Forex
26 February 2010
John J. Hardy, FX Consultant, Saxo Bank
GBP is falling to new lows vs. the rest of the G-10 currencies today on lousy growth data and sliding sentiment. Commodity currencies are trying to make a comeback after yesterday's New York trading session saw a dramatic turnaround in risk appetite. But a busy week looms next week....
26 February 2010
Michael Schmeja, Global Head of Derivatives Sales, Saxo Bank
Vols Softer across the board after the pretty impressive re-bound in late NY trading. The stand out trade/rumor from yesterday afternoon was a 3 month 1,10 EUR put for 3 yards apparently bought by US prop desk. USDJPY vols are well supported with the dip lower as at these spot levels the risk/reward of being long gamma seems attractive.
26 February 2010
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
The second estimate of Q4 US GDP will be released today and we expect an above consensus growth of 5.9% driven mainly by inventories.
26 February 2010
Andrew Robinson, FX Analyst, Saxo Capital Markets
US data continued to disappoint yesterday with jobless claims pushing back close to the 500 mark after a few weeks of improvement while durable goods orders were also soft when you take out the huge aircraft component. On the headline, orders were up 3.0% m/m but -0.6% ex-transportation.
25 February 2010
John J. Hardy, FX Consultant, Saxo Bank
Commodity currencies are feeling the pain and the yen the gain as risk aversion deepens here on lousy US data. And EURJPY is trading at a 12-month low today below the 120 handle.
25 February 2010
Robin Bagger-Sjöbäck, Research Analyst
Here is an extract from an interesting article from American Banking News, highlighting the upcoming troubles within the commercial real estate sector, just like we have reported on several occasions the last six months.
25 February 2010
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
Fitch has already downgraded Greece to BBB+ with a negative outlook and now S&P is warning that a downgrade is likely. Currently S&P has a BBB+ rating on Greece.
25 February 2010
Andrew Robinson, FX Analyst, Saxo Capital Markets
In his testimony before Congress, Fed chief Bernanke stuck to the “low rates for an extended period” theme and preserved the relatively dovish rhetoric that has been emanating from Fed speakers since the discount rate hike last week. In the details of his testimony, Bernanke noted that “private final demand does seem to be growing at a moderate pace” although acknowledged that some of the turnover may be short-lived as a result of stimulus and inventory re-build. He reiterated that the jobs market remains “quite weak” and inflation would remain subdued for some time due to the slack in the economy.’
24 February 2010
John J. Hardy, FX Consultant, Saxo Bank
Mr. Bernanke had nothing to add beyond consensus, but the market is trying to react anyway - what should we expect here?
24 February 2010
Robin Bagger-Sjöbäck, Research Analyst
Yesterday, the FDIC released their Quarterly Banking Profile (QBP), a report much awaited by both active investors as well as the general public. The QBP smoothly summarizes the US financial sector performance over the previous quarter, as well as its overall health for more than 8,000 commercial banks and savings institutions, covered by the FDIC insurance.
24 February 2010
Mads Koefoed, Macro Strategist, Saxo Bank
The Turkish economy has been booming in recent years and it looks a good bet against the Euro. There is no doubt that Turkey has been hard hit by the global recession, but we still like the prospects enough to advocate a short position in EURTRY.
24 February 2010
John J. Hardy, FX Consultant, Saxo Bank
We talked about the potential for markets to pivot on the Bernanke testimony , but it appears we may have already seen the big pivot after yesterday's market action.
24 February 2010
Michael Schmeja, Global Head of Derivatives Sales, Saxo Bank
Again we have seen very erratic moves in the market. I would have expected yesterday the EURUSD to go higher and test at least a level like 1.3730/50, just to see the pair drop after the IFO. On the other hand, we are still in consolidation mode and it would need a solid break of 1.3500/1.3900ish to change to trending mode.
24 February 2010
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
A major event today is Bernanke’s bi-annual Congressional testimony, which is likely to focus as the labour market and (the lack of) job creation
24 February 2010
Andrew Robinson, FX Analyst, Saxo Capital Markets
Risk appetite performed a full u-turn early in the session yesterday as, at first, German data disappointed and then US data confirmed the direction. The German IFO readings were below forecast in the business climate and current assessment categories and dragged the overall index lower for the first time in almost a year. This was enough to pull EURUSD back from a 1-week high versus the USD while additional pressure was piled on after Fitch downgraded the ratings and outlook for the four largest banks in Greece.
23 February 2010
John J. Hardy, FX Consultant, Saxo Bank
USDJPY retraced through key short term support, but we are not likely to know its fate until we have Mr. Bernanke's testimony tomorrow and Thursday behind us and see its effect on the US treasury market as long yields and yield curve dynamics are in the spotlight.
23 February 2010
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
Watch out for US Consumer Confidence, which is expected to decline a bit. Such a result will be no surprise given the weekly ABC numbers, which are still very poor.
23 February 2010
Andrew Robinson, FX Analyst, Saxo Capital Markets
Currency markets held tight ranges overnight in the absence of any significant data releases or developments in recent themes. EUR struggled to regain the 1.3650 level and drifted back sub-1.36 while GBP took a brief look above 1.55 but met decent selling pressure and also eased back into the close.
22 February 2010
John J. Hardy, FX Consultant, Saxo Bank
Watching paint dry would have been more important than today's market action. But today we have a graphic look at the CFTC reports from last Friday. Euro bearishiness is at record lows.
22 February 2010
John J. Hardy, FX Consultant, Saxo Bank
Is risk appetite pushing the outside of the envelope? The direction of risk appetite this week and Mr. Bernanke's testimony on Wednesday are likely to dominate the USD direction this week.
22 February 2010
Mads Koefoed, Macro Strategist, Saxo Bank
Stocks and oil went higher overnight on the back of solid GDP figures from Taiwan (9.2% YoY) and Thailand (5.8% YoY). This together with an easing of the fear that a tightening is imminent in the US is helping risky assets.
22 February 2010
Andrew Robinson, FX Analyst, Saxo Capital Markets
After the initial knee-jerk reaction to take risk off the table on Friday following the Fed’s surprise discount rate hike late Thursday, risk appetite made a slight rebound into the US session as US data beat forecasts and markets took to heart Fed rhetoric stressing that the Fed move signaled no change in policy.
19 February 2010
John J. Hardy, FX Consultant, Saxo Bank
The lowest core CPI reading on a month on month comparison since the early 1980's just after the market is busy trying to react to a the Fed's move to hike the discount rate. Then another Fed official downaplays risk for hikes to funds rate a day after another official trumpets the danger of inflation. The market has the right to be confused at this point....
19 February 2010
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
The Federal Reserve hiked their discount rate (not the fed funds rate) yesterday, which caused a large sell-off in risk. The central bank stressed that this does not change their outlook.
19 February 2010
Andrew Robinson, FX Analyst, Saxo Capital Markets
Fed Chief Bernanke talked about increasing the discount rate to 100bp in his last speech, and the last FOMC minutes showed the Fed had talked about the same at the last meeting, the Fed took the first step towards this goal and surprised the market with a 25bp hike in the discount rate to 0.75% after the US close yesterday.
19 February 2010
John J. Hardy, FX Consultant, Saxo Bank
Welcome to another edition of the Saxo Bank FX Monthly
18 February 2010
John J. Hardy, FX Consultant, Saxo Bank
The Fed hikes the discount rate (not the Fed funds rate). So what does this mean for FX? Here we try to take a stab at it....
18 February 2010
John J. Hardy, FX Consultant, Saxo Bank
Looking across markets, it increasingly appears that we are at an important inflection point for risk. US weekly claims data today not making a good case for the bulls...
18 February 2010
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
The FOMC Minutes yesterday revealed that the FOMC is concerned about the housing market (in addition to the labour market). The participants do not expect housing to matter much for GDP in 2010-11.
18 February 2010
Andrew Robinson, FX Analyst, Saxo Capital Markets
The USD was back in favour overnight as both economic data and the FOMC minutes pointed towards slightly firmer US yields. US housing starts were above forecast, rising 2.8% in January led by a 9.2% jump in multi-family starts which topped 100,000 for the first time since last August, while industrial production also continued its recent strong run with +0.9% m/m versus the +0.7% consensus.
17 February 2010
John J. Hardy, FX Consultant, Saxo Bank
More hawkish Fed rhetoric today reverses somewhat dovish rhetoric of yesterday. The USD jumps higher in response, as US treasuries took a beating later in the day after the FOMC minutes. We're fast reaching an importnat line in the sand for risk.
17 February 2010
John J. Hardy, FX Consultant, Saxo Bank
Risk continues to push commodity currencies higher and the Yen weaker, but how long will this move hold? Also, should the Euro be putting up more of a fight here?
17 February 2010
Mads Koefoed, Macro Strategist, Saxo Bank
The TIC Flows report yesterday showed that China sold off enough US debt in December to let Japan become the new number one holder of US debt.
16 February 2010
John J. Hardy, FX Consultant, Saxo Bank
Risk was on the rampage today, but so was a new Fed president with an unusual name and a bit more to say at his first speech than the market apparently expected.
16 February 2010
John J. Hardy, FX Consultant, Saxo Bank
A rally in risk and even stronger rally in Gold is pushing especially the commodity currencies stronger vs. the greenback today as we near interesting resistance levels in AUDUSD. What's the next move?
16 February 2010
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
The EU finance ministers continue their two-day meeting today, and a statement could come out at the end of the meeting. The markets went higher yesterday on news that a solution was nearby.
16 February 2010
Andrew Robinson, FX Analyst, Saxo Capital Markets
There was very little action of note to report overnight with public holidays in US and Canada preventing any aggressive position-taking or moves.
15 February 2010
Mads Koefoed, Macro Strategist, Saxo Bank
Tomorrow the UK will report consumer and retail prices for the month of January, and we expect them to show increases of 3.8% and 4.1% from the same month last year.
15 February 2010
John J. Hardy, FX Consultant, Saxo Bank
The rest of today will be slow with US markets closed for Presidents' Day. Today we have a look at a few technical reasons why EURUSD may be ready to consolidate here in the shorter term, even if the overall downtrend is still very much intact.
15 February 2010
Mads Koefoed, Macro Strategist, Saxo Bank
Japan’s GDP expanded a more than expected 4.6% (consensus: 3.5%, Saxo Bank: 4.2%.
15 February 2010
Andrew Robinson, FX Analyst, Saxo Capital Markets
Another eventful end to the week though closing prices on Friday appeared not to fully reflect the wave upon wave of negative sentiment that had been building throughout the week
12 February 2010
Nick Beecroft, Senior Markets Consultant
The fudge re Greece adds virtually nothing; in fact I think it gives the green light to hedge funds, etc to test just exactly what kind of 'support' the EU has in mind, by going after all the PIIGS one-by-one in a European tour very reminiscent of the 1992 EMU crisis.
12 February 2010
Mads Koefoed, Macro Strategist, Saxo Bank
An otherwise slow week in terms of macro data ends on a busy note with the most important ones being Eurozone GDP and US Retail Sales. Vehicle Sales were weak in January recording a drop of 5%, but sales of other goods should have increased enough for overall sales to increase. The Eurozone economy is struggling and with the Germany economy recording a flat GDP for Q4 earlier today we see downside risk to the consensus estimate of 0.3%.
12 February 2010
Andrew Robinson, FX Analyst, Saxo Capital Markets
The market was disappointed that no concrete news came out on the Greek topic and as a consequence the EUR came under fire in the overnight session. Whilst there was general agreement of EU support for Greece, Euro-zone governments stopped short of promising concrete financial support to Greece, although they did say that they "will take determined and coordinated action, if needed, to safeguard financial stability in the Euro area as a whole."
11 February 2010
John J. Hardy, FX Consultant, Saxo Bank
Euro summit outcome on Greece not particularly inspiring for the market. EURSEK plummets below 10.00 on a more hawkish Riksbank meeting today. Risk trades poised at interesting levels here ahead of last day of the week.
11 February 2010
Mads Koefoed, Macro Strategist, Saxo Bank
Leaders from the member-countries of the Eurozone have issued a statement that orders Greece to get its affairs in order. Greece has been ordered to cut down its deficit, which currently stands at nearly 13% of GDP. In return, creditor countries will guarantee cheap credit to Greece while it sorts out its budget deficits.
11 February 2010
Mads Koefoed, Macro Strategist, Saxo Bank
Today, European leaders will meet (9.15 GMT) with the topics being the economy, the climate, and Haiti. However, there’s an expectation that talks on the Greek situation will take centre stage instead. The ECB is banned from helping out member countries through debt purchases, so it looks likely that a solution will involve loan guarantees from Germany and France. We expect risk appetite to continue today and remain buyers on dips.
11 February 2010
Andrew Robinson, FX Analyst, Saxo Capital Markets
A confusing session overnight for the EUR as markets twisted and turned as comments from Germany and France kept the sentiment pendulum swinging. Initially hopes were that Germany was considering Greek aid “beyond loan guarantees” but later a French source said there was no agreement within the EU on an aid package for Greece. All eyes will be on today’s EU summit, where a fierce debate is expected and expect the EUR to react accordingly to any news-bites.
10 February 2010
John J. Hardy, FX Consultant, Saxo Bank
The key to today? When is "at some point"? That's when Mr. Bernanke says that the Fed will begin to tighten actual interest rate policy. The JPY responded more sharply than the USD today on this news...
10 February 2010
Nick Beecroft, Senior Markets Consultant
Bernanke's testimony is a head-fake-don't be lead astray.
10 February 2010
John J. Hardy, FX Consultant, Saxo Bank
Rumors swirling on Greek bailout potential pushes Euro all over the place. Focus on Aussie tonight with employment data on tap. EURSEK trading at key levels ahead of Riksbank.
10 February 2010
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
Risky assets turned in a strong performance yesterday as rumours that a bailout plan will be put together grew stronger – even if the terms of any solution to the Greek situation are still very unclear. Today, the German Finance Minister Schaeuble is expected to outline how Greece will be supported. Also watch out for the BoE inflation report (10:30) and Fed testimony at 15:00 GMT. Considering that we are still low on other news, including macro releases, and with a solution to the Greek situation apparently edging closer we remain bullish today and buy on dips in stocks.
10 February 2010
Andrew Robinson, FX Analyst, Saxo Capital Markets
Tentative hopes that a solution to the Greek debt situation were temporarily given a boost as rumours circulated late in the NY session that the Euro-zone was about to step in to help Greece with its debt situation. This saw the EUR power to its strongest gains against the dollar in more than two months and recover ground lost earlier in the week. However, the pair gave back some of the gains once a spokesman for the German government claimed the reports were “unfounded”.
09 February 2010
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
Short positions against the EUR are at record levels, while there's an expectation forming that an announcement from the EU on the Greek situation is forthcoming.
09 February 2010
Andrew Robinson, FX Analyst, Saxo Capital Markets
On a day with an almost blank data sheet, currency markets were generally range-bound overnight with mild short-squeeze on the majors detected as traders scaled back dollar longs. EURUSD peeped back above 1.37 but the weight of concerns about Greece’s debt situation remained, and the pair drifted back lower into the close to finish back where it started.
08 February 2010
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
A relatively quiet Monday follows the mixed unemployment report from Friday afternoon. Nonetheless we expect the Friday sell-off to continue, thus remain negative on risk, sell on rallies.
08 February 2010
Andrew Robinson, FX Analyst, Saxo Capital Markets
The highlight of last week – the US non-farm payroll and unemployment data – had something for all yesterday although volatility from other sources did cloud the outcome somewhat. Optimists would highlight the fall in unemployment below the 10% mark for the first time since October last year (to 9.7%) whereas the nay-sayers will note that the US economy failed to add jobs for the first time since end-2007 with a loss of 20k jobs rather that the +20k expected while December’s data was revised down an additional 65k.
05 February 2010
John J. Hardy, FX Consultant, Saxo Bank
US employment report is mixed to slightly positive, but is the market even focusing on data at the moment? If risk does manage to rally, will be interesting to watch the USD's behavior. If we continue to sell off, then the USD and JPY are likely to continue to benefit.
05 February 2010
Nick Beecroft, Senior Markets Consultant
US Non-farm payrolls-$ buying opportunity?
05 February 2010
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
Today Nonfarm Payrolls are released with the added spice that the annual revision will accompany it. Estimates are all over the place ranging from -100K to 100K.
04 February 2010
Markets shift into panic mode and the JPY is taking a stick to the rest of the G-10 currencies. Commodity currencies are the hardest hit. What are we to make of this suddenly ugly situation?
04 February 2010
John J. Hardy, FX Consultant, Saxo Bank
Risk aversion is returning a bit in the early US session on an ugly jobless claims report and on poor Australia retail sales data overnight. The USD and JPY are moving stronger in response. The ECB's Trichet said the ECB is "inflexible" on the EU stability pact - could this be a setup for further tensions down the road?
04 February 2010
Nick Beecroft, Senior Markets Consultant
The central scenario today must be that both the Bank of England and ECB do not surprise the markets, i.e. they both leave headline interest rates unchanged, the Bank of England does not extend its QE programme, and the ECB does not surprise re the rapidity of withdrawal of special liquidity.
04 February 2010
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
Risk could take a turn for the better if better than expected earnings reports continue throughout the day. Also keep an eye on German factory orders.
03 February 2010
John J. Hardy, FX Consultant, Saxo Bank
Euro limps into close as contagion fears may be spreading. What will the ECB have to say tomorrow to try to calm markets? Vigilance may not be enough, Mr. Trichet. Aussie also weakens in the knees again ahead of Retail Sales data.
03 February 2010
John J. Hardy, FX Consultant, Saxo Bank
EUR made a comeback attempt on EU's backing of Greece's attempt to keep a lid on its fiscal crisis, but 1.4000 in EURUSD didn't hold for long on a positive ADP number from the US. Does this set up a strong nonfarm payrolls report for Friday?
03 February 2010
Christian Blaabjerg, Chief Equity Strategist, Saxo Bank
Earnings are back in the drivers seat. The fear of soveriegn collapse in the PIIGS countries seems eased for the moment. We expect risk appetite coming back because earnings are so far quite good.
03 February 2010
Andrew Robinson, FX Analyst, Saxo Capital Markets
Currency markets spent the overnight session trapped in ranges after the RBA’s surprise no-change yesterday. There was a general onus on short-covering in the majors and the USD drifted lower as a whole. News that Greece had discovered some €40 bln in “hidden debt” was shrugged off with the EUR seeing persistent demand.
02 February 2010
John J. Hardy, FX Consultant, Saxo Bank
Another day of risk consolidation as the bulls continue yesterday's run ahead of the heavy economic calendar for the rest of the week. We are fast nearing key swing levels for risk appetite across markets that decide whether the risk bulls or bears will keep the upper hand here.
02 February 2010
John J. Hardy, FX Consultant, Saxo Bank
A rare central bank shocker overnight as the RBA left rates untouched rather than hiking by 25 bps to 4.00% Market trying to decided whether it prefers to look through this or take Aussie to new lows. GBPUSD has threatened major support ahead of the rest of the week's data and central bank meeting onslaught.
02 February 2010
David Karsbøl, Chief Economist, Saxo Bank
Our Asset Allocation Model is maintaining an “Outright Bullish” stance after having changed from “Outright Bearish” five months ago. The reason is a sharp turnaround business activity (according to our Global Business Cycle Indicator) and that means that the overall allocation has changed and now recommends a bigger, net long (however moderate) position in equities and larger exposure to commodities.
01 February 2010
John J. Hardy, FX Consultant, Saxo Bank
The risk bulls are trying to take stand here and Aussie shorts are running for cover. Is this a pivot point for risk, or just a small consolidation.
01 February 2010
David Karsbøl, Chief Economist, Saxo Bank
The biggest position in the Saxo Bank Portfolio Model is still short EURCHF. Current exposure is still long the Aussie (up to 31% from 23%) and last month's long in CHF is continued although with a slightly lower exposure (to 28.6% from 30%).
01 February 2010
John J. Hardy, FX Consultant, Saxo Bank
It's central bank week this week with RBA up tonught, Norges Bank on Wednesday, and the BoE and ECB on Thursday. We've also got plenty of US data and a market that's in a nervous state after last Friday's ugly close . This should be an interesting week.
01 February 2010
Mads Koefoed, Macro Strategist, Saxo Bank
The Chicago PMI figures published on Friday - usually a good indicator for national PMI - were strong across the board, but the employment component was particularly good showing a big jump from 47.6 to 59.8. This is not only good for today's number, it is also a good indicator for the manufacturing component of the Manufacturing Payrolls on Friday.
01 February 2010
Andrew Robinson, FX Analyst, Saxo Capital Markets
The USD finished January on a real high, buoyed by a string of strong US data on Friday. First off, US Q4 GDP beat forecasts with a strong 5.7% annualized growth (4.7% expected), its strongest quarter growth in over six years. Inventories, which were on everybody’s lips before the release, contributed an impressive 3.4%-point to the estimate as companies reduced inventories at a much slower rate compared to the third quarter.
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