Playlist: From the floor

Show less
From the Floor: EM, China feeling the heat
03 August 2018 at 7:31 GMT
From the Floor: Trump ups the trade war ante
01 August 2018 at 8:00 GMT
Video / 03 January 2018 at 9:07 GMT

From the Floor: Weak greenback directs markets

  • EURUSD poised just below cycle highs 
  • GBPUSD near cycle highs despite lack of news 
  • Equity momentum extends on weak USD
  • Equities still expected to weaken towards end of Q1
  • Biotech shares rise on back of Biogen's 5% advance
  • WTI holding above $60 but may be running out of steam
  • Bond correlation with equities is back in business
  • Emerging market bonds firmer on the weaker dollar

By Clare MacCarthy

The second trading day of 2018 finds markets in thrall to the still-weak dollar, with equities powering higher, WTI crude oil holding above $60/barrel and bonds moving in step with the equity market gains.

First, to forex, where EURUSD is poised just below cycle highs at 1.2092 and GBPUSD near cycle highs despite an absence of fresh news, reports John J Hardy, Saxo's head of FX strategy. As Hardy explained yesterday, the greenback weakness may be a reflection of increasing concern at the negative implications of the US tax bill for the national purse, but it may also be a "pause before the next bout of event risk" he says. But these event risks are unlikely to appear today as the only major items on the economic calendar – Federal Open Market Committee minutes and an ISM manufacturing update – are unlikely to spring any surprises. Instead, look ahead to Thursday's ADP employment survey and Friday's nonfarm payrolls as potential triggers for the next potential impetus.

EURUSD is within reach of cycle highs:
 Source: Saxo Bank

In equities, the story for today is that the strong momentum of recent weeks is continuing with a good performance in Wall St yesterday followed by mostly firmer trading in Asia overnight. However, Peter Garnry, Saxo's head of equity strategy, says that this strength will not sustain permanently and he still expects a correction towards the end of the first quarter.

Meanwhile, in commodities, crude oil is settled nicely above $60 a barrel and gold is looking good above $1,300/oz, says Ole Hansen, Saxo's head of commodity strategy. That said,it would be unwise to try chasing gold much higher as "it's in need of consolidation following its longest run since 201". Oil is in a similar position in that while it continues to get support form raised geopolitical risks there is a danger that rising US shale production and a record speculative long could knock it backwards again.

Finally today, bonds are also being highly responsive to the US dollar's weakness with emerging markets doing particularly well, says Simon Fasdal, Saxo's head of fixed income. European high yield issues are a bit softer with Italian bonds depressed by the upcoming general election in that country. 
03 January
Vivvian Vivvian
Very Good. Thanks. Clear presented, and much important and relevant info in a 1 minute or 2. Grab it! See you tomorrow
03 January
Clare Mac Carthy Clare Mac Carthy
Thank you Vivvian. The Strategy Team works very hard on it :-)
03 January
Alpi Alpi
Hi, you draw attention on the Greek market, but I could not find any instrument on your platform to invest in Athens exchange. Can you suggest some please?
03 January
Peter Garnry Peter Garnry
@Alpi if you type in Greece there will be several options but it requires that you are deemed appropriate for you to trade.


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