Waiting hurts. Forgetting hurts. But not knowing which decision to take can sometimes be the most painful…
It is ironic that the 73rd anniversary of D-Day is followed by the “longest day” for the market.
Anyone looking for advice on what to do in the market today, there is a one-word answer; nothing.
The Dollar awaits Trump, the Euro Draghi and Sterling May/Corbyn
The first relief for the market will come at 12.30pm tomorrow when Mario Draghi makes his announcement on interest rates. What traders will be waiting for is some direction on where he sees the Eurozone economy heading. When will Quantitative easing be scaled back? When will rates be raised?
These are the only doubts facing the single currency. It looks set to breach the long-term resistance at 1.1320 but may need fresh buying to provide impetus. A correction is possible but may be driven by events elsewhere.
Comey to impale Trump?
When James Comey was sacked as FBI Director almost every political commentator “smelt a rat”. The timing was erratic at best, he had recently been praised by Trump and his pre-Trump record was impeccable.
We are now going to find out just what happened from Comey’s perspective. The burning question is “did Trump ask you to drop the investigation into links to Russia?”
His answer could lead to impeachment, criminal charges and political disarray in Washington. One thing is certain. It will take a massive shove to force Trump into resignation. I doubt he has ever heard the expression; “untenable situation”.
It is not necessarily the fallout from this which could still be a storm in a teacup. It is Trump’s ability to get on with the job that is causing the dollar to fall against the JPY in particular.
Risk aversion brings buying of the Japanese currency as well as the Swiss Franc. Their low inflation economies are the perfect store of wealth.
The Yen has made a two-month low as the U.S. administration has virtually ground to a halt. Trumps first hundred days have been replaced by tauper particularly since he returned from the G7 and NATO summits.
Election Fever? Hardly
This is been a remarkable election. Clearly the punctuation of the campaign by two hideous terrorist attacks has had an effect. But it is the opinion polls that have provided intrigue. How can support go from 25%+ to almost zero for no good reason? Of course, socialists will point to the “stellar” performance” of their leader and the electorate’s realization that Labour will make the best Government but the reality is a lot less clear.
How do we trust opinion polls? After Cameron, Brexit and Trump we need some explanation not just bare numbers.
Tomorrow will be the day for justification. If the Conservatives end up with an eighty plus seat majority it could signal the death of polling as we know it. The return of the “silent majority” is what has created the unreliability of opinion polls. Undecided? No just stoic!
Sterling has the potential to move five hundred points. The issue is: in which direction. Liquidity will be key. “Brexit night” was brutal but having lived through the night Sterling left the ERM I can truly claim to have seen it all.
1.25 or 1.35? There is no chart that can provide the answer. A straddle? Quite possibly. Buy volatility not direction.
