strange correlation in the market today. Ever since Draghi's "get used to volatility" speech, EUR/USD and bunds on Eurex tracked each other in the usual direction, EUR/USD rallying with Bunds sell-off.
Some thing is different today, with the correlation flipped. The Euro selloff matched with Bunds selloff and after US PPI data, the correlation stayed positive. It is not obvious what caused this sign change. Euro rallied in general along with most other currencies, so probably Bunds not leading Euro.
Whichever way it is, it makes sense to stay short Euro overnight. It is hard to see we will have some great news on the Greece negotiations over the week end with everyone pushing the deadline to 18th Euro Finance Ministers meetings. But we can always have further bad news. The day to watch, however, will be the inflation prints for UK and Eurozone early next week. Any great print, we will see a firm rally in Euro and Bunds will be back in steps with the usual correlation.
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