Article / 13 March 2017 at 5:26 GMT

Macro Monday: Dutch election and central banks in focus — #SaxoStrats

Global Macro Strategist / Saxo Bank Group - Singapore Hub
Singapore
  • Key focus this week is the Fed decision, Dutch election and central bank meetings
  • Hedge funds are continuing to exit commodities, most notable in WTI
  • Copper longs continue to capitulate to price action
By Kay Van-Petersen

A replay of the global macro weekly call for week 11 is available here.

Please see our Q1 Outlook here.

Summary of the past week

  • US yields continue to rally hard into the Federal Reserve decision
  • European Central Bank on Thursday: no change but things brewing below the surface
  • US jobs data very strong: good headline and increase
  • Reserve Bank of Australia hawks start to show themselves

COT report

  • Big reversal in USD positioning: up 63% week-on-week increase
  • Positioning very light relative to historical though. CAD, AUD and NZD reductions
  • Commodities: hedge funds continue to exit positions this week. Noticeable in WTI
  • Gold longs reduced, while silver not seen capitulation yet
  • Copper longs continue to capitulate to price action

The week ahead

  • Key focus is the Fed, Dutch elections and central banks
  • There are loads of central banks: Fed, SNB, NO, TU, ID, CL, BoJ
  • Economy: C: IP +6.2%, FAI +8.2% and retail sales +10.55%. US CPI +2.7%, core 2.2%, PPI, retail sales. Eurozone Zew, IP and CPI 2.0%. UK Jobs. AU: Jobs +16.3k. NZ: Ca, GDP
  • ECB president Mario Draghi speaks

Positioning and thinking

  • ECB: maintained dovish view but an inch away from very dovish. Deflationary demons been knocked out
  • Dutch elections: Worth noting, it’s under risked. A lot of undecided voters
  • G20: What will Trump be like here?

Technical picture from James Kim

  • DXY: prices failed to push further than the previous week's high settles below the crucial trend line off January lows as well as the 50% retracement level. On a weekly, DXY trades back into its lower channel. 102.25 resistance for the week, with support at 100.5
  • EURUSD: continuing positive setup. 1.09 target for the week
  • EURAUD: bullish case from two weeks ago, now neutral. Strength remains, now looking for opportunity elsewhere
  • NZDUSD: extremely oversold. Long opportunity at 0.6863 with a tight stop
  • USDCHF: rising wedge with a break lower looking likely. Wait for two consecutive settlements for below. 1.01 handle significant
  • Copper: trades below a bearish head and shoulders break. This gives us a target at 245. Copper should struggle at resistance at 265. Attractive to sellers there
  • Emini S&P: 2398 a long-term target was achieved. Worth highlighting as time now – 14 months rally from February 2016 low – same time as GFC time frame rally, could see S&P downside ahead 


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 Picking up speed ... the Dutch election result this week may surprise. Photo; Shutterstock

– Edited by Gayle Bryant

Here is this morning's recording of this week's Macro Monday call.

Kay Van Petersen is Global Macro Strategist at Saxo Bank. You can follow him on Twitter: @SaxoStrats or @KVP_Macro. Please join us live for next Monday's Macro Call at 0830 [Singapore/Hong Kong], 0930 [Tokyo], 1030 [Sydney].  

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