Show less
Morning Call: Softer dollar boosts commodities, stocks
21 September 2018 at 7:40 GMT
Morning Call: Markets stabilise as trade tensions ease
20 September 2018 at 8:28 GMT
Morning Call: Chinese shares surge as trade war rages on
19 September 2018 at 8:36 GMT
Today’s FX chart analysis - video
John J Hardy
18 September 2018 at 10:28 GMT
Morning Call: Trump hits China with tariff plan
18 September 2018 at 7:29 GMT
The week ahead in macro
Kay Van-Petersen
17 September 2018 at 8:11 GMT
Macro Monday week 38: Keep Global Macro and Carry On
Kay Van-Petersen
17 September 2018 at 8:02 GMT
Morning Call: US yield curve lifts, boosting dollar
17 September 2018 at 7:23 GMT
Technical analysis webinar – A view of the market: Larsson
Kim Cramer Larsson
12 September 2018 at 14:44 GMT
Morning Call: Chinese shares fall further
11 September 2018 at 8:36 GMT
Morning Call: USD, SEK in focus
10 September 2018 at 7:49 GMT
The week ahead in macro
Kay Van-Petersen
10 September 2018 at 7:37 GMT
Morning Call: Is Japan next?
07 September 2018 at 7:35 GMT
Video / 14 August 2017 at 7:38 GMT

From the Floor: Risk rally 'likely to continue' — #SaxoStrats

   • Risk sentiment bounces back in Asian session
   • VIX retreat from 16 bullish for equities
   • WTI rangebound after failing to break $50.50/b
   • North Korea fears wane, but US/China now on watch
   • 'Headline risk continues in bond markets': Fasdal

By Michael McKenna

Last Friday's weak US inflation print sparked a risk-off reaction that saw equities wither, EURUSD punch higher, and German 10-year bunds briefly spike to 164.30. Today, however, the Asian session appears to have inaugurated a recovery on the back of waning fears of escalation with North Korea, among other factors.

"One factor to watch here is the US-China relationship, particularly on trade," says Saxo Bank head of forex strategy John J Hardy. Hardy added that China "is the enabler of North Korea's bad behaviour" and says that the US' reaction to the hermit kingdom's recent belligerence could take the form of tough trade stances against Beijing even as the likelihood of direct military action recedes from headlines.

The US media have shifted their focus from Pyongyang to Washington following the Weimar-esque street battle between far-right and anti-fascist street demonstrators in Charlottesville, Virginia, on Sunday, with many commentators accusing Trump of taking an overly cautious approach after an apparent white nationalist killed a left-wing protester with his car.

In FX markets, Tuesday's UK inflation release, Wednesday's Federal Open Market Committee meeting, and Thursday's European Central Bank are the week's tentpole events with John Hardy pointing to GBPUSD as a pair that could break out of its 1.30-area range on either a CPI surprise out of London or new information concerning Westminster's Brexit preparations ahead of the resumption of talks later this month.

In EURUSD, Saxo's forex head says that investors will be looking for central bank comments on the EUR's recent strength Thursday. According to Saxo Bank head of equity strategy Peter Garnry, EURUSD's recent high of 1.1910 remains the key line in the sand for the benchmark pair.


Create your own charts with SaxoTraderGO click here to learn more

Source: Saxo Bank 

With the VIX volatility index retreating from the 16 area touched last Friday, Garnry says that he sees the current wave of risk-on sentiment as likely to continue as European markets follow their Asian counterparts higher.

One item to note from today's Asian session was Japan's strong GDP beat, which saw growth come in at 1% versus 0.6% expected for 2017's second quarter, representing annualised expansion of 4% versus 2.5% expected. Inflation, however, remains elusive.

On the commodities front, Saxo head of commodity strategy Ole Hansen says that crude oil finds itself rangebound again after WTI failed to break the $50.50/barrel resistance area. Although Libyan supply disruptions put a dent in the North African nation's significant return to a three-year production high last month, this is being offset by a slowdown in Chinese refinery activity.

In gold, the return of risk sentiment raises the risk of profit-taking as the metal failed to break $1,295/oz on last week's sentiment plunge.

"We look to reduce exposure with re-entry above $1,300/oz," says Hansen.

Pyongyang, North Korea
Fears of a military exchange with North Korea are receding, but the tensions 
could resurface in the Sino-US trade relationship. Photo: Shutterstock

Michael McKenna is an editor at Saxo Bank 


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