/2017 2:59 am EST

Focus: CURRENCIES

Robert Savage

Partner & CEO, CCTrack Solutions

We remain in a world that watches the news and responds to the central bankers. The euro/dollar is the risk barometer for that trade and it’s getting close to a larger washout moment, asserts Bob Savage, CEO of Track Research in Tuesday commentary from London.

This is a weak version of singles day when math geeks and Amazon (AMZN) lovers celebrate 7-11.

The problem for markets is that this isn’t news and given the dearth of other economic data, the only thing to talk about is price action.

Oil has suffered another reversal day. Asia bounced in anticipation of US drawdowns in oil and gasoline inventories post the July 4 holiday and Europe sold as the OPEC reality of production caps fails.

The bond selling trends have returned and the pain trade in all positions follows.

Markets are looking for an excuse to trade away risks – with British pound/Japanese yen (GBP/JPY) higher on the day not a comfort for carry trades but rather seen as noise in marginal central bank watching.

The BOJ vs. BOE vs. the FOMC vs ECB.

We remain in a world that watches the news and responds to the central bankers. But even that certainty is in play, the euro/dollar (EUR/USD) is the risk barometer for that trade and it’s getting close to a larger washout moment.

We are all looking for unique alpha. Like searching for prime numbers, it’s easy up to 100 and hard when you get over 1,000,000.

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