Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 19 February 2018 at 3:29 GMT

Macro Monday: USD reversal sets stage for strong week — #SaxoStrats

Global Macro Strategist / Saxo Bank Group - Singapore Hub


  • Several Asian nations are taking a break for the Lunar New Year
  • China starts work again on Thursday, after many millions visited their home towns
  • There will be plenty of Federal Reserve speakers this week
  • AUDUSD resilience has defied the Aussie dollar bears
  • The monthly chart for copper looks positive with a nice upward channel
By Kay Van-Petersen and James Kim,

Summary of the prior week
  • US CPI data: There was a strong print (Core 1.8% / Headline 2.1%) yet USD suffered from weakness until the end of week rally set in.
  • Russia interfered with US election : 13 Russian citizens and three Russian companies were indicted on charges of engaging in a widespread effort to interfere in the 2016 presidential election.
  • Fixed income: US 10s closed at 2.8749 post a range of 2.9424 / 2.7842. Interesting to see the bund yields tighten on the wk closing at 0.706 (0.7945 / 0.6996).
  • Forex: Very much a reverse of what we saw two weeks back, DXY -1.5%, Euro & Yen being amongst the biggest gainers. Emerging markets led the pack with Rusia's RUB and South Africa's ZAR clocking over +3% appreciations against the USD.
  • Commodities Good overall week for commodities, interesting to see gold just shy of 1360 despite new highs in US10s & risk-on in equities.
  • Equities: As we called in the previous week’s Macro Monday, we’ve rallied from the sell-off, with leadership being seen out of the US. Asia still lagging, partially due to CNY/holidays in region. Techs and Financials  led the gains in the equities market since the low on February 8.
  • Volatility: We’ve gone from 29 to 19.50 on the VIX as we’ve had a big -33% pullback in vol. And more importantly a similar big fall in the vol of vol (VVIX)


Faithful companions in many cultures, and a sign of good fortune in China ... the Macro Monday team wishes all of its readers a successful year of the dog. Photo: Shutterstock

The week ahead
  • Key Focus: Central bank minutes week and Chinese New Year, and flash PMIs.
  • Central Banks (Singapore time):  RBA Minutes (due out on February 20) Federal Reserve, European Central Bank + MX Minutes (February 22) BI 4.25%p (15) SL 7.25%p (16)
  • There will be plenty of Federal Reserve speakers this week (Singapore time): Harker (February 21), Quarles (February 22), Dudley (February 22/23), Bostic (February 23), Kaplan (February 23), Rosengren (February 23), Mester (February 24), Williams (February 24).
  • Other (SGT): Bank of England's Mark Carney (20).
  • Public holidays: US closed on Monday for President’s day, Chinese New Year break (February 15-21) Hong Kong's new year break (February 16-19), Taiwan (February 15-20).
Economic data
  • US: Flash PMI, Home Sales.
  • Canada: CPI.
  • China: Leading index (Note that China heads back to work on Thursday).
  • Eurozone: ECB minutes, Consumer Confidence, CPI 1.3%e CORE 1.0%.
  • Germany GDP.
  • Japan: Trade Balance, All Industries Activity.
  • UK: Jobs data, 2nd GDP read, Public Sector Borrowing.
  • New Zealand: PPI, Global Dairy Auction, Credit Spending, Retail Sales.
  • Australia: RBA minutes, Construction Data, CB leading index and Wages.
Thoughts on market positioning and sentiment
  • US 10-year bond yield rises above Australia's for the first time in 18 years:  an event that has only been seen in 35 trading sessions during the past 30 years yet correlation with AUDUSD broken since 2015; shows AUDUSD resilience that has defied any AUDUSD bears.
  • USD could go into a possible squeeze earlier this week after Friday’s moves. and James Kim has a few ideas on technicals; see below.

Technical outlook (James Kim)
  • DXY:  Staged a remarkable reversal as seen from most G10s. Targeting 92.20 with stops at 87.20. Monthly 200MA providing support once again.
  • EURUSD: False break in EURUSD as it completed a bearish reversal pattern on Friday. Prefers to short on retracement at 1.24703 with stops at last week's high and TP 1.22413
  • EURNZD: Break of the channel has EURNZD targeting trading towards 1.6517.
  • EURJPY: sitting at the key support level at ¥131.93, its base in 2017. KIV until break of the 200 day moving average.

EURJPY chart


  • EURAUD: set for losses as its caught below a double top curse with 1.55 handle the downside target.
  • USDJPY: Violated the trendline since 2012 or the Abenomics’ trendline. However, monthly 200 moving average could mean a respite from the selling. Tactical long with targets at ¥107.710 where we would cut and reverse to go short. Expect heavier resistance at previous 2012 uptrend.
  • S&P 500: Bounced since the selloff but now sees resistance at the 61.8 retracement at 2744, followed by 2796. Decline in volume is worrying for the longs though.
  • S&P/ASX200: finished last week above the 200 DMA and could see a further 100 points gain towards 6,000, its psychological level.
  • Copper: Monthly chart is looking really positive with a nice upwards channel but we need to clear its 50% retracement at $3.29
  • Gold: Short bias and similar to EURUSD and most of the G10s, dollar reversal could see Gold approaches $1335 then followed by $1319.

For more on forex, click here.

– Edited by Robert Ryan

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], 1130 [Sydney].

FXKhaos FXKhaos
Wish you and your team also a year of positive growth and success!
Madjid Madjid
Hi Kay,
Many thanks, can youplease add the link to this week's recording of the Macro Monday call
Hong Wei Lee Hong Wei Lee
@Madjid Unfortunately due to technical issue, the replay of the call wasn’t saved.


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