Forex
30 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
Business managers in Chicago have figured out that a V-shaped recovery will not happen in their area. The business barometer, which is a survey based on responses about the business outlook from managers in the Chicago area, came out at 46.1 - indicating contraction. Investors rushed to offload any US stocks they owned and the S&P 500 quickly lost a staggering 14 points.
30 September 2009
Alan Plaugmann, Deputy Head of CFDs and Listed Products, Saxo Bank
Crude oil and gasoline inventories exploded last week – in the numerical sense rather than the incendiary – and we expect that today’s numbers from the US Department of Energy to also show a large build up. We remain slightly bearish on the back on fundamental inventory data and implied demand (which puts demand back at around 2001-2002 levels).
30 September 2009
John J. Hardy, FX Consultant, Saxo Bank
USD bears caught in a bit of a squeeze on SNB intervention
30 September 2009
Robin Bagger-Sjöbäck, Research Analyst
For the first time in history the FDIC and its Deposit Insurance Fund (DIF) has approved a proposal allowing prepayment of quarterly assessments, to keep the fund balance positive. We believe this will result in more banks classified as “troubled banks” and ultimately lead to a rise in failures.
30 September 2009
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
Despite yesterday's disappointing numbers from the US consumer equities did not close significantly lower. Momentum in equity markets is currently very strong and our stance is still buy on dips.
- The FDIC is running out of money after 140 bank failures. The agency is now proposing to let banks paythree years of premiums in order to recapitalize the Deposit Insurance Fund. This amounts to around $10bn for the four biggest US banks alone.
- The Conference Board Consumer Confidence unexpectedly dropped to 53.1 (expected at 57.0). Stocks dipped at the release, but seemed to stabilize.
- The FX market is a bit mixed. USD lower, but JPY higher. Commodities are being picked up and HY close to new highs. The trend in stocks is still higher, so we maintain a 'buy-on-dips' stance for the short-term.
30 September 2009
Andrew Robinson, FX Analyst, Saxo Capital Markets
When it comes to consumer confidence, it would appear that the UK is now riding high above the US, a sharp contrast to the actual performance of the respective economies. Yesterday, US consumer confidence disappointed with a weak 53.1 reading, down from the previous month’s 54.5 and an expected improvement to 57.0.
29 September 2009
John J. Hardy, FX Consultant, Saxo Bank
But tomorrow could be a wild day for increasingly volatile JPY
29 September 2009
Robin Bagger-Sjöbäck, Research Analyst
Confidence indicators have been released in both the Eurozone as well as the US today. The Eurozone offered some mixed results, with Industrial and Service Confidence meeting expectations, while Economic and Consumer Confidence both came out above consensus.
29 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
US homeowners can calm down a bit as home values are on the rise again. The housing market appears to be firmly on its way to recovery as another report indicates that house prices are going up. The housing market has been in distress ever since 2006, but today’s Case-Shiller Home Price Index is a step in the right direction.
29 September 2009
John J. Hardy, FX Consultant, Saxo Bank
Euro struggling under the weight of EURGBP selling...
29 September 2009
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
Credit markets lead equity markets. Since the Lehman collapse we have seen spreads in credit markets contracting between corporate bonds and US Treasuries. The spread levels prior to and around the Lehman collapse indicated that the systemic risk was high. Risks have now normalized due to aggressive policy and stabilization in the financial system and the spreads have now retreated to pre-crisis levels. Despite having rallied over the past weeks, we expect credit will continue to perform for a while (and equities to follow along)
29 September 2009
David Karsbøl, Chief Economist, Saxo Bank
UK Q2 GDP and September Eurozone confidence figures were out earlier today with no real surprises and the market has traded in a tight range.
29 September 2009
Nick Beecroft, Senior Markets Consultant
Amongst the major currencies, sterling is once again stealing the limelight. Recent comments from Mervyn King and from BOE Chief Economist Spencer Dale, to the effect that a depreciation of sterling would be beneficial to the economy, are very significant. These gentlemen will be only too aware of the effect on the markets that such comments will have.
29 September 2009
David Karsbøl, Chief Economist, Saxo Bank
Government stimulus packages and re-stocking of inventories will bring the US economy positive growth in the second half of 2009, but the recovery may be short-lived, according to Saxo Bank's Q4 Outlook
29 September 2009
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
With USD and JPY weakening again and high yield bonds posting new highs risk appetite is still on.
- Signs of risk-appetite: USD and JPY weakening again. HYG posting a strong candle and making new highs.
- Stocks are higher in a strong reversal and we maintain our short-term stance of 'buy-on-dips'.
- One caveat: Today's Conference Board Consumer Confidence is expected at 57, but the weekly ABC Consumer Confidence has not been improving noticeably in the past weeks. Expect a slight disappointment.
- Look out for DAX upside, could be boosted by the positive election outcome.
29 September 2009
Andrew Robinson, FX Analyst, Saxo Capital Markets
Dollar bulls that went home happy at the end of the Asian session yesterday were in for a surprise during the night. A strong performance by equity markets in the face of renewed M&A talk and greater optimism about prospects in the financial sector put a brake on the dollar’s gains.
28 September 2009
John J. Hardy, FX Consultant, Saxo Bank
Is the Yen switching gears?
28 September 2009
Despite disapointing numbers from the US equity markets are most likely going to be led higher by credit markets that will push equities higher. Beginning signs of risk-aversion in the FX market: USD and JPY strengthening at the expense of EUR and AUD. GBP under severe pressure. Shanghai Composite down again.
28 September 2009
Andrew Robinson, FX Analyst, Saxo Capital Markets
In the end it was a definite “risk off” day of Friday as weak US data in the form of durable goods and new home sales outweighed any positives to be gleaned from a final Michigan sentiment survey at its highest level since early 2008.
25 September 2009
John J. Hardy, FX Consultant, Saxo Bank
JPY stronger as USDJPY punctures big 90.00 level and bonds maintain the rally impulse
25 September 2009
John J. Hardy, FX Consultant, Saxo Bank
Market churning back and forth, putting status of USD consolidation in doubt...
25 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
Workers can slow down in the coming months and factories can close some plants as production is lowered in response to the decline in orders for durable goods. The durable goods orders report for August is out and it reveals that orders decreased 2.4%. This indicates that orders are flowing in to companies in the US at a slower pace than was the case the month before. Factories need to respond to this decrease in orders. And fewer orders mean lower sales.
25 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
The USD received some support from the Fed announcement on TAF and TLSF. Watch out for American data today (especially New Home Sales), are we heading south in equities?
25 September 2009
Andrew Robinson, FX Analyst, Saxo Capital Markets
Markets were impressed by the US initial jobless claims data and this appeared to but a cloud over the USD bulls that had gathered during the Asian session yesterday. However, the euphoria failed to last and the greenback was back in favour as existing home sales data disappointed.
24 September 2009
John J. Hardy, FX Consultant, Saxo Bank
The after-FOMC turns out to be far more exciting than the event itself...risk bulls stumble.
24 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
Sales of existing homes in the US fell 2.7%, well under analsts' estimates. Stocks got killed (and even more when the Fed announced its decision on TAF and TSLF). The FX market also reacted strongly to the news and the EURUSD has now declined roughly 40 pips.
24 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
Americans, who take a look around at their jobs, see fewer colleagues missing from their work stations. Today’s report on unemployment benefits reveals that the number of Americans who are forced to apply for financial support from the government declined by 21,000, last week. This was the third straight weekly drop in claims. And it shows that even though many Americans still struggle to hang onto their jobs, the situation is improving.
24 September 2009
John J. Hardy, FX Consultant, Saxo Bank
Market seems to be taking FOMC outcome into stride as risk bulls attempting another stampede...
24 September 2009
Robin Bagger-Sjöbäck, Research Analyst
IFO surveys released today show more positive sentiment and expectations about the economic future in Germany. As expected, the IFO surveys followed the ZEW surveys released nine days ago. Expectations for both were a bit too optimistic, leaving the actual figures above prior readings but still short of consensus.
24 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
The Fed extended the asset purchase program deadline to March, but nevertheless stated that the economy has picked up.
- Mixed signals from central banks: The Federal Reserve will keep interest rates low for another period and also extended the asset purchase program to March, while Canada and Norway is signaling that they are ready to hike; stocks will be supported by the Fed's statement, but once other central banks start to signal hiking interest rates stocks will be under pressure.
- Initial Jobless Claims surprised to the upside last week due to Labor Day. Watch out for a worse than expected number today as those first time claimants who missed out will make sure that they get benefits this time.
- Hennes & Mauritz reported Q3 results earlier today. Net income rose to SEK 3.46bn (3.33bn), which was slightly below the SEK 3.5bn estimate
24 September 2009
Andrew Robinson, FX Analyst, Saxo Capital Markets
There was something for everyone in last night’s FOMC statement with doves welcoming the fact the “economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period” , while hawks latched on the (marginally) more optimistic tone for the economic outlook.
23 September 2009
John J. Hardy, FX Consultant, Saxo Bank
The kneejerk reaction in risk hasn't held - will the risk juggernaut pause for breath here?
23 September 2009
John J. Hardy, FX Consultant, Saxo Bank
Speculation is rampant on Fed's monetary policy statement - USD may consolidate stronger for the shortest term almost regardless of the outcome today
23 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
Stocks rose in Asia on speculation the Group of 20 Nations will maintain measures to lift the global economy out of its slowdown and this will lead European equities higher as well.
22 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
The value of American homes rose by 0.3% in July and indicates that the housing market has reached a bottom in the US. The housing market has suffered severely, but today’s report is another sign that the market has troughed and is now on its way to recovery. Sales have been on the rise for some months now, and now house prices are following along. We remain concerned, however, that the improvement in the housing sector may in part be due to government interference in the shape of the tax credit to first time homebuyers.
22 September 2009
John J. Hardy, FX Consultant, Saxo Bank
FX traders might as well be buying and selling equities lately...
22 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
Retailers saw an unexpected decline of 0.6% in sales in July after two good months in May and June. Retailers have already had to endure a difficult six months with low sales and today’s report will do nothing to convince Canadian retailers that the recession is over.
22 September 2009
Robin Bagger-Sjöbäck, Research Analyst
22 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
- The Fed’s second-quarter survey of senior loan officers showed U.S. banks tightened standards on all types of loans and said they expect to maintain strict criteria on lending until at least the second half of 2010. This is driven by Fed’s ambition to have banks raising capital and will most likely curb growth in private consumption.
- Asian stocks rose for the first time in three days as brokerage upgrades fueled speculation that regional equities can extend a six-month rally. We expect this to be repeated once we are getting closer to the earnings season; upward revisions will drive equities higher.
22 September 2009
Andrew Robinson, FX Analyst, Saxo Capital Markets
The dollar’s recovery which started so well at the beginning of the week appears to be running out of steam already, at least judging by today’s action in Asia. The rebound was starting to look less-convincing as the NY session came to a close and US bond yields drifted back.
21 September 2009
John J. Hardy, FX Consultant, Saxo Bank
Uncertainty continues ahead of Wedensday's FOMC meeting.
21 September 2009
John J. Hardy, FX Consultant, Saxo Bank
USD moving stronger and JPY weaker: moves of consolidation only?
21 September 2009
Andrew Arnold, Trading Floor Editor
The global recovery, fueled by loose monetary and fiscal policies, is sowing the seeds for the next bubble. The continuation of these policies is good for emerging market assets according to the latest Emerging Markets Outlook from emerging assets manager Global Evolution.
Global Evolution expects the major central banks of the world to remain generous by flooding the market with ample cheap liquidity.
21 September 2009
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
- G20: A lot of focus on decreasing leverage in the financial system, increase liquid asset holdings and reducing bank bonuses. The long-term effect is a negative for financial stocks, but this outcome is in our view already priced-in and financials are already on their way towards reducing leverage. DJ Financials are up 10% in the past two weeks.
- US Dec-2009 10-Years Treasuries setting up for a break of 116.50. Shanghai Composite strongly reverses from new lows overnight.
21 September 2009
Robin Bagger-Sjöbäck, Research Analyst
Last Thursday, the FED released their Flow of Funds report for the second quarter.
From the introductory section, at the end of Q2 2009;
- domestic nonfinancial debt amounted to $34.4tn up by $500bn from $33.9tn in Q1 2009
- household debt shrank to $13.7tn from $13.8tn, while
- government debt increased by $500bn to reach $9.5tn in total
18 September 2009
John J. Hardy, FX Consultant, Saxo Bank
A little pause today in the wake of recent March of the Bulls...
18 September 2009
Ole S Hansen, Senior Manager, Saxo Bank
The dollar (1% lower) and the stock markets (S&P 2.5% higher) continued their slow grinding move in opposite directions this week thereby continuing to lend support to commodity prices.
The gold rally headed into its fifth week albeit at a slower pace as the all-time high from 2008 at USD1,032.70 is looming large. On the previous two occasions we reached and traded above USD1,000, a major correction followed after a few days.
18 September 2009
John J. Hardy, FX Consultant, Saxo Bank
USD making fitful rally attempts ahead of the weekend...
18 September 2009
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
US housing data and labour market data highlighted yesterday that the US economy is still fragile. We expect today's trading to be quiet due to lack of known events that could move markets.
18 September 2009
Andrew Robinson, FX Analyst, Saxo Capital Markets
The three-day Wall Street rally, firmness in commodities and weaker dollar came to near-term halt late yesterday, even though US data held nothing to really disappoint
17 September 2009
John J. Hardy, FX Consultant, Saxo Bank
EURUSD marching higher and higher - but is it getting a bit lonely at the top?
17 September 2009
John J. Hardy, FX Consultant, Saxo Bank
Is market getting a little complacent on recent trends as we head into the end of the week?
17 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
545,000 Americans applied for unemployment benefits for the first time last week. This was better than expected by analysts, who were actually predicting that the number would increase relative to last week. Initial jobless claims have fallen a lot since the highs earlier in the year, but many Americans are still forced to apply for jobless claims each week.
It is deeply troubling that after so many months with a recession we still have more than half a million Americans applying for initial jobless claims each week.
17 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
Retail sales as measured by volume were flat month-to-month in the United Kingdom, which was slightly worse than predicted by analysts. Sales were mainly driven by consumer spending on food stores while consumers cut back on spending on clothing.
17 September 2009
Stocks took off again yesterday and we see no reason to change our stance; buy on dips in equities with a mid-term target of 1,121 in S&P500.
17 September 2009
Andrew Robinson, FX Analyst, Saxo Capital Markets
16 September 2009
John J. Hardy, FX Consultant, Saxo Bank
A crazy day for JPY crosses.
16 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
The automakers were busy in August in an attempt to keep up with the demand from the stimulus program known as Cash for Clunkers. Industrial production in other sectors also increased, and all in all production increased 0.8% - much better than the 0.5% expected by economists.
The previous month saw an increase of 1.0% and together these two months show considerable improvement over previous months in 2009. Government stimulus programs, such as the auto rebates and the first time homebuyer tax credit, have certainly made an impact on production during the summer.
16 September 2009
John J. Hardy, FX Consultant, Saxo Bank
Greenspan roils the bond market with comments about congressional spending risks. USD finds a modicum of support on the comments....
16 September 2009
David Karsbøl, Chief Economist, Saxo Bank
An additional 24,400 Britons received unemployment benefits in August. This was slightly better than expected by analysts, who had anticipated that 25,000 Britons would receive jobless claims.
The jobless claims change number in the UK refers to the change in the number of unemployed workers who receive claims and are actively seeking employment.
16 September 2009
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
Watch out for a strong industrial production number due to cash for clunkers.
- Gold again rallying on new USD lows. Break-Even Inflation Rates edging higher after higher than expected PPI and Retail Sales figures yesterday.
- Shanghai Composite was strongly rejected from the lows and is back above 3000. Other Asian markets also performing well.
- High Yield universe is still doing well. Oil, AUD, CAD and EUR also making new highs.
- Therefore, we maintain our 'buy-on-dips' stance for equities (and in general risky assets). Mid-term target in S&P 500 still 1121.
16 September 2009
Andrew Robinson, FX Analyst, Saxo Capital Markets
Risk was definitely back on yesterday as US retail sales soared through the roof in August, even if the impact from the “cash-for-clunkers” program was taken out of the equation.
15 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
The shelves of businesses in the US are practically empty as inventories declined yet again in July.
American businesses cut inventories further in July in an attempt to cope with the fall in demand. With demand way down, businesses have wasted little time reducing inventory – the eleventh month in a row with reductions. The latest number for the month of July indicates that managers are still cutting back on inventories, but at a slightly less ferocious pace.
15 September 2009
John J. Hardy, FX Consultant, Saxo Bank
BoE ponders deposit rate cut for banks and GBP pounded for heavy losses. US saw strong Retail Sales advance in August. USDJPY on the bid after US data as bonds feel the pain of a higher than expected US PPI number.
15 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
German investors and analysts are upbeat about the future, according to the ZEW Center for European Economic Research.
The newest survey, which has just published, shows that investor confidence rose from 56.1 in August to 57.7 in September. Analysts, however, had expected an even larger increase to 60.
15 September 2009
Andrew Robinson, FX Analyst, Saxo Capital Markets
The slight risk-averse bias that Asia passed onto Europe yesterday following the weekend “skirmish” on US-China trade tariffs proved short-lived. The dollar’s rebound was unable to take out significant support levels in the major currency pairs and so it was soon “business as usual” with risk on and the dollar back lower.
14 September 2009
Ole S Hansen, Senior Manager, Saxo Bank
Weekly Commodity Update
The main commodity drivers once again for commodity markets were the dollar which made a new 2009 low versus the Euro and the S&P 500 which made a new high for 2009.
One year on from the Lehman collapse the market is full of what it lacked a year ago, namely liquidity. This liquidity continues to look for investment opportunities and it helped drive the dollar lower last week as commodity and other higher risk currencies made good gains. This favourable risk environment also saw stock markets making new highs as the appetite for mergers and bid activity returned.
14 September 2009
Andrew Robinson, FX Analyst, Saxo Capital Markets
While the early part of Friday’s session focused on further USD weakness and lower US yields, sentiment took a bit of a reversal into the NY close, though the JPY still remained the dominant currency. Data releases during the session were more supportive of the “risk on” theme, with the preliminary reading for University of Michigan Confidence coming out far better than expected at 70.2 versus67.5 expected, a strong rebound given the more moribund weekly release of ABC consumer confidence.
14 September 2009
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
Credit markets are still working quite well with oversubscribed HY issuance, we still believe that dips will be a buying opportunity for the short-term.
11 September 2009
John J. Hardy, FX Consultant, Saxo Bank
Trying to extract meaning from today's action...
11 September 2009
John J. Hardy, FX Consultant, Saxo Bank
Only risk aversion can throw the greenback a rope...
11 September 2009
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
Stocks continued higher yesterday and we believe that it is still “risk on”, so expect stocks to go higher today – we still buy on dips. Look for Uni. of Michigan confidence release today.
11 September 2009
Andrew Robinson, FX Analyst, Saxo Capital Markets
Another slippery slope session for the dollar yesterday though once again we failed to make significant headway below recent lows. GBP was the out-performer of the session as short-term speculators, who were positioned for a trimming of the interest paid on bank reserves, scrambled for cover as the bank of England left rates, QE measures and other tolls unchanged.
10 September 2009
John J. Hardy, FX Consultant, Saxo Bank
If the market's are fretting the US administration's profligacy, it is certainly not evident judging from the results of the US T-bond auction today...
10 September 2009
John J. Hardy, FX Consultant, Saxo Bank
GBP launches comeback attempt. USD trying to put up a little resistance on a bit of risk aversion...
10 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
The Trade Balance for July came in slightly below expectations at -$32 billion. This is still much better than the last couple of years where the trade balance was often below -$50 billion.
10 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
The queues outside the jobless claims offices are still very long and more than half a million Americans applied for jobless benefits last week.
550,000 Americans applied for unemployment benefits for the first time last week, according to the Department of Labor. This was slightly better than expected by analysts. The report also reveals that continuing claims dropped somewhat to 6,088,000 - also better than expected. The negative side to the report was that last week’s numbers were revised slightly higher.
10 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
The Bank of England announced today that it will maintain its official bank rate at 0.50% as was widely expected by market participants. All 60 economists surveyed expected this rate and the announcement thus did not cause too much commotion in the markets though Sterling initially spiked around 70 pips versus the US dollar.
While the interest rate announcement was expected at 0.50%, there was some speculation about whether the Bank of England would raise the target amount of the asset purchase programme.
10 September 2009
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
Fed sees improvement in most areas of the economy, but expressed concerns about consumer spending. Watch out for BoE interest rate announcement and jobless claims data.
- The Fed said yesterday that manufacturing had improved in most areas of the broader economy, but at the same time the Fed flagged concern about the health of consumer spending. Retail sales were flat in most regions despite a boost from the government's "cash-for-clunkers" effort.
- High Yield Bonds, EURUSD and crude continued higher supportive for the stock market. Small-caps rallied the most signaling risk appetite in the stock market is very strong.
- Look for initial jobless claims today (important for US consumer sentiment) and BOE interest rate announcement.
10 September 2009
Andrew Robinson, FX Analyst, Saxo Capital Markets
The bias to sell the dollar was evident for most of yesterday’s session but the greenback was able to recover some lost ground into the close.
09 September 2009
John J. Hardy, FX Consultant, Saxo Bank
A few interesting developments on the day, but not enough to upset the apple cart just yet...
09 September 2009
John J. Hardy, FX Consultant, Saxo Bank
USD continues to crumble ahead of important bond auction results.
RBNZ on tap tonight - Bollard will try to throw cold water on the kiwi.
09 September 2009
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
We maintain a buy on dips stance – credit markets still look supported in the short term with HY bonds outperforming IG bonds significantly.
- EURUSD broke 1.45, but gold didn't manage to break the 1006 mark for good. Stocks edged higher in the US session, but Asian markets are down around 1%.
- US Consumer Credit declined a record $21.6B in July (stocks actually rallied intraday on that news), but the Federal debt increased by $111.9B.
- We maintain a buy on dips stance - credit markets still look supported in the short term with HY bonds outperforming IG bonds significantly.
09 September 2009
Andrew Robinson, FX Analyst, Saxo Capital Markets
Various reasons were flying around to explain the dollar’s heaviness, and break lower, at the European open yesterday – gold’s break higher, Chinese concerns about US macroeconomic plans and UN calls for a new global reserve currency among them. Regardless, the dollar’s slide was broad-based and was enough to force a few currencies out of their recent tired ranges.
08 September 2009
John J. Hardy, FX Consultant, Saxo Bank
USD weaker on the day, but CAD the weakest of the weak...
08 September 2009
John J. Hardy, FX Consultant, Saxo Bank
USD capitulates to new lows for the year on renewed risk appetite. AUD rocket ride to be tested with fresh Aussie data tonight.
USD will struggle to find support as long as global markets remain in recovery mode. US weekly confidence up later.
08 September 2009
David Karsbøl, Chief Economist, Saxo Bank
There is a complete disconnect between what ordinary persons see and experience and the perceptions of investors. But as the recently concluded G20 meeting virtually promised to continue the lax monetary policy, lax regulatory standards and lax accounting standards, this is being taken as a positive.
We think the market is poised to either break key-resistance in risky assets (1.45 in EURUSD, 1006 in Gold, 1039 in S&P 500) or to a retracement big time because of the record amount of complacency
08 September 2009
The smoke rising from the chimneys of British factories is thicker these days as goods are spewed out at a rate not seen in many months.
The plants, mines and energy sectors in the UK are producing more goods than at any time since January, according to the newest data for July.
08 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
The market is clearly dominated by irrational exuberance, but until we see credit markets deteriorate again, we have a buy-on-dips stance. This could continue for months.
08 September 2009
Andrew Robinson, FX Analyst, Saxo Capital Markets
Market holidays in the US and Canada ensured that activity in the European session wound down early with levels only marginally changed from the open.
07 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
German factories are again busy places according to the latest factory orders. All months from March have seen monthly increases in orders coming in to the factories, in particular May and June saw big gains in factory orders around 4%, and today’s number did not disappoint with a month-to-month growth rate of 3.5% - a full 1.5%-point above analysts’ expectations.
07 September 2009
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
Despite Friday's release of data from the US labour market stocks showed a very strong session. This will most likely bring European equities higher as US celebrates Labor Day.
- Friday's US labor market data showed a continued deterioration of conditions. Unemployment Rate out at 9.7% vs. 9.5% expected. Participation Rate unchanged at 65.5% and NFP dropped 216K vs. 230K expected. Average Weekly Hours unchanged at 33.1 as expected.
- Stocks gave up 1% at the release, but regained the lost territory and closed higher. The irrational exuberance continues into today's session: The JPY is down and AUDUSD breaks the 0.85 level. Shanghai Composite is up more than 1% and Treasuries are down more than a figure. Our stance today is a 'buy stocks on dip'.
07 September 2009
Andrew Robinson, FX Analyst, Saxo Capital Markets
A mixed reading of the US labour data on Friday ensured a volatile time just after the release. While the headline non-farm payroll number was better than expected at -216k versus -230k, a 49k downward revision to previous data clouded the issue and the unemployment rate leapt to 9.7% from 9.4% previously, much higher than the 9.5% forecast. The reaction in currency and equity markets suggests that the market’s focus was mainly on the headline non-farm payroll data and this was overall seen as a positive report, contrary to our interpretation, though it could be argued that the aggressive dollar selling was into thinning markets and an effort by UK players to squeeze holiday-mode US players. Nevertheless, what activity there was in Asia looked to extend the closing trend, with equity markets pushing higher and the dollar under pressure.
04 September 2009
John J. Hardy, FX Consultant, Saxo Bank
The Daily Reversal Report....
04 September 2009
David Karsbøl, Chief Economist, Saxo Bank
The Unemployment Rate (Aug) came out at 9.7% vs. 9.5% expected, as a stable Civilian Labor Force Participation Rate (it had dropped a total of 0.4% points in June and July) kept the Unemployment Rate much lower than it otherwise would have been.
The Participation Rate came out at 65.5% (unchanged). Lots of +65 year olds had planned to retire these months, but the fact that their 401K’s are now a lot smaller than they had envisaged forces many of them to keep working for longer than originally planned.
04 September 2009
John J. Hardy, FX Consultant, Saxo Bank
US Employment Report: in-line change in payrolls , unemployment rate jumps to 9.7%
Let the three-ring circus of interpretations begin. G-20 this weekend unlikely to discuss currencies.
04 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
An extra 27,000 jobs in Canada were reported in better than expected unemployment figures . The unemployment rate, however, still increased to 8.7% in August, though this was also better than expected. This is only the second month in 2009 where Canada has added more jobs.
04 September 2009
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
Gold has rallied $50 in two days and threatens to break the $1000 mark again. Stocks are at a crossroads trading in a narrow channel and will probably be muted untill the non-farm payrolls and unemployment rate figures later today. There's a real chance that unemployment could surprise at 9.6% and an NFP reading below 250K is neither supported by the Weekly Initial Jobless Claims nor the ADP from Wednesday. Stand by for disappointment today.
03 September 2009
John J. Hardy, FX Consultant, Saxo Bank
Another day, another reversal - what's new? A bit on tomorrow's US payrolls and more..
03 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
While the production of autos, ships, and such is expanding for the first time in 19 months, as we reported on Tuesday, the service industries are still contracting. The ISM Non-manufacturing Index came out at 48.4 for August, which signals that service industries are still contracting, albeit at a slower pace. Today’s index is 2.0 percentage points higher than July’s, but still implies that the service sector has experienced 11 straight months of contraction.
Business Activity, a component of the overall index, which measures the level of activity in the service industries increased after a decrease in July. At 51.3 it is signalling expansion for the first time in 2009.
03 September 2009
David Karsbøl, Chief Economist, Saxo Bank
The OECD might even be right in assuming that growth is coming back in Q3 on a global basis. If it meets forecasts it will still be miserable and hardly covers the population growth. We must begin thinking about how to position ourselves towards global growth. It is about time that the capital flows the other way: to the hard-working, fast growing nations where the marginal utility of the capital will be highest in the longer term. In other words, when allocating capital we want assets that are in general exposed to global growth ex US and ex EZ.
03 September 2009
John J. Hardy, FX Consultant, Saxo Bank
Roller coaster ride within the range is extended for another day. For the Euro, Shanghai provides the ups, ECB the downs...
US ISM Non-manufacturing in-line with expectations - still contracting. US Continuing Claims data sours the US employment picture.
03 September 2009
David Karsbøl, Chief Economist, Saxo Bank
Comments by Jean-Claud Trichet, president of the European Central Bank, following the ECB's decision to keep Eurozone rates unchanged were encouraging, but failed to set the markets alight.
The unanimous decision to keep rates at 1% was deemed "appropriate" by Trichet who pointed to subdued inflation and economic expansion in the coming months.
03 September 2009
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
Keep an eye on the ISM Non-Manufacturing today as it is still expected to come out below 50 (meaning contraction). A reading above 50 would translate into a rally in stocks
03 September 2009
Andrew Robinson, FX Analyst, Saxo Capital Markets
Currency traders were again frustrated yesterday as market direction for the USD appeared to swing with abandon and failed to break out of established ranges. Data releases generally were disappointing with Challenger job cuts out at -13.8%, the ADP employment change coming in at -298k (versus -250k expected) and factory orders only +1.3% versus 2.2% expected. Equity markets reacted with the customary pessimistic air (note the S&P drifted further below the 1,000 mark) but the reaction in currency markets was less obvious. Markets were undecided whether to chase the weak asset=reduced risk appetite = firmer dollar or the weak data=firmer bond markets=weaker dollar correlations.
02 September 2009
John J. Hardy, FX Consultant, Saxo Bank
USD bulls sent back to square one. Quiet in precious metals market turns to storm today.
02 September 2009
John J. Hardy, FX Consultant, Saxo Bank
Market busy going nowhere after yesterday's rush of activity - do we have to wait until Friday for resolution?
EuroZone finance ministers want stimulus train to ride on through 2010. ECB up tomorrow.
02 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
A fresh job report indicates that fewer people have been fired in the US, according to the latest employment numbers from ADP. Not since September 2008 have such a low number of people been fired in a month. Today’s figure from August shows 298,000 more workers were fired than hired in the last month. This is far less than in the months from December 2008 to March 2009 where the net change in employment was (600,000).
02 September 2009
David Karsbøl, Chief Economist, Saxo Bank
Yes, we respect the momentum in stocks. Yes, we can see the stimulus – both monetary and fiscal. Yes, there might be “cash on the sidelines”. Yes, frightened fund managers might be chasing their benchmarks. Yes, the recession has been long and deep. Yes, housing has become so much cheaper. Yes, earnings have already dropped a third. Yes, we can!
But please tell me where the pent-up demand is? Show me how the roasted demand-pigeons will fly into the mouths of the priced-for-perfection equities.
02 September 2009
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
Stocks generally down 2% in the US session despite better than expected figures. It doesn’t bode well that S&P500 closed below 1000. The Shanghai Composite is up this morning
- Stocks generally down 2% in the US session despite better than expected figures (ISM Manufacturing, Pending Home Sales and Total Vehicle Sales). It doesn't bode well that S&P 500 closed below 1000. The trend in stocks is still positive and the Shanghai Composite is up this morning. Commodities don't look too healthy, but AUD is holding up. Keep an eye on NZDJPY (about to break lower).
- Today's ADP Employment Change and the FOMC Minutes are important, potential market triggers.
- Looking at Japan: The JPY is higher and JGB's are higher, despite worries about the DPJ issuing more debt to pay for campaign promises.
02 September 2009
Andrew Robinson, FX Analyst, Saxo Capital Markets
Risk bulls must have thought they were sitting pretty after the US ISM manufacturing data matched the earlier stronger data out of China, as the headline came in at a strong 52.9 versus 50.5 expected, the first push into expansionary territory since January 2008, and the new orders component soaring to 64.9 but the employment component a less-stellar 46.4.
01 September 2009
John J. Hardy, FX Consultant, Saxo Bank
Lots going on in today's markets, with reversals galore. Will the action continue or do we see yet another reversal in coming sessions?
01 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
Fresh numbers show that on average managers in the US are seeing expansion while pending home sales increased month-on-month. Construction spending, however, declined slightly.
The Institute of Supply Management – ISM – released its report on manufacturing today showing that manufacturing in the US grew for the first time in 19 months. The ISM manufacturing PMI index came out at 50.5 versus 48.9 in July. With 50 the dividing line between expansion and contraction today’s reading indicates that manufacturing is once again expanding in the US. The purchasing managers around the country are on average now seeing signs of expansion.
01 September 2009
John J. Hardy, FX Consultant, Saxo Bank
US ISM beats expectations handily - risk-takers trying to make another stand as bulls and bears still seem evenly matched.
UK PMI spoils the improving numbers parade. Are cracks beginning to show in UK recovery?
01 September 2009
Mads Koefoed, Macro Strategist, Saxo Bank
Eurozone unemployment increased by 0.1% point in line with analysts’ anticipation. The jobless rate in the Eurozone increased to 9.5% in July, the highest since 1999. The unemployment rate in June was 9.4%.
Many companies in Europe are still laying off workers as evidenced by today’s unemployment rate, and indeed the overall Eurozone economy is expected to shrink some 4.6% in 2009, while retail sales have dropped for 15 straight months.
01 September 2009
David Karsbøl, Chief Economist, Saxo Bank
European session figures have generally been slightly better than expected today.
Swiss Q2 GDP and German Unemployment both surprised for the better, but especially European shares are underperforming with DAX trading a 6-day lows and DJ Stoxx 600 at 7-day lows both of which look to be picked up at trendline supports.
01 September 2009
David Karsbøl, Chief Economist, Saxo Bank
The fibo-level at 1014 in S&P 500 was retested yesterday and rejected. This will bring European equities higher this morning
01 September 2009
John J. Hardy, FX Consultant, Saxo Bank
RBA leaves rates unchanged at 3.00%. Meeting comments are dovish relative to expectations.
Profound lack of USD momentum continues. German employment and US ISM figures on tap later today.
|
|