Now that Russia has ended its military cooperation with NATO as tensions worsen over Georgia and the US missile shield plan for Poland, what will Capital markets want to do? Their initial reaction has been to push the CRB index towards its largest weekly gain in 3-decades. The ‘big dollar’ has retraced nicely from its monthly highs, but, with Euro-lands dependence on Russian energy exports they cannot afford to drag out this ‘spat’, their economies are already in trouble. Bring back the financial write down concerns; they are much easier to interpret!
The US$ is stronger in the O/N trading session. Currently it is higher against 14 of the 16 most actively traded currencies in another ‘whippy’ trading range.
Yesterday’s US data was not a surprise to the market, if anything it solidified markets view that the 2nd half of the year will ‘bare no fruit’. The index of leading indicators fell -0.7% vs. -0.2% last month (more than 3-times the anticipated drop).
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