It’s too early to say the British pound/U.S. dollar (GBP/USD) is going back over 1.44 but the cross is telling us the risk is there or EUR is going to 1.22 and lower, writes Bob Savage, CEO of Track Research on Friday.

There are early birds looking for worms today as Spring is delivered to New York. This requires just the right mix of hope and volatility - with U.S. bank earnings and no major economic data the ray of sunshine for the bullish moods.

There are many who see this week as a bottom building exercise with U.S. rates up 5bps, commodity currencies Australian dollar (USD/AUD) and Canadian dollar (USD/CAD) up 1.5% and with equities holding bid despite geopolitical fears about the U.S. response to Syria and its complications to Russia remaining.

The U.S./China trade war is still more talk than action, though the China naval display in the Taiwan strait maybe less pacifist in its goals. The role of U.S. rates rising brings back “normalization” talk elsewhere and that shows up in the HKMA intervening Thursday night – first time since 2005 – while the MAS tightened its currency policy stance for the first time in two years lifting the Singapore dollar (USD/SGD) to 1.3115.

The obvious issue for higher rates is bubble popping – particularly in real estate markets globally with Hong Kong on the front lines, but Singapore and China aren’t far behind.

The other place where rates matter is in the euro/British pound (EUR/GBP) where the BOE rate hikes in May and the ECB reluctance to move on rates ahead of tapering leaves the cross breaking technically harder and faster.

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