Tag Archives: #badnewsisgood

A Bevy of Doves

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The Fed has a bevy of doves
Whose world view was given some shoves
When Trump was elected
As they were subjected
To boxing, though without the gloves
 
But suddenly, they’ve found their voice
And rate cuts are now a real choice
So, bad news is good
And traders all should
Buy stocks every day and rejoice

 

Apparently, the signal has been given from on high at the Marriner Eccles building that discussing rate cuts is permitted.  Patience is no longer the virtue it was just last week.  In the past two days, three different FOMC members, Daly, Cook and Goolsbee, have returned to form and are quite open to cutting rates sooner after the recent employment data.  I would contend that rate cuts are their natural stance, but they were discouraged from expressing that view because it would put them in sync with the president, something that they very clearly have worked to avoid.  Regardless of the history, the Fed funds futures market is now pricing in a 93.2% probability of a cut next month as you can see below.  Perhaps more interesting is the fact this probability has risen from 37.7% in just the past week.  My how quickly things can change.

Source: cmegroup.com

I’m sure you recall that one of the key reasons Chairman Powell and his acolytes described the need to remain patient was the potential impact of tariffs on inflation.  This was even though the universal view was tariffs, a new tax, would be a one-off price increase, so would have no long-term impact, and that higher interest rates would do nothing to fight this particular cause of inflation, just like the price of food doesn’t respond to interest rates.  However, I want to highlight a piece from the WSJ this morning that asks a very good question, why wasn’t Powell concerned about all the tax increases from the previous administration, or for that matter, the tax increase that would have occurred had the BBB not been enacted.  Again, all the discussion that the Fed is apolitical is simply not true and never has been.

Moving on, I wanted to follow up on yesterday’s discussion as I, along with many market observers, have been trying to come to grips with the inconsistency in the data.  Some is strong, other parts are weak, and it is difficult to arrive at a broad conclusion.  My good friend, the Inflation_Guy™ put out a podcast the other day and made an excellent point, historically, there was a synchronicity between activity in the goods sector and the services sector, so when things in either sector started to decline (or rise) it took the other sector along with it.  But that is not currently the case.  

Instead, what we have seen is asynchronous behavior with the correlation between prices in the two sectors essentially independent of each other over the past five years, rather than tracking each other as they had done for the previous 30 years.  Extending the price action to overall activity, which seems a reasonable concept as prices follow the activity, depending on the data you observe, you may see strength or weakness, rather than everything heading in the same direction.  However, it is worthwhile to remember that systems in nature eventually do synchronize (see this fantastic clip) and so eventually, I suspect that both sectors will do so and a full blown recession (or expansion) will materialize.  Just not this week!

Which takes us to markets and how they have been responding to all the tariff news.  I think you can make one of the following two arguments regarding equity investors; either they have absorbed the tariff information and ensuing changes in trade behavior and have decided that earnings will continue to grow apace, or, they have no idea that there is a cliff ahead and like the lemmings they are, they are rushing toward the abyss.  Perhaps it is simply that President Trump has discussed tariffs so much that they have become the norm in any analysis thought process, and so modest adjustments don’t matter.  But whatever the reason, we continue to see strength pretty much across the board here.

The rally in the US yesterday was followed by strength across almost all of Asia with gains in Tokyo (+0.7%) and Hong Kong (+0.7%) as well as Korea, India and almost all regional bourses.  China, however, was unchanged on the session after their trade balance rose a less than expected $98.2B, as imports rose more than expected.  However, as this X post makes clear, it should be no surprise given the renminbi’s real exchange rate continues to fall, hence their exports remain quite competitive, tariffs or not.  As to Europe, strength is the word here as well (DAX +1.5%, CAC +1.2%, IBEX +0.5%) although the FTSE 100 (-0.5%) is lagging ahead of this morning’s expected BOE rate cut.  And don’t worry, US futures are higher across the board as well.

In the bond market, yields have been edging higher with Treasury yields up 2bps after yesterday’s 10-year auction was not as well received as had been hoped, but then, yields were 25 basis points lower than just a week ago, so demand was a little bit tepid.  European sovereign yields are also edging higher, mostly higher by 1bp and we saw the same thing overnight in JGBs, a 2bp rise.

In the commodity markets, oil (+0.6%) has found a short-term bottom, but is just below $65/bbl, which seems like a trading pivot of late as can be seen by the chart below from tradingeconomics.com.  As my personal bias is that the price is likely to decline going forward, the 6-month trend line heading down does appeal to me, but for now, choppy is the future.

Meanwhile, metals markets are in fine fettle this morning (Au +0.4%, Ag +1.4%, Cu +0.15%) as the dollar’s recent weakness seems to be having the expected effect on this segment of the market.

Speaking of the dollar, as more tariffs get agreed, I am confused by its weakness since I was assured that the response to higher US tariffs would be a stronger dollar.  But arguably, the fact that the Fed is suddenly appearing much more dovish is the driver right now, and while the euro is little changed this morning, we are seeing the pound (+0.4%), Aussie (+0.3%) and Kiwi (+0.4%) all move up, although the rest of the G10 space is higher by scant basis points.  In the EMG bloc, movement, while mostly higher in these currencies, is also measured in mere basis points, with INR (+0.25%) the largest mover by far.  Arguably, it is fair to say the dollar is little changed.

On the data front, the BOE did cut rates 25bps as expected, although the vote was 5/4, a bit more hawkish than forecast which is arguably why the pound is holding up so well.  US data brings Initial (exp 221K) and Continuing (1950K) Claims as well as Nonfarm Productivity (2.0%) and Unit Labor Costs (1.5%).  This is a much better mix of this data than what we saw in Q1 with productivity falling -1.5% while ULC rose 6.6%.  That was a stagflationary outcome.  In addition, we hear from two more Fed speakers, Bostic and Musalem, as the Fed gets back in gear this week.  It will be interesting to see if they are more dovish as neither would be considered a dove ex ante.

Apparently, we are back on board the bad news is good for stocks train, and it is hard to fight absent a collapse in earnings or some other catalyst.  As such, with visions of Fed cuts dancing in traders’ heads, I suspect the dollar will remain under pressure for a while.

Good luck

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Jay Powell’s Dream

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As markets await the release

Of Payrolls, all things are at peace

But once it’s revealed

We need watch the yield

In 10-years lest it should decrease



While Goldilocks is still the meme

And certainly, Jay Powell’s dream

The data’s beginning

To show growth is thinning

More quickly both down and upstream

So, here’s the scoop.  Today is payrolls day and that is the only thing that anybody cares about right now, ahead of the release, and it will be the topic du jour by all the talking heads for the rest of the day.  As of 7:00am, here are the latest consensus forecasts according to tradingeconomics.com:

Nonfarm Payrolls180K
Private Payrolls153K
Manufacturing Payrolls30K
Unemployment Rate3.9%
Average Hourly Earnings0.3% (4.0% Y/Y)
Average Weekly Hours34.3
Participation Rate62.7%

Now, looking at a chart of the past year’s releases, the numbers seem to show a very gradual decline, albeit hardly in a regular manner.

But let’s take a look at some underlying data that may help us understand the bigger picture a bit better.  First off, one of the things that draws a great deal of criticism is the birth/death model that the BLS uses to estimate the number of new companies that start up, hiring people, compared to the number of companies that close with the resulting job losses.  A key reason that every month this year has seen the data revised lower is because that portion of their data continues to be revised lower.  Historically, the birth/death model is at its worst during an inflection point, when the economy is either entering or exiting a recession.  Those downward revisions are a strong clue that things are not going that well.

But there is something else worth noting and that is the BLS breaks the payroll data down on a state-by-state basis as well.  This is not something that gets a lot of press but is nonetheless important.  While this data only goes back to 1976, that is still a fairly robust series.  I highlight this because every time in the past, when all 50 states + Washington DC have seen a decline in the number of employed workers, we have been in a recession already.  And shortly thereafter, the first negative NFP prints started showing up, usually withing 2-3 months.  Well, guess what?  Last month saw every state in the union report a decrease in the number of employed persons.  This is quite a negative signal for the economy, and one that is not getting much press, certainly not from the soft-landing set.  

I’m not saying that we are going to get a negative NFP print this morning, just that it seems one is coming to a screen near you soon.  If history is any guide, then sometime in Q1 seems realistic.  And ask yourself how Chairman Powell and his friends on the FOMC will respond to that type of data.  They had better hope that the recent trend in inflation, which has clearly been on a downward trajectory, continues, because otherwise, the Chairman will have nowhere to hide.  Cut rates to address economic weakness while stoking still firm inflation?  Leave rates on hold to fight inflation and let growth crater further?  Talk about a rock and a hard place.

It seems to me that the evidence continues to pile up on the side of a recession coming early next year.  Absent another wave of MMT or helicopter money or some type of direct fiscal stimulus by the federal government, this business cycle seems destined to end soon.  The bond market has been telling us that since the beginning of last month.  The oil market has been telling us that since the beginning of last month too.  The stock market has still not gotten the message.  It will, trust me, and it won’t be pretty.  However, I don’t think today is the day it will happen.  Just be prepared.

So, how have markets performed leading up to the NFP data?  Well, following yesterday’s rally in US stocks, Asia had a mixed picture.  Japanese equities continue to be pressured by a combination of concern over tighter monetary policy and a strengthening yen.  There was, however, a bump on the road to that tighter policy thesis as Q3 GDP was revised lower to -2.9% Y/Y, with the M/M falling -0.7%.  Will they really tighten policy into a shrinking economy?  Meanwhile, despite the word from the Chinese Politburo that they would be adding more fiscal stimulus in 2024, shares in Hong Kong and on the mainland barely eked out gains of 0.1%.  The rest of APAC, though, had a decent performance, with gains ranging from 0.3%-0.9%.

European bourses are in good shape today, with green across the board, albeit some just barely (DAX +0.1%) and some more robustly (CAC +0.7%).  Finally, US futures are edging lower, -0.2% or so, as I type (7:30am).

In the bond market, yields, which as we know have been trending sharply lower since early November, are rebounding slightly this morning with Treasuries up 3bps and European sovereigns all showing increases of between 5bps and 9bps. That seems a bit odd to me as there has been no data indicating inflation is rising or growth is impressive of late.  In fact, the Eurozone inflation data continues to point to deflation as Germany’s final reading came in at -0.4% in November.  In fact, as much as markets are expecting the Fed to cut rates soon, with a 60% probability now priced in for the March meeting, I suspect that the ECB is going to be cutting before the Fed as Eurozone growth and inflation are falling rapidly.  As to JGB’s, yields there edged higher by 1bp overnight and currently sit at 0.75%, certainly not pressing on the 1.00% cap.  

Turning to the commodity markets, oil (+2.2%) has finally found its footing with WTI back above $70/bbl.  While there continue to be rumors that OPEC+ is going to cut production further, this feels much more like a trading bounce than a structural move.  Interestingly, industrial metals are having a very good day with both copper and aluminum higher by 1% or more although gold is unchanged on the day.  Ordinarily, I might attribute that to a weaker dollar except that the dollar’s not weaker this morning.

Speaking of the dollar, if you remove the yen from the equation, it has, in truth, been reasonably strong.  Perhaps a better description is that other currencies have been weak as things like European economic doldrums weigh on those currencies while declining oil prices weigh on the petro-currencies.  Now, for all the JPY bulls out there, be careful as the weakening GDP growth and the fact that the most recent CPI data, while still above target, started to decline means that there is less pressure on Ueda-san to change policy.  Yes, they have started to discuss the idea of lifting rates out of negative territory, but they have also been quite clear that they need to see wage gains and the wage story really won’t be clear there until the March wage negotiations are completed.  All I’m saying here is that we have come quite a long way in less than a month.  Do not be surprised by a sharp rebound that wipes out a lot of profit and positions.

And that’s really it for the day.  At 10:00 we also see the first cut of the Michigan Sentiment Index (exp 62.0) as well as the concurrent inflation expectations indices (1yr 4.5%, 5yr 3.3%).  But by then, I expect that the excitement will have passed, and the market will be following whatever trend develops from the payrolls.  If pressed, I expect a softer number, something like 100K and a tick higher to 4.0% on Unemployment.  If that is correct, I expect that the market will continue with its ‘bad news is good’ concept and buy stocks in anticipation of Fed rate cuts.  But remember, virtually every time the Fed is cutting rates aggressively because economic activity is declining, risk assets are being sold, not bought.

Good luck and good weekend

Adf

Bad News is Good

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It seems that when bad news is good
Some things are not well understood
So, risk assets rally
And traders who dally
Miss out making gains that they could

But that was the story last week
And looking ahead we shall seek
The narrative changes
That altered the ranges
Of assets that used to look bleak

It has been a pretty quiet session overall and, in truth, the upcoming week does not look all that interesting from a market perspective.  While we do get the RBA policy announcement tonight (exp 25bp hike to 4.35%), and a great deal of Fedspeak including Powell on both Wednesday and Thursday, from a data perspective, there is nothing of note on the horizon.

As such, I feel like it is a good time to review the recent data and policy decisions that have led to the market gyrations through which we have been living.  If you recall, heading into last week, the narrative had been focused on the continued bear steepening of the yield curve as bond yields were rising on the anticipation of a significant increase in supply.  This movement was weighing on equity markets, which had just finished an awful week.  While risk was under pressure, we saw dollar strength although oil markets were in the midst of pricing out an expansion of the Israeli-Hamas conflict into a wider Middle East war impacting oil production or shipments.  Generally, the mood was bearish and there were many questions as to the timing of the much-anticipated recession.

And then last week turned almost everything on its head.  Starting with the BOJ, which adjusted its YCC policy again, although in a more flexible manner, removing the hard cap on yields at 1.00% and instead calling that a goal, rather than a cap.  Not surprisingly, the first move was for JGB yields to rise sharply, although they have not yet touched 1.00%, and, also, not surprisingly, the BOJ was in the market with an unscheduled round of JGB purchases the next day.  In the end, I think it is fair to say that while the BOJ is still running the easiest monetary policy in the world, it is somewhat tighter at the margin.

Meanwhile, the Fed’s reaction function seems to have been adjusted by the bond market’s bear steepening price action.  Several weeks prior to the FOMC meeting last week, Dallas Fed President Lorrie Logan was the first to mention that higher long-dated yields were tightening financial conditions and doing some of the Fed’s work for them.  Subsequently, we heard several other Fed speakers reiterate that idea, with some going as far as saying they thought it was worth between 50bps and 75bps of tightening.  At the FOMC press conference last Wednesday, Chairman Powell jumped on that bandwagon, and though he attempted to sound somewhat hawkish, claiming that they remained data dependent and if inflation remained hot, they would hike again, nobody really believes him anymore.  According to the Fed funds futures market, the current probability of a rate hike in December is down to 9.8%.  That was nearly 30% just before the FOMC meeting and has been sliding ever since.

It seems fair to ask, what has changed all these attitudes?  I would argue that the Treasury’s Quarterly Refunding Announcement (QRA) which is generally completely under the radar, was the big news that altered the narrative.  Then, adding to the new momentum, we got clearly weaker than expected employment data, implying that the Fed’s data dependence was going to be heading toward rate cuts sooner rather than rate hikes at all.

Briefly, the QRA is, as its name suggests, the document the Treasury issues each quarter to inform the market of how much new Treasury debt will be issued for the next two quarters, as well as the anticipated mix of issuance between T-bills and longer dated coupons.  In the most recent version, Secretary Yellen indicated that the Q4 issuance would be lower than had previously been expected, and she also indicated that a greater proportion would be in T-bills than expected.  The combination of these two features cut the legs out from under the oversupply issue, at least temporarily (there is still an enormous amount of debt coming) and combined with what had clearly been developing short bond positions by the hedge fund and CTA communities, saw a major reversal in bond prices with yields declining > 40bps last week.

It should be no surprise that stock markets took that news and ran with it.  Part of the previous narrative was the continuous rise in yields was devaluing future earnings in the equity market.  As well, earnings season saw decent numbers, but lots of lower guidance by company management downgrading future assessments.  While Q3 GDP was a hot, hot, hot 4.9%, the Atlanta Fed’s first look at Q4 GDP is for a much more sedate 1.2%.  If that is what Q4 is going to look like, it is hard to get excited about earnings growth.  So, prior to last week, equity markets had declined ~10% from their recent highs, a very normal correction, and the big question was, is this the beginning of the next leg lower in a longer-term bear market, or was this just a correction?

Taken together, and adding in a much weaker than forecast NFP report on Friday, where the headline number fell to 150K, and there were revisions lower for the previous two months by an additional 40K while the Unemployment Rate ticked up to 3.9%, its highest print since January 2022 and 0.5% higher than the cycle lows, the new market narrative seems to be as follows: the Fed is done hiking and the only question is when they will start to cut rates.  The high in longer-term yields has been seen as well since the data is starting to roll over.  This will lead to further downward pressure on inflation and the soft landing will be completed.  The upshot of this narrative is, of course, BUY STONKS!!!

And that was the outcome from Wednesday on last week, a major reversal in equity market weakness, a huge rally in bond prices and decline in yields and a general warm and fuzzy feeling.  And who knows, maybe they will be correct.  But…

  1. The combination of higher stocks and lower bond yields has eased financial conditions considerably in just the past week.  This implies the Fed may be forced to act to continue their program lest inflation reasserts itself.
  2. The idea that slowing growth is a positive for equity prices seems a bit skewed as slowing growth typically leads to weaker profits.
  3. Inflation is not dead yet, and the most recent Core PCE reading did not indicate that it is slowing that rapidly.  As can be seen from the chart below, 0.3% M/M PCE equates to 3.6% annual, well above the Fed’s target.

While I believe that the market is going to run with this narrative for a while, and we could easily see stocks continue to rebound and yields grind a touch lower, I fear that reality will set in soon enough and these moves will prove ephemeral.

Tying this up with a bow on the dollar leaves me with the following view; as long as this current narrative holds, the dollar will remain under pressure.  I suspect this can last through the end of the year, although much beyond that I am far less certain.  I would contend there are two ways things can evolve from here:

  1. This relaxation in financial conditions forces the Fed to reassert themselves and they start hiking rates again.  In this case, the dollar will once again rise as no other central banks will have the ability to keep up with a newly hawkish Fed, or
  2. The much-anticipated recession finally shows up, perhaps in Q1 2024, and the Fed, after a little hesitation starts to ease policy.  However, by that time, I suspect that the rest of the world will also be in recession and central banks elsewhere will be cutting rates even more quickly.  While the dollar is likely to slide initially, I don’t think it will decline very far as in that situation, it seems likely that the US will remain the proverbial ‘cleanest shirt in the dirty laundry.’

As for today, it is hard to get excited about anything really, at least with respect to the FX market.

There will be no poetry tomorrow, but I will return on Wednesday.

Good luck

Adf

Naught Left to Wield

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The PMI data revealed
The Continent’s yet to be healed
The second wave’s crest
Must still be addressed
And Christine has naught left to wield

It appears as though the market reaction function has returned to ‘bad news is good.’  This observation is based on the market response this morning, to what can only be described as disappointing PMI data from Europe and Japan, while we have seen equity markets higher around the world, bond yields generally declining and the dollar under pressure.  The working assumption amongst the investment community seems to be that as economic weakness, fostered by the much discussed second wave of Covid infections, spreads, it will be met with additional rounds of both fiscal and monetary stimulus.  And, this stimulus, while it may have only a marginal impact on economies, is almost certainly going to find its way into investment portfolios driving asset prices higher.

Unpacking the data shows that France is suffering the most, with Manufacturing PMI declining to 51.0 and Services PMI declining to 46.5, with both of those falling short of market expectations.  Germany, on the other hand, saw Manufacturing PMI rise sharply, to 58.0, on the back of increased exports to China, but saw its Services data decline more than expected to 48.9.  And finally, the Eurozone as a whole saw Manufacturing rise to 54.4 on the back of German strength, but Services fall to 46.2, as tourism numbers remain constrained, especially throughout southern Europe.

This disappointment has analysts reconfirming their views that the ECB is going to increase the PEPP by €500 billion come December, with many expecting Madame Lagarde to basically promise this at the ECB meeting next week.  The question is, will that really help very much?  The ECB has been hoovering up huge amounts of outstanding debt and there is no indication that interest rates on the Continent are going to rise one basis point for years to come.  In fact, Euribor rates fell even further, indicating literally negative concern about rates increasing.  And yet, none of that has helped the economy recover.  While the ECB will offer counterfactuals that things would be worse if they didn’t act as they have been, there is no proof that is the case.  Except for one thing, stock prices would be lower if they hadn’t acted, that much is true.  However, in their counterfactual world, they are focused on the economy, not risk assets.

The message to take away from this information is that the second wave of infections is clearly on the rise in Europe, (>217K new cases reported yesterday), and correspondingly as governments react by imposing tighter restrictions on activities, specifically social ones like dining and drinking, economic activity is going to slow.  At this point, estimates for Q4 GDP are already sliding back toward 0.0% for the Eurozone as a whole.

One last thing, the weakening growth and inflation impulses in Europe is a clear signal to…buy euros, which is arguably why the single currency is higher by 0.25% this morning.  Don’t even ask.

A quick look at the UK story shows PMI releases were also slightly worse than expected, but all well above the critical 50.0 level (Mfg 53.3, Services 52.3, Composite 52.9).  While these were softer than September’s numbers, they do still point to an economy that is ticking over on the right side of flat.  Retail Sales data from the UK was also better than expected in September, rising 1.6% in the month and are now up 6.4% Y/Y.  Despite all the angst over Brexit and the mishandling of the pandemic by Boris, the economy is still in better shape than on the Continent.  One other positive here is that the UK and Japan signed a trade deal last night, the UK’s first with a major country since Brexit.  So, it can be done.  Ironically, in keeping with the theme that bad news is good, the pound is the one G10 currency that has ceded ground to the dollar this morning, falling a modest 0.15%, despite what appear to be some pretty good headlines.

And that is pretty much the story this morning.  Last night’s debate, while more civil than the first one, likely did nothing to change any opinions.  Trump supporters thought he won.  Biden supporters thought he won.  Of more importance is the fact that the stimulus discussions between Pelosi and Mnuchin seem to be failing, which means there will be nothing coming before the election, and quite frankly, my guess is nothing coming until 2021 at the earliest.  If this is the case, the stock market will need to refocus on hopes for a vaccine, as hopes for stimulus will have faded.  But not to worry, there is always hope for something (trade deal anyone?) to foster buying.

So, let’s quickly tour markets.  Asian equities were generally on the plus side (Nikkei +0.2%, Hang Seng +0.5%), but Shanghai didn’t get the memo and fell 1.0%.  European indices have been climbing steadily all morning, with the DAX (+1.2%), CAC (+1.55%) and FTSE 100 (+1.7%) all now at session highs.  Meanwhile, US futures, which had basically been unchanged earlier in the session, are now higher by 0.3% to 0.5%.

Bond markets are actually mixed at this time, with Treasury yields edging ever so slightly higher, less than 1bp, with similar increases in France and Germany.  The PIGS, however, are seeing demand with yields there lower by between 1bp and 3bps.  As an aside, S&P is due to release their latest ratings on Italian debt, which currently sits at the lowest investment grade of BBB-.  If they were to cut the rating, there could be significant forced selling as many funds that hold the debt are mandated to hold only IG rated paper.  But it seems that the market, in its constant hunt for yield, is likely to moderate any impact of the bad news.

As to the dollar, it is broadly, but not steeply, weaker this morning.  AUD (+0.35%) is the leading gainer in the G10 bloc as copper prices have been rising on the back of increased Chinese demand for the metal.  Otherwise, movement in the bloc remains modest, at best, although clearly, this week’s direction has been for a weaker dollar.

In the emerging markets, most currencies are stronger, but, here too, the gains are not substantial.  HUF and CZK (+0.35% each) are the leaders, following the euro, although there is no compelling story behind either move.  The rest of the bloc is generally higher although we have seen some weakness in TRY (-0.35%) and MYR (-0.3%).  The lira is still suffering the aftereffects of the central bank’s surprise policy hold as many expected them to raise rates.  Rationale for the ringgit’s decline is far harder to determine.  One last thing, there was a comment from the PBOC last night indicating they were quite comfortable with the renminbi’s recent strength.  This helped support further small gains in CNY (+0.2%) and seems to give free reign for investors to enter the carry trade here, with Chinese rates substantially higher than most others around the world.

On the data front here, yesterday saw the highest Existing Home Sales print since 2005, as record low mortgage rates encourage those who can afford it, to buy their homes.  This morning brings the US PMI data (exp 53.5 Mfg, 54.6 Services), but recall, that gets far less traction than the ISM data which is not released until Monday, November 2nd.  As to Fed speakers, we are mercifully entering the quiet period ahead of the next FOMC meeting.  But the message has been consistent, more fiscal stimulus is desperately needed.

As the weekend approaches, I would not be surprised to see the dollar’s recent losses moderated as short-term traders take risk off the table ahead of the weekend.  At this point, having broken through a key technical level in EURUSD, I expect an eventual test of 1.20, but once again, I see no reason for a break there, nor expect that if the dollar does fall to that level, it will be the first steps toward the end of its status as a reserve currency.

Good luck, good weekend and stay safe
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