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The week ahead in macro — #SaxoStrats
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From the Floor: Only limited Catalan impact on EUR – #SaxoStrats

#SaxoStrats
  • Key events today include Eurozone PMI & unemployment
  • Catalan referendum sees limited falllout for EURUSD
  • Former Bernanke ally Kevin Warsh may become next Fed chief
  • Improved fundamentals are supporting oil 
  • Big Brent speculative long raises correction worry
  • Gold drifts lower on weaker yen and rising stocks
  • Corn stocks at a 27-year high and soybeans at a 10-year high
  •  DAX futures could extend rally if the euro continues to weaken
  • Friday's US nonfarm payrolls expected to drop after hurricanes
  • US Treasuries continue to weaken amid prospects of US tax cuts 

saxostrats







By Clare MacCarthy

The Catalan independence referendum which saw police violence and an estimated Yes vote of 90% (albeit on a sub-50% turnout) has only dented the euro slightly. Market interest now turns to this week's heavy schedule of data releases.

"The referendum was a PR disaster for the Spanish government," says John J Hardy, Saxo's head of forex strategy, though there will hardly be any significant downside follow-through for the euro, he notes. More important for the week's forex developments is a slew of data including Eurozone manufacturing PMIs and unemployment data today as well as the US nonfarm payrolls on Friday.

In oil markets, prices are being supported by improved fundamentals but the buildup of a substantial Brent crude speculative long is triggering worries of a correction, says Ole Hansen, Saxo's head of commodity strategy. He also cautions that the threat to supply caused by Kurdistan's own independence referendum last week and Turkey's strong opposition to this development, remains in place.

In equities, Dax futures could extend their rally if the euro continues to weaken, says Peter Garnry, Saxo's head of equity strategy. The next major resistance level is at 12,920, he notes.

Finally, US Treasuries continue to weaken amid prospects of US tax cuts and a potentially hawkish Federal Reserve.

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