The focus for risk isn’t the U.S. dollar (USD/JPY) (though JPY grabs the headlines) but euro/Japanese yen (EUR/JPY), which is lower as the squeeze into 1Q end builds. Risk for 200-week break worth considering today at 129.53, writes Bob Savage, CEO of Track Research Friday.

The third Friday of March means triple witching – option exercises across futures – making for more volatility both in the US and EU.

For the overnight, there was dark magic in the headlines from Abe admitting he knew of document doctoring days before it became public, to the U.S. where Trump denies he is firing McMaster at NSA to Mueller subpoenas for the Trump Organization documents.

Trade worries continue – as Fox reported new China tariffs to be announced by month-end, and on the report that China U.S. bond holdings dipped in January to 6-month lows.

For Europe, the Italian coalition building with the 5-Star jars given their pledges to dismantle ESM and boost sovereignty.


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Throw in the timeline for EU/UK talks that extends to April 18 and excludes Northern Ireland and you would expect no deal on Brexit transition next week.

Politics remain messy and a concern in a market filled with option strikes and mid-month reallocation plans. This is a witches’ brew and it adds to the weight of four down days in U.S. equities. Central bankers tried to be good witches – RBA Debelle suggested markets don’t have to believe forward guidance and that they maybe surprised on rate moves in the futures.

The new BOJ team was approved by Japan’s parliament with Kuroda getting a rare second term. The economic data was scarce and didn’t matter much – Japan IP, German WPI suggest less, not more, room to wait.

Money markets remain strained and the 3M USD Libor-OIS is at a new multi-year high of 49bp today – watching 50.5bp the peak from Jan. 5, 2012 next.

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