Ole Hansen
The Russian and Saudi energy ministers met ahead of Opec’s late-November deal, but Saxo Bank head of commodity strategy Ole Hansen says the future for oil remains cloudy.
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:

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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.


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