Focus this session – across all asset classes – is firmly fixed on the European Central Bank's monetary policy meeting although bank chief Mario Draghi isn't expected to deliver much beyond dovish rhetorical attempts to weaken the euro.
Article / 01 June 2016 at 8:00 GMT

From the Floor: Japan takes profits, delays tax hike

Your Next Trade
  • 'Mediocre' Chinese data weigh on Asian risk sentiment: Moltke-Leth
  • Japan delays sales tax hike for 24 months so as to boost economy
  • AUD rallies on GDP data but squeeze likely not sustainable: Hardy
  • New Brexit poll shows stronger 'Leave' side; sterling slumps
  • Bunds rocket past 164.00 resistance on apparent UK sentiment shift
  • Click on this link for a replay of our morning call 

From the Floor
By Michael McKenna

Today's Asian session saw a broad retreat on the risk sentiment front as the latest Chinese data offered no sign of any upward momentum. The general pallor was intensified by Japanese prime minister Shinzo Abe's confirmation of a 24-month sales tax hike delay (the rise was meant to come into effect in 2017) aimed at boosting the nation's economy.

The yen rose nearly 1% on the risk-off wave, with Saxo Bank head of forex strategy John Hardy noting that he sees some form of intervention waiting in the Tokyo wings.

"Timing is the only question here; the QQE programme just hasn't made enough of a difference".

USDJPY rallied into the Ichimoku cloud as risk sentiment waned overnight:

Create your own charts with SaxoTraderGO click here to learn more

Source: Saxo Bank 

Not all of the APAC data prints were soft, however, as Australian GDP showed a dramatic, 1.1% expansion in Q1, ahead of the 0.8% forecasted and sufficient to push the Australian dollar to just shy of the 0.73 handle versus USD.

"We saw some pretty strong fundamentals across the board," notes Singapore-based Saxo sales trader Christoffer Moltke-Leth, "trade, jobs, building approvals... an upcoming Reserve Bank of Australia interest rate cut is now very uncertain".

According to Hardy, however, the sharp move higher in AUDUSD is likely to fade, but that, of course, depends on this week's US data.

"Today we have the US ISM non-manufacturing release," says Saxo's head of forex strategy, "and I see a risk of moving below 50 here. The question is how the market reacts – will it prove content to wait for Friday's nonfarm payrolls report?"

Beyond this week's US data bonanza, of course, lies the risk-of-risks that is the UK Brexit vote on June 23. In recent days, polls suggestive of a 'Remain' victory have boosted sterling but the UK currency is now beating a hasty retreat in the wake of a new Guardian poll showing a 52% 'Leave' majority.

The result, it must be noted, reflects the sentiments of a mere 3,000 respondents, but we live in twitchy times and GBP has declined by one big figure versus the USD.

The ostensible shift in voter opinion has also rampaged through fixed income markets, where Saxo Bank bond trader Michael Boye says 10-year bund futures have rocketed past resistance at 164.00 on the news.

Another interesting development in the bonds space, says Boye, are the reports of plans by both Saudi Arabia and Dubai to issue new bonds; the speculation comes hot on the heels of last week's $9 billion issuance from Qatar – the region's largest ever.

According to Bloomberg, the Saudi issue could be worth as much as $15bn. 

Qatari, Saudi, and UAE bond issues could change 
the financial face of the Gulf region. Photo: iStock 
Michael McKenna is an editor at

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.


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
- 沪ICP备13028953号-1

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