The euro is the risk barometer still with 1.1760 pivot for 1.1820-40 test. The Canadian dollar (CAD) is perhaps vulnerable to oil and NAFTA unwind risks, EM has been able to bounce except for Turkish lira (TRY) today, writes Bob Savage.
The week of trading can best be explained by Italian political fears, which were overdone Tuesday, repriced Wednesday, and of no concern Thursday.
Focus shifts to risk-on markets S&P 500 (SPX) with an eye on North Korea summits, U.S. data and the usual month-end rebalancing noise.
Overnight the risk rebound started in Asia with better China PMI, but weaker Australian Capex, continued into Europe with flash CPI suggesting the ECB could taper and talk about hikes in 2019 again despite Italy.
The euro (EUR) bid up accordingly and was able to ignore the threat of US tariffs as talks on trade deals fail. The pain trade ahead maybe about the crosses to EUR with British pound (GBP) still about Brexit.
The Canadian dollar (CAD) is perhaps vulnerable to oil and NAFTA unwind risks, EM has been able to bounce except for Turkish lira (TRY) today and that may be the biggest reminder that we are back to where we started the week but with higher rates and more troubles ahead.
U.S. politics may be back in the play of things as the Trump tariffs and failure to get deals done sparks a return to U.S. deficit focus, need for capital and the cost of money.
View Bob Savage at TradersExpo New York in brief video interviews recorded Feb. 9:
How to create a risk parity portfolio
Duration: 3:25
How I pick assets on the basis of highest yield
Duration: 3:31
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