04 August 2016 at 8:20 GMT
By Clemens Bomsdorf
While the aftermath of the Bank of Japan decision (read more in yesterday's European mid-session report here
) can still be felt with an ”explosion of USDJPY
volatility” as Dan Larsen from Saxo's FX Options desk in Copenhagen
puts it, it is the Bank of England that will be in focus today. A 25 basis point cut to 0.25% is expected.
”The focus will be on the outlook and how dovish they will be regarding next steps,” says Saxo Bank's Asia macro strategist Kay Van-Petersen
. While there is no formal asset purchase expectation, numbers whispered are 50 to 75 billion GBP, says Van-Petersen. What is innteresting is that Goldman Sachs sees potential for a cut larger than 25 bps and additional asset purchase of 100bn GBP
or even more.
The Bank of England’s announcement will also affect equities. “Equity futures are green, but we will see what will happen after the Bank of England announcement,” says Peter Garnry, Saxo's head of equity strategy
. Generally he is negative when it comes to UK shares, but does not expect a large impact from today’s Bank of England decision.
Brent crude over the last year (click to enlarge):
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Source: Saxo Bank
The Asian session saw shares up, pushed by Brent
crude breaking higher than $43/b. German electronic giant Siemens
is up 2% pre-market as it published earning numbers beating expectations. For Garnry, the share is still a buy.
In the US, several earning reports are due today. Monster Beverage
, which Garnry recommends being long in, is very interesting as one of the fastest growing companies in the soft drink market and a possible takeover target. Also, EOG Resources
could surprise to the upside just as other shale oil producers have done.
Gold spot price since 2012:
Source: Saxo Bank.
From oil to gold
... the precious metal has traded a couple of times above 1360 $/oz, but failed to really break the $1,360-80/oz level. Larsen sees $1,310-20/oz as the current support level. “In the options’ market we can see the market is bidding for longer term gold calls,” says Larsen.
There are several levels that needed to break and then $1,500/oz could be targeted. “And then," according to Larsen, "we have decided from there on if we can continue higher."
Siemens became a household name for its domestic appliances, but the German giant offers so much more, and does it well (as earnings prove!). Photo: iStock
Clemens Bomsdorf is consulting editor at TradingFloor.com
Editor’s note: From the Floor takes advantage of TradingFloor.com's unique real-time access to Saxo Bank’s various trading desks around the globe to put our community in touch with the developments that matter to their portfolios