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 / 27 March 2017 at 7:42 GMT

From the Floor: Trump's defeat creates 'new narrative' — #SaxoStrats

  • Trump's failure to get healthcare bill passage creates "new narrative" — Garnry
  • Market scepticism that president can push through other reforms grows
  • Financials performance Monday the key to understanding market impact — Garnry
  • S&P 500 test of 2,300 and then 2,250 could be imminent
  • Dollar weakens against major peers as safe havens gold and yen sparkle
  • Gold moving in on 200-day moving average at $1,261/oz — Hansen
  • Net long position on precious metal shows there is room for upside — Hansen
  • Bungled Opec meeting in Kuwait has bulls eyeing the exit door — Hansen
  • US Treasuries 10-year yields down to 2.35% with 2.3% in view — Fasdal

By Martin O'Rourke

The art of the fail

US president Donald Trump failed Friday to bend Congress to his will having pledged that he would bring an end to Obamacare and that has shaken confidence in the dealmaker’s ability to deliver on the string of pledges that made up his campaign platform.

"We've got the catalyst that we've been looking for and Trump's defeat is creating a new narrative," says Saxo Bank's head of equities strategy Peter Garnry. "This could change the whole stance towards the Trump administration and the key to watch out for on Monday is the financials."

"The key to understanding how much the market has bought into the great reflation trade is through financials," says Garnry. "If we get a strong selloff, we have a new narrative."

Garnry is keeping a close eye on the S&P 500 which closed at 2,343.58 Friday. "If we get through 2,300 then we are definitely looking at 2,250."

The S&P 500's bull run underpinned by the reflation trade could be at en endm

Source: SaxoTraderGO

Equities of course is not the only expression of market scepticism as to Trump's ability to deliver his much-trumpeted $1 trillion stimulus package. The dollar has been a noticeable decliner overnight falling against most of its major peers and suffering a 1% fall against yen.

USDJPY is down approximately 2.2% since March 1.

"The whole market is casting doubts over whether Trump can implement his policy," says Shiyun Su, reporting from Saxo Bank's Asia hub in Singapore. "We're looking at the 110.0 level."

Yen's gain was Nikkei's loss as the exports-driven listing took fright at the strengthening of the local currency for a 1.6% slide on-day. Su also points out that volatilities have hit a two-month high as risk-off fever grips the markets.

USDJPY closing in on  the 110.0 handle
Source: SaxoTraderGO

Sparkling gold

Risk-off naturally helped spur gold to bigger gains propelling the precious metal once again to within a whisker of the 200-day moving average at $1,261/oz.

"When you have stronger yen, you get stronger gold," says Ole Hansen, Saxo Bank's head of commodities strategy at Saxo Bank. "We could be ready for a test of the February highs in the low $1,260s/oz with the 200-DMA the immediate target."

"A close above the 200-DMA level is also likely to trigger additional buying because the long position is relatively low," says Hansen. "Trump's defeat has really raised so many questions about whether he can actually see through his stimulus pledge."

The latter might have an impact on iron ore prices and on copper, the latter of which has been helped by the reflation trade, Hansen warns.

The net long position shows there is room for more gold buying

Source: Bloomberg, Saxo Bank

US 10-year Treasuries yields also slipped to 2.35% and 2.3% looks likely in the short term, says Saxo Bank's fixed income chief Simon Fasdal. German 10-year bunds also opened stronger Monday morning to go past 161 although any move upwards might be capped by a less dovish European Central Bank going forward, says Fasdal.

"The ECB is under pressure to build a less dovish strategy," he says.

 Bungling Opec

The press officers at Opec meanwhile might be looking for gainful employ elsewhere this week after the cartel made a mess of its communiques after the weekend jamboree in Kuwait and left the oil market in a state of utter confusion.

"Opec initially drafted a statement that included a note on an extension of the current oil production cut deal beyond six months but then amended that to a review of the current deal and extension at a later date," says Hansen. "It's created a lot of doubt in the market as to its ability to get an extension and there is a risk that these mixed signals from Opec carry risk to the downside."

"Brent could be facing a move through $50/barrel with support at $49.22/b."

Brent crude was at $50.43/b at 0655 GMT.

And finally....

There are a spate of juicy financials earnings in China on tap this week which might alleviate some of the gloom, but with the Hang Seng suffering a 0.5% fall overnight on the back of concerns about housing curbs on the mainland, we shouldn't bet on it.

Nevertheless, there continues to be a world out there beyond the Trump universe. Best we keep an eye on it!


'None shall pass!'. President Trump discovers
something about the realities of power. Photo: Shutterstock

Martin O'Rourke is managing editor at Saxo Bank

Peter Garnry Peter Garnry
It seems like the market is writing a new narrative here post Trump’s defeat. Negative sentiment in key risky asset classes with S&P 500 (cash) down 0.8% If we see an acceleration to the downside in oil and negative print in Dallas Fed Manf. Activity at 1400 GMT then the selloff could extent to 2,300…

Note also that we are below 50-SMA for the first time since Nov 9th (day after Trump’s victory). Financials down 2.2% here…key to gauge the unwinding of the reflation trade…
Ole Hansen Ole Hansen
Crude oil has hit new lows for the day as the risk off sentiment in stocks has triggered additional long liquidation. Both Brent and WTI are holding above last week’s lows at $49.71 and $47.01 respectively. Sentiment is heavy with US stocks likely to be the main focus for the remainder of the day.

Gold meanwhile is struggling to break above $1260 and this is raising a few eyebrows considering the multiple tailwinds currently coming from the other markets. Various commodity indices, including the Bloomberg Commodity Index are under pressure from weakness in energy and agriculture. This is likely to have triggered investor redemption which is also hurting gold, one of the biggest components of the BCOM index.


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