As the Japanese yen and British pound weakened, this left the technical picture of the U.S. dollar more important than usual and it appears to be like a two-hump camel, writes Bob Savage, CEO of Track Research.
Camels: some have two humps, others just one. The technical difference matters for how long it can last without water and the comfort for the riders. The fact that 95% of the camels today are dromedaries, one hump stands out. Some will argue that llamas, alpacas and guanacos merit a mention but they are mammals, not camels, according to science.
For today, markets are faced with light economic data – Swedish CPI, RBA minutes and the German ZEW.
Sweden is the worst performer today in the G10 thanks to its CPIF miss.
The Japanese yen (JPY/USD) is a close second as U.S. rates return to matter as a driver.
The focus on Brexit talks continues to dominate UK/EU headlines – Bloomberg reported the UK was considering withholding Brexit money if it didn’t get a trade deal, while Business Insider reported the EU was preparing a 60-page “privileged” status plan for the UK.
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The British pound (GBP/EUR) and Gilt markets did little but to continue to bleed lower – deciding to wait for the BOE testimony tomorrow maybe the best.
This left the technical picture of the U.S. dollar (USD/EUR) more important than usual and it appears to be like a two-hump camel, rare and worthy of attention.
The return of rates as the favorite explanation for USD gains maybe bit too simple today – and it may make the 1 pm U.S. 2-year note sale more of an event than it should be – as the reality of forex trading could be as simple as watching a chart and making a bet.
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