Global Macro Update

Dangerous fault line is opening? as the negotiations between? U.S. and Russia get underway this week in which? Ukraine and Europe have not been invited to attend. This may well mark the advent of? twilight of NATO as Europe can no longer count on US protection as much as it did in the past.

For European members of NATO the future suddenly looks a whole lot more uncertain, whereas Moscow is gloating at? relegation of Europe to being a? bystander.Under a "dirty-deal" -induced rapid sanctions relief,? gas prices might? fall, which would push inflation expectations lower. EUR/USD could see a short-lived lift in a knee-jerk reaction,but its tough to visualise Europe without US protection.

Over the last year, European defence spending jumped by 11.7% in real terms to USD 457 bio- marking tenth consecutive year of growth. Now Europe has to spend more on Defence.

Markare regarding any tariff threat? as no more than tail risk. Perhaps that speaks to the look and feel on tariffs now as compared to before Trump's inauguration. That especially since he isn't really hitting hard at China in particular

.Jan Retail sales disappointed, but it might not be as bad as the headline numbers suggest as winter weather and California wildfires likely played a role .

Security concerns over shadow Economic -Zew may not matter - Set for testing Fri 1.0447 low & then Thurs 1.0374 base - 1.0450 option expiries too huge .

Xi attended a meeting with Chinese key private sector leaders and gave a supportive speech - garnered a great deal of attention, as such a meeting had not taken place since late 2018 - represents a show of support from central govt to private enterprise.

In the bigger picture , there is a growing? realisation? putting entitlement spending at the forefront of economic policies has led to decades of stagnation, high debt ,deficit & social discontent. Today , labour market report is one to watch out for -Set to test Friday's 1.2550 low & Thursday's 1.2442 base below 1.2616.

Q4 GDP showed economy expanding for third straight quarter- exports especially to US that made this possible.Rising bets for? BoJ rate rise - may not materialise - 151.30 holds - so the bullish USDJPY view prevails Close above 152.50 would bolster

Time for the consolidation 86.75-86.95 to end & the USDINR upmove to resume -?