In the first several articles in this series, I am simply going to provide you an overview of Elliot...
Today's Focus on US Auctions, British Pound and Dollar Awaiting Comeback
12/11/2017 11:17 am EST
Today’s focus is in the US auctions, the FOMC later and the mood for risk. The GBP is an example of how all can go right one day and wrong the next and that maybe the lesson as the USD is waiting for something to drive it back, writes Bob Savage, CEO of Track Research.
Weather isn’t destiny. In London, it's cold and raining. This seems fine to a New Yorker but to many here, it’s cold, icy and horrid. The weather as destiny mood has taken over in the UK as the Brexit divorce leading to reasonable but complicated trade discussions dominates the press.
UK Brexit Secretary Davis told BBC TV on Sunday that the deal agreed with the EU Friday “was much more a statement of intent than it was a legally enforceable thing.”
UK Environment Secretary Michael Gove and Foreign Secretary Boris Johnson will demand a hard Brexit when the UK starts trade negotiations, as payback for supporting the deal last week, the Sunday Times reported, while the Irish Government warned: “Both Ireland and the EU will be holding the U.K. to the phase one agreement.”
The British Chambers of Commerce downgrades its 3Y outlook for UK growth – 2017 now 1.5% GDP from 1.6%, 2018 1.1% from 1.2% and 2019 1.3% from 1.4%. Trade contribution was the main driver despite British pound (GBP/USD) weakness along with sluggish business investment and household consumption.
Contrast that to New Zealand where the new government appoints Adrian Orr, currently the CEO of the Superannuation Fund, as the new RBNZ Governor. He is seen as a balanced, not dovish, central banker and that lifted the New Zealand dollar (NZD/USD) 1.2% to 0.6930 - 5-week highs.
The summer weather in New Zealand counters the fears about the “radical” government which is talking about banning foreigners from buying houses – a first test case for the anti-globalization of capital movement. The point is that markets remain stuck in the mud between politics and central bankers aggravated by outside noises like weather and wars.
The weekend news was light in comparison – and the economic data was sparse – with China CPI lower but the money supply higher while European data mixed as Italian retail sales sink and French business confidence rallies.
The focus on the day is in the US auctions, the FOMC later in the week and the mood for risk. The GBP is an example of how all can go right one day and wrong the next with the GBP still holding above the breakdown level at 1.3250 and that maybe the lesson as the euro (USD/EUR) is watching and waiting for something to drive it back to summer highs. Winter doesn’t have to mean seasonal forces win but they do matter and destiny isn’t the mood nor a game but how the collective actions of a people determine their fate.
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