Business

The currency markets are signalling that a massive shift might be about to happen.

According to a Bank of America/ Merrill Lynch fund manager survey, the US Dollar ($USD) is the single most crowded trade on the planet.

In a fiat world, the value of a given currency is based on where it trades relative to other currencies. In the case of the $USD, the Euro comprises 56% of the basket of currencies against which the $USD is valued.

Put another way, whatever happens to the Euro will effectively trigger an inverse reaction in the $USD.

If yesterday's exuberant spike in stocks (surging Dow above 21,000), on a day when economic growth expectations were crushed, was not enough to scare you about the ebulient animal spirits in the markets, then perhaps this will. The largest S&P 500 ETF (SPY) was inflows of $8.2bn - the biggest daily inflow since Dec 2014 (and second largest in 6 years).

In the past, these massive floods of retail panic-buying flows have stalled the rallies (and not ended well).

From Mark Cudmore, a former FX trader who writes for Bloomberg

March Hike Is Now Base Case as U.S. Data Game Shifts: Macro View

Lael Brainard’s hawkish comments confirm that a March rate rise must now be the base case for investors, and it’s unlikely the upcoming data even matters.

Brainard is not only part of the Fed’s core, she’s arguably the most dovish member of it. When she sends a hawkish message, you need to pay attention.

The month of February was a mixed to positive among a broad sample of assets.

Trump Avoid Debt Crisis ? "Extremely Unlikely" says Rickards

The upcoming March 15 U.S. debt ceiling deadline is something that is being largely ignored by markets and most media for now. Despite it being just 9 trading days away. This will change in the coming days and is one of the many reasons why we are bullish on gold.

Source: CNN