Not just the markets, but me. I’m struggling to find something interesting to say amid what looks like a day of backing and filling after several directional sessions strung together so far this week.
GBP is the exception, but it is always exceptional.
Risk appetites appear to be muted by ongoing sovereign credit concerns today, a natural outgrowth of the near-collapse of the global economy last year. Even if nations did not go on a stimulus binge, they still would be suffering at the hands of falling tax receipts.
Dubai, Greece, Spain, the UAE are on the front lines while rumbling in the background are concerns about the UK and the US. Against that backdrop, the reflation trade looks like a lousy option and if long it, it seems as good a time as any to lighten up, especially as year-end approaches.
Sovereigns continue to diversify reserves, helping return a modicum of two way traffic to a market that had grown somewhat one-sided in recent days.
Bottom line: If nursing EUR/USD longs from lousy levels, look to lighten up on rebounds to the 1.4780 area near-term. If short at decent levels, stick with it. A break of 1.4625/30 targets a move to 1.45-ish, the measured move objective I’ve been writing about all week.
EUR/USD trades quietly at 1.4722.
