V-shaped? W-shaped? L-shaped? U-shaped?
Looking at my keyboard, I don’t see a letter that neatly illustrates my view of the economy going forward. Like the equities market, the labor market is recovering after a cliff-dive, but my guess is that the recovery in GDP will be relatively muted. Rather than an “L” It will look sort of like an elongated U. The bottom is in but sluggish consumer demand will keep the economy from sparking back to life with the usual vigor seen after a sharp recession. The excesses built over the last 15 years will not be cleansed in a year or two…
EUR/USD is recovering after a blood-letting of stop-loss sales took us as low as 1.4275 before a bounce. We’ve rebounded back above the 1.4330/40 level that many have used as a pivot, squeezing out short-term bears already. An ugly day all around for both the complacent EUR/USD longs and the slow-to-react USD bulls.
Commodity currencies are unabashed victors in this environment. Cross them against the JPY on dips.
