The reversals of euro (EUR/USD) and British pound (GBP/USD) overnight are telling us something and put the USD at 90 an important barometer for those that have to balance rate hikes against growth, writes Bob Savage, CEO of Track Research Tuesday.

Expectations for U.S. policy are low and that leaves upside today.

There is the Japan PM Abe meeting with Trump, the IMF WEO outlook and the ongoing diplomacy around Syria where the U.S. wants Saudi, UAE and others to replace the U.S. troops and pay for it all. The sticky point maybe Yemen.

The problems for such a peace remain Iran and Russia. The Russia cyber-attacks are an example of the new cold war. Trump holding back more sanctions may be an olive branch.

The barometer of measuring such chances remains oil. Perhaps the higher price today is about OPEC squeezing it with production cuts extending through 2019 or maybe it’s to pay for the Syria mess.

There are other peaceful hopes at play. South Korea and North Korea are discussing plans for a formal end to the war to replace the 1953 armistice – that drove South Korean won (USD/KRW) stronger.

The China data overnight was as expected, no surprises, and perhaps most importantly, the TIC data late Monday showed that China increased its holdings of U.S. bonds to 6-month highs in March eases one feared tool in the trade scuffle. The U.S., on the other hand, banned U.S. companies from selling to China telecom ZTE. 

As for Europe, the weaker UK earnings and German ZEW brought any doubts about the USD back to flat.

We are stuck in a bell jar with too many observers and too many expectations for trend when the reality is noise and frustration. The two trending forex pairs overnight New Zealand dollar (NZD/USD) lower and euro/Swiss (EUR/CHF) higher reveal the symptoms and the suicidal nature of trading in this environment.

Safe-havens are not needed when uncertainty is so high, and the best path is to have no expectations.

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