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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After Theresa May
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