The only barometer for the risk-on and risk-off world that seems to be working is the Japanese yen (...
Euro/Japanese Yen the Chart to Watch Amid European Challenges
02/23/2018 4:28 pm EST
This is the end of my vacation – eight days in Argentina – with plenty of hot weather, there is a drought on going, plenty of strikes, yesterday was truckers, and plenty of time to reconsider what is important in markets, writes Bob Savage, CEO of Track Research Friday.
So, today’s Morning Track is a bit fuller than usual, with a quick attempt to recap the weekly news abroad. Overnight was light on the news front, bit like the entire week, with China Anbang insurance government take-over a stand out, while slightly higher Japan CPI was ignored.
The EU data was a non-event but the Italy debt market was spooked into their BTPei auction and this hit the entire periphery.
The focus for the rest of the day is on Fed speakers – though it’s doubtful that you get much more than 3-4 hike talk from the lot.
In forex you have to watch the Swedish krona/Norwegian krone (SEK/NOK) for fun today with the breakout of euro/Swedish krona (EUR/SEK) post the Riksbank minutes and example of how important central bank policy remains.
Markets are ending the week with a risk-on mood but one that seems shy and unable to ask for the needed break out to new highs. Month-end flows are expected to matter more and there is a sinking sense that the risk barometers of the past aren’t working like they used to – blame the Fed and ECB for that as they try to normalize in glacial fashion.
Today the chart to watch is euro/Japanese yen (EUR/JPY) with the breaking down of the U.S. dollar (USD/JPY) bid in JPY despite a strong Nikkei pushing out the search for better risk metrics and correlations. EUR/JPY may be something to watch should European growth and political hopes get dashed further over the weekend.
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