Euro May Be the Best Forex Barometer, Given Risk Mood Swings

12/08/2017 6:00 am EST

Focus: CURRENCIES

Robert Savage

Partner & CEO, CCTrack Solutions

Given risk-on and risk-off mood swings, the best forex barometer may be the euro as the stops at 1.1764 attract given the 55-day support. USD gains without bigger rate moves are like seeing a ghost – ephemeral and not lasting, writes Bob Savage, CEO of Track Research.

The term “ghost ships” is on the rise, as the Japan coast guard reports a sharp increase in the number of North Korean shipping vessels found adrift off its coast. The question to ask is whether they are spies, refugees or something else and perhaps most importantly if this is a signal that something big is changing in North Korea.

For markets today, maybe ghost ships are an analogy to start the day as many see the headlines adrift from the prices and price action more troubling than usual with volatility rising sharply even as ranges hold.

First is bitcoin (BTC) up another 5.5% to $15,285 – new record highs ahead of the Sunday Futures launch and despite another hack attack on NiceHash wallets.

The motor of analyzing risks from data appears to be stalling. This might be a trick of seasonal profit-taking and risk reduction – a subterfuge of illiquidity or it could be the signal that the era of low volatility, low yields is ending.

After the weak UK Gilt auction it’s worth questioning as many now argue, UK rates are going up despite the outcome of Brexit.


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According to the UK Telegraph, EU Juncker now fears that the UK May government could collapse if Brexit talks are deadlocked, and so, they are prepared to extend deadlines. Michel Barnier was quoted as saying Wednesday night however, the UK had only 48 hours to come up with an offer.

The news from the IMF on China was mostly ignored, but the drop in coal demand hurts the Australian dollar (AUD/USD) and its trade surplus shrinking is going to leave many wondering if playing China risk is back in vogue.

The German IP data didn’t help steady bonds there as the weaker auctions, more equity stability puts value doubts in play. The world is filled with trades adrift and the data Thursday seems unlikely to decisively answer the questions about the next trend.

Given the risk-on and risk-off moods swings, the best barometer in forex may be the euro (EUR/USD) as the stops at 1.1764 attract given the 55-day support. USD gains without bigger rate moves are like seeing a ghost – ephemeral and not lasting.

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