Baku, Azerbaijan, June 29
By Anvar Mammadov - Trend:
There was a pronounced grinding of the gears across global markets overnight as the European Union summit produced a deal on migration in the wee hours of the night that was not anticipated, Head of FX Strategy at Saxo Bank John Hardy told Trend on June 29.
“The deal is short on details, but outlines an intention to create migration centers across the EU as well as centers in Africa where migrants attempting to cross by boat can be returned if they have not reached the EU’s shores,” he said. “Whether this is enough of a deal to save Merkel’s coalition with the CSU remains to be seen, but the market is clearly hopeful as the single currency surged higher across the board, particularly against a very weak JPY – more on that below.”
“While the deal does offer hope that the EU can maintain order, we’re cautious in putting too much in the rally just yet – let’s see where we close the day today, and remember that today is the last day of the quarter, which can produce rather sharp moves intraday,” the expert noted.
“An interesting post from The Macro Tourist follows up on an earlier post discussing the US Fed’s “QT days” – days at the end of the month and occasionally mid-month when significant treasury holdings mature and seem to drive a weak equity market due to the liquidity implications,” he noted. “The question at this point is whether the phenomenon has become too obvious and might be front-run by the market. With a hefty chunk of Treasuries maturing tomorrow, today’s session or Monday’s would be the sessions to watch for this effect.”
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