Most particularly about today's action is the recurring divergence between a falling euro and rising equities (alongside risk currencies weighing on USD) before the Fitch downgrade triggered an-all round risk-off reversal. As we speak, markets are attempting to rebound into the green, leaving the euro behind, highlighting the possibility that further question marks in Spanish banks ability to recapitalize will not necessarily spill-over to non-Eurozone assets as far as contagion is concerned.
Combining the Spain bailout with expectations of a market-friendly outcome in Greek elections (New Democracy now leads over leftwing Syriza party) and signals for further QE in next week's FOMC allows for an extension of the recent rebound in equity indices. This is already favouring the risk currencies of GBP, NZD and AUD, with CAD.
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It's impossible to separate fact from fiction with all the noise in the China-US trade talks, but a report this week was notable for an intriguing detail. CAD and GBP are leading the gainers for the 2nd consecutive day, while NZD powered ahead after the RBNZ confirmed rates would remain on hold. The two-day OPEC meeting gets underway today. US jobless claims and durable orders are due next. Below is the chart highlighting the improving correlation between EURUSD and the Eurozone-US spread of their respective economic suprises, using Citi econ suprise index.