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From the Floor: Continued risk-on and a 'runaway CAD' — #SaxoStrats

   • UK CPI data up at 0830 GMT on a light macro data day
   • 'The Bank of Canada recognises the current bubble': Hardy
   • 'We are bullish Japanese shares as long as USDJPY is above 108': Garnry
   • Opec discussing extension of production cut deal past March '18
   • Apple special event at 1000 PDT, suppliers in focus

By Michael McKenna

'We expect continued risk-on sentiment," says Saxo Bank head of equity Peter Garnry as markets bounce back from a cautious weekend of Hurricane Irma- and North Korea-related concerns.

"Japanese stocks followed their US counterparts up 1% in the Asian session," he adds, noting that he remains bullish Japan so long as USDJPY remains above the 108.00 level.

Sterling may catch some attention today following the UK inflation release at 0830 (and ahead of Thursday's Bank of England outing), but what GBP really needs is clarity on Brexit and that hardly seems forthcoming.

The strongest performer in FX markets is the Canadian dollar, says Saxo Bank head of forex strategy John J Hardy, with the loonie's runaway performance matched by Canadian two-year rates that are now 20 basis points ahead of their US counterparts.

"What's happening here is that the Bank of Canada recognises the bubble [in Canada's economy], particularly in the housing sector."

"When this pops," adds Hardy, "it's gonna get ugly."


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Source: Saxo Bank 

The major factor in the equities space today is Apple's "special event" at 1000 PDT at which the company is expected to launch the latest iteration of its iPhone, as well as other products. According to Peter Garnry, the event should have investors tracking the performance of Apple suppliers including Dialog Semiconductor in Europe.

Garnry also points to small Welsh chipmaker IQE as one to watch as the firm's products are widely rumoured to be used in the new iPhone's 3D sensors; Swiss-listed Austrian technology group AMS is another share to keep an eye on, he adds.

With risk appetite rising, Saxo Bank head of commodity strategy Ole Hansen says that $1,300/oz is the downside level to watch in gold as it is the 38.2% retracement of the metal-s July-to-September rally.

In crude oil, Hansen says that investors will be focusing on today's Opec meeting with some downside possible if there are any indications that the cartel may not extend its current production cut deal past march 2018.

Although such an extension has not yet been confirmed, Hansen says that markets may be pricing it in.

For more on agricultural commodities, copper, Apple, and the Norwegian election, listen to today's morning call in its entirety.

Downtown Toronto: Is Canada's bubble ready to burst? Photo: Shutterstock

Michael McKenna is senior editor at Saxo Bank
Market Predator Market Predator
Hello John. Could you please comment SEK? CPI print is weaker than expected and there is SEK appreciation"?!" Thx.


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