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From the Floor: Trump catalyst running out of steam — #SaxoStrats

• China posts first trade deficit in three years after imports jumped 44.7% – Lee 
• Global dairy auctions fell and so did NZDUSD – Lee
• Political fears impact EURCHF – Hardy
• 1-month implied FX vol hits lowest since late 2014 – Hardy 
• Trump catalyst seems to running out of steam in equity market – Garnry
• S&P 500 looking weak at least short term – Garnry
• Gold challenged ahead of March 15 with USD and real yields rising – Hansen
• Opec and non-Opec producers may have to prolong deal to curb oil supply – Hansen
• ECB is buying much larger proportion of bonds with short maturity – Boye 

 By Clemens Bomsdorf

The S&P 500 is showing weakness one week ahead of the March 15 Federal Open Market Committee meeting.

“It seems the Trump catalyst is running out of steam,” says Peter Garnry, Saxo Bank's head of equity strategy. At least short to medium term, the major US index looks weak, with 2,350 points as a key level, he adds.

Equities in the US are now grasping for new themes, while leading indicators in the US and Europe are still turning higher. Many key equity markets are at least being compressed in tight ranges, Garnry says, adding that many emerging markets are still doing quite well. See also today's Morning Markets.

When it comes to single stocks, Snap is still in the centre of attention. The weakness of the recently listed share persists and the price fell to $20.50, but still above its IPO price of $17. “They are very vulnerable,” Garnry says, pointing to Snapchat’s advertisement model, which lacks information on users and therefore makes it difficult to generate high revenue.

Also in fixed income, the US is worth watching. US 10-year treasuries are trading at key levels, notes Saxo's fixed income trader Michael Boye. 2.5% is the upper level of the recent range and we could see a breakthrough there. A Fed rate hike in a week is still widely anticipated.

German Bunds are consolidating ahead of Thursday’s European Central Bank meeting. Short- term yields in Europe dropped as data released Tuesday showed that the ECB is buying a massive proportion of bonds with short maturity. “Average duration of ECB bond purchases has fallen dramatically in February,” Boye says. For Germany the duration is now down to 3.4 years from 9.4 years in January. “It explains the very extensive move in the 2-year yield in Germany and shows the impact of ECB bond buying,” says Boye, whose weekly bond update will provide more later today on

Source: Bloomberg
The March 15 FOMC meeting has an impact on commodities, too. We are seeing long liquidation in gold, the market is challenged ahead of the FOMC meeting, says Saxo’s commodities strategy chief Ole Hansen. Geopolitical risks are still a factor, but in Hansen’s view there is “no need to rush into this market given the March 15 meeting ahead.”

Brent crude is currently going nowhere, trading close to the average price it had since January. $55/barrel is the downside level to look for, according to Hansen. He also notes that Opec and non-Opec producers may have to prolong the deal to curb oil supply.

The latest weakness in copper is due to Chinese growth worries, Hansen says. China on Wednesday reported its first trade deficit in three years after imports jumped by 44.7% in February, says Hong Wei Lee, from Saxo's Singapore desk.

Shares in Asia traded mostly in the red. Negative news came also from Japan, where fourth-quarter GDP missed economists’’ estimate. Lee also says New Zealand’s dairy auction fell and so did NZDUSD.

Source: Saxo Bank
John J Hardy, head of FX strategy at Saxo Bank, says that one-month implied FX volatilities hit the lowest since late 2014. In Forex, “it is all about scratching around for themes, one is the euro and the ECB,” says Hardy and mentions that political fears are affecting EURCHF.
Today one might also see movements in GBP due to the UK’s budget announcement, Hardy says.

A cow market? Dairy auctions impact NZDUSD. Photo: Shutterstock

Clemens Bomsdorf is consulting 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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