The barometer of whether politics matter more than policy today rests in the Japanese yen (JPY/USD) and whether it closes below 113.50, writes Bob Savage, CEO of Track Research Wednesday.

The lens for today is comparing everything against last year – as there isn’t a lot of other news, politics remain the headline story while central bankers remain in control and markets have marched on with robust risk taking.

Whether risk is on or off hasn’t been very exciting in 2017 but perhaps it’s just a delayed response and today brings risks for reversals.

On the first anniversary of Trump being elected president in the US, the U.S. dollar (USD/EUR) is lower by 3%, US 10Y rates are higher by 40bps – even as the FOMC has lifted O/N 75bps so far and stocks are up 25%-30% almost everywhere.

Overnight some of that unwound as one of the drivers of higher equities, the hope for tax reform, (read as a big corporate cut) looks set to be delayed. The Washington Post reported that the Senate plan clashes with the House version with a suggestion of a 1-year delay in the cut along with a foreign excise tax. Markets didn’t like that idea.

Perhaps they were also unsettled as the local elections last night brought Democrats to control the governorships in New Jersey and Virginia highlighting the push-back to the president’s plans.

There is plenty of other news that moved markets as well – like the general strike in Catalonia blocking rail lines there and reversing some of the Spanish bond gains. Or like the pressure on UK PM May to shake up her cabinet after further revelations that the development secretary Priti Patel had unauthorized meetings with Israeli diplomats and the ongoing Brexit impact study delays add pressure for her to act.

Oil markets are obsessed with the Saudi news where the cold war with Iran moves to Lebanon. Oil is lower on the day after API reports but waiting for US EIA confirmation about gasoline and crude inventories.

The China trade data today was a bit soft but explained away by the 19th Party Congress and the hope is that inventories just rebuild for commodities – something that Trump will be talking about with Xi in a few hours.

If you want to trade now, perhaps wait, that is the lesson of the day. Waiting hasn’t hurt Trump nor the markets. The 20-year wait for inflation in Japan hasn’t hurt its stock market either – but that is a more about Abe and the latest comments from Funo highlight the role of forex in making it all work. The barometer of whether politics matter more than policy today rests in the Japanese yen (JPY/USD) and whether it closes below 113.50.

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