Article / 30 April 2015 at 8:23 GMT

From the Floor: Don't rock my boat

Editor / Saxo Bank
Editor’s note: From the Floor takes advantage of'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.

*Tomorrow is a Danish public holiday. From the Floor returns on May 4

  • Negative US news is needed to drive the dollar weaker, says Hardy
  • FOMC meeting saw no reaction in terms of US rates, says Hardy
  • JPY pairs looking technically interesting for bearish reversal setup
  • The Reserve Bank of New Zealand shifts to a dovish bias
  • Opportunity to capitalise on 3.2% decline in the DAX, says Garnry
  • US 10-year yields break higher but settle back to mid-range

By Oliver Morrison and Clare MacCarthy

No surprises

From the Floor rarely likes to ruffle people's feathers, preferring instead to sit quietly and impartially to deliver market developments to its faithful followers. 

The US Federal Open Market Committee was in similar mind yesterday, choosing to keep its target interest rate at a record low, hinting that it will raise rates soon as long as the US economy continued to grow. 

"The FOMC has really avoiding rocking the boat here," says Saxo's head of FX John J Hardy. 

"There was no reaction in terms of US rates, so there was nothing to drive the dollar weaker after what was becoming a disorderly squeeze on dollar long positions coming into meeting after that weak GDP date print."

So it looks like we need distinctly negative US news to drive the dollar weaker from here, if it is going to go any weaker. 

Or conversely, if data are particularly strong it would be very easy to get the dollar bulls back into play. The key data point on that front will be next Friday's nonfarm payrolls data. 

Big in Japan

Meanwhile, the JPY pairs are looking technically interesting for bearish reversal setup.

There was renewed yen strength in the Asian session after the Bank of Japan decided to leave its monetary policy settings unadjusted as the bank struggles to drive inflation towards its long-held 2% target. 

Pierre Magnussen from Saxo's FX Options desk says this presents opportunities for NZDJPY. "The obvious trade to look at is Kiwi Yen," he says. The pair has already traded lower by 1.5%. Should we see a breakout in dollar yen, I think we'll have a similar correction in kiwi yen." 

Meanwhile, the Reserve Bank of New Zealand has shifted to a dovish bias, which saw good reactions in NZDUSD and AUDNZD. 

The AUDNZD pair has completely reversed its sell off trend towards parity, which could present interesting long-term trades, says Hardy.

 Source: Saxo Bank

Just another tightening of 25 basis points in the New Zealand rate versus the Australia rate and we'll be back in the 112.50 levels that we saw at the end of last year, he says. "Respect how much these crosses can move. These are interesting trades for longer term."

Bond buoyancy

Over in the fixed income sphere, Saxo’s Michael Boye says that US Treasuries scarcely noticed the unexpectedly weak US gross domestic product data early in the session. And because the FOMC statement didn’t produce any surprises (besides being insufficiently dovish for the market’s taste), next week’s US nonfarm payroll numbers will be directionally crucial.

As to levels, US 10-year yields broke higher but settled back to finish the session in the mid-range at 2.03%.

In Europe, Boye says Germany’s bunds sold off quite heavily for no apparent reason other than a disappointing 5-yr bund sale and a pick-up in inflation, meaning that that country’s economy seems to be gaining strength. 

The price of the 10-year future went dropped and the yield ended up at 0.29% which Michael says is a significant change from the 0.05% bottom we saw just a few weeks ago.

And with peripheral European bonds largely holding their own we’re seeing no serious contagion from the Greek situation. Regarding Greece, Moody’s downgrade of the country’s debt to CAA2 is of little material significance, what’s more important is the growing optimism on a solution to the debt problem. 

But if the Eurozone/Greek efforts to cobble a compromise together come to nothing, then we’ll have a completely different situation on our hands, Boye says.

Return of the DAX

Finally, Saxo's equities head Peter Garnry is looking to pounce on a 3.2% decline in the DAX, with DAX futures are trading at 11,500. This, combined with good pre-earning results for many companies in Europe – notably BNP Paribas, BASF, Airbus, Nokia, Novo Norisk and Shell – means he is initiating a short-term long position on the DAX with a stop loss of 11,200. 

"We expect to keep it for around 3-5 days depending on the bounce back and how forceful it is," he says.  

Nokia sales in Q1 sales have beaten expectations. Photo: iStock

Oliver Morrison is an editor at

Follow Saxo Squawk live throughout the day. Sign up here to keep abreast of all developments affecting your portfolios. 


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail