Article / 06 October 2016 at 8:11 GMT

From the Floor: US rate hike on the radar

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  • Yesterday's jump in non-manufacturing ISM increases US rate hike chances
  • USDJPY has broken important important resistance
  • Oil prices consolidating despite bullish EIA inventories surprise


By Clemens Bomsdorf

Movements in USD as well as US data will keep markets and economists busy in the short and in the longer run. What will happen to the USD and what to the US rates are key questions says John Hardy, head of FX strategy at Saxo Bank. Tomorrow’s nonfarm payroll data will add more news. Until then, analysing current data and market moves is essential. 

US ISM Sept 2016

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Source: Saxo Bank 

Speaking live on today's Global Morning Call, Hardy called it “almost absurd” that yesterday saw September’s US ISM non-manufacturing jump to a new 2016 high just after the six-year-low in August. “[Such] a massive comeback in US non-manufacturing was not expected”, he says. 

That movement, of course, boosts Federal Reserve rate hike odds and also helped the USD quite a bit higher. 

USDJPY went through a key resistance level to the upside. Commodity currencies are fairly stable as “there is a bit of reluctance to dump the risky currencies when we have good economic news and commodities looking somewhat stable,” reports Hardy.

When it comes to commodities, Ole Hansen, Saxo's head of commodity strategy,  notes that we are seeing some consolidation. Crude oil is taking a breather despite yesterday's bullish inventory surprise. Yesterday the weekly inventory report defied expectations once again with US inventories falling for a fifth consecutive week. 

Today's focus returns to the challenges Opec faces. 

The key resistance at $50/barrel on WTI and $52/b on Brent have yet to be challenged. “The speculative demand has obviously been quite big this week,” according to Hansen, who also says that we will see the extend of that when data is released on Friday. 

Natural gas is back above $3/therm ahead of inventory data.  

Gold sold eight days in a row. ISM and USD had relative little impact. There was an attempt to break through the $1267/oz level, but the consolidation trend seems to have hit gold as well. Open interest fell to a four-month low while ETF holdings are up four days in a row. 

“We are seeing the potential for a repeat of what we saw back in May,” says Hansen. 

Tomorrow’s NFP and China coming back from holiday next week are the two focal points now.

 Fuelling the economy? Photo: iStock

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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