Article / 05 June 2017 at 3:10 GMT

Macro Monday: UK elections and terrorism in spotlight — #SaxoStrats

Global Macro Strategist / Saxo Bank Group - Singapore Hub
  • US 10-year sets new lows following weak nonfarm payroll numbers
  • USD is in retreat after the NFP miss
  • Key focus this week includes UK election, ECB and flash PMIs

By Kay Van-Petersen

A replay of the global macro weekly call for week 23 is available here.

Summary of last week

  • US 10-year sets new lows after the weak nonfarm payroll numbers
  • Equities continue to melt up on low volatility
  • Commodities on the back foot outside of the precious metals
  • USD in retreat after the NFP miss
  • Divergence between soft and hard data continues
  • Trump vs G7 continues. Defence securities worth looking into
  • Another terrorist attack in the UK

COT report

  • 13-week lows on net long USD positions
  • EUR turning close to a long bias EUR
  • GBP starting to see shorts building
  • MXN remains at 52-week highs in long positioning
  • 13% reduction in commodity bullish bets
  • Big increases in silver and gold
  • Coffee shows new one-year lows on shorts

 The UK Conservatives are losing momentum ahead of this week's election,
driven by Theresa May's performance. Photo: Shutterstock

The week ahead

  • Key focus: UK elections, European Central Bank, Flash PMIs
  • Central banks: RBA; RBI; ECB; BoC Financial System Review
  • Fed Speakers: none
  • Economy: CH: TB, CPI +1.5%e PPI US: ISM Serv. 57.3e 57.5p JOLTS EZ: TB, Final Serv. PMIs, 1QF GDP +1.7% JP: 1Q Final GDP +2.4%e +2.2%p UK: PMI Ser. 55.1e 55.8p Manf. pro AU:1Q GDP +1.6%e +2.4%p TB NZ:Milk auction (6)

Key events

  • UK elections: Conservatives losing momentum, driven by prime minister Theresa May's poor performance as a candidate. Uncertainty is the ultimate result meaning Brexit becomes more unclear. But probably just at the margin.
  • UK terror attack is a horrendous event, but low grade. It’s not religion, it’s the haves vs the have nots. Solution to prevention may come from private companies.
  • Top of mind: Federal Reserve 14 June hike:
  • Since March: gold higher, yields lower, equities higher and volatility even lower.
  • Global PMIs continue to hold up. But inflation is not bouncing back with the oil input removed now. It will need to come from the wage price increases.
  • Need to see an increase in 2018 outlook to drive USD higher.
  • New administration, not getting anything done soon, but don’t fully discount them.
  • Still like: short duration, EM carry, equities, credit and sovereigns.

Technical picture: James Kim

  • Dollar index: Fresh 2017 low. Hovers above key levels at 96.4 and 96.11. 95.9 is Trump election lows. If these hold, USD may be turning.
  • EURUSD: 1.13 handle may indicate the end of this current up price near term. Indicating a pull back towards the 1.10 levels. Tactical short at 1.1310 with stop 60 pips above.
  • USDCHF: hovering above 2016 support levels. 0.9530 areas to look for a bounce. 200-weekly moving average at these levels.
  • USDJPY: Closes last week on 200 DMA. However, closes below the 200 weekly MA. Immediate downside is 109.40
  • AUDUSD: Snaps back to end week unchanged. Resistance at 0.7465 and then 0.7514.
  • Nikkei: new 2017 and 2016 highs, however RSI diverges however, so exercise caution.
  • EMinis: Also demonstrating A class divergence. RSI turning lower while price sets new highs. Exercise caution.
  • ASX200: 5880 top side target as supported below 5700.
  • XAU: Trades in make or break moment this week. Weekly trend line from 2011 being broken. This would be a very bullish break. Targets 1323, with a final target at 1481.
  • EVN: Evolution Mining: Top gold pick. Breaking out for a look at $2.70 with ultimate target at $3.42.

The world on a page
Source: Bloomberg

Please see our Q2 Outlook here.

  – Edited by Gayle Bryant

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].  
Hey Kay it is not about the subject above but I know what you think about Bitcoin. I was wondering what are your thoughts about altcoins and which one looks promising to you with bitcoin?


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