A small snippet on the euro via Morgan Stanley, which raises a curious question, for me at least:

  • EURUSD bears have struggled to push the pair below 1.12
  • Traders should remember that the RMB plays a key role here, and sentiment is overly bearish
  • especially when China's January trade figures significantly outperformed expectations

MS make a good point in that first line and second, but the third is where I have a bit more of a problem. Later in the same note, MS say:

  • January export and import figures for China greatly exceed market expectations (imports y/y grew at -1.5%vs consensus of -10.2%)

(MS referring to Chinese January trade data released yesterday:

)

And then, correctly:

  • we note this may partially have been affected by CNY seasonality

(MS referring to the lunar new year distortions, as we noted in the posts yesterday, see those links for more).

So, what's troubling me is that third line re the EUR, we really wont won't get a clearer (as clear as we can anyway) on China trade until the February data is released in a month, and even then the trade war with the US is huge confounding factor. This is life in the financial markets, what is clear is very often not very clear.