…while patting myself on the back for my call last week that China is unlikely to lead us out of recession. Today’s horrifying trade figures have undermined that view to a significant degree.
There remains a degree of reflation optimism this morning but it is being led by the US, not China. Yesterday’s news that Citi turned a profit for the first two months of 2009 along with hopeful signs from Washington on modest restrictions on short-sellers and to accounting rules helped spur a short-covering rally in stocks that continues through this morning. S&P futures are up more than 1% at writing.
EUR/USD is firming in recent ranges, buoyed by equities. Expect sellers in the 1.2810/20 area if the rebound continues.
