…and markets can’t go up for ever. That seems to be the early theme as the markets experience a period of retrenchment after big runs all week. Equities have opened flat in the US despite upbeat JP Morgan earnings, oil is seeing some retrenchment, down $0.70 and JPY crosses are seeing some profit-taking.
It looks as though the market priced in upbeat Chinese growth and were surprised by the New Zealand downgrade, undermining demand for JPY crosses. Toushuin flows back into Japan for the rest of the month may help slow the rally in those crosses in coming days.
Philly Fed will set the mood for the balance of the session. If market’s can’t rally on a good number, a deeper retrenchment in the reflation trade will unfold.