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 / 13 November 2017 at 2:08 GMT

Macro Monday: What's the next catalyst for 2017? — #SaxoStrats

Global Macro Strategist / Saxo Bank Group - Singapore Hub
  • Razer starts trading today in an IPO worth up to $HK4.3 billion
  • The company provides software and hardware for gamers
  • Fed's Dudley has flagged early retirement, will Yellen announce hers as well?
  • The US tax plan is likely to be a story for 2018, not this year

By Kay Van-Petersen

Summary of prior week

  • China is taking steps to open up the finance space to foreign ownership – this has been a sticking point on the global M&A landscape and will be viewed as big step in the liberalisation of the CM
  • US and Canada data was quite strong 
  • China CPI and PPI beat again, coming at 1.9%a vs 1.8%e and 6.9%a vs. 6.6%e
  • Tax plan running into quicksand, with a Q4 2017 finish looking unlikely. We’ve been saying most likely Q1, 2018 for well over a month now
  • RBNZ was a touch more constructive than markets expected, very unusual for them to say NZD is fair value
  • Fixed interest: Tighter across the board, BZ bucking the trend
  • FX: This USD three steps forward, two steps back is tiring. Pullback vs. both EUR and JPY
  • Commodities: Overall up, 8% natural gas. SA took oil to highest levels since mid-2015
  • Equities: Had to do a second take, US equities actually down, except for Nasdaq 100 (leader)
  • Volatilities: VIX smash: up 24% for the week to 11.29
COT report
The week ahead
  • Key focus: Inflation, remaining 2017 catalysts, 2018 views
  • Central banks: CL 2.50% e/p (November 15) BI 4.25% e/p (16)
  • Federal Reserve speakers: Harker (November 13), Evans (November 14/15), Janet Yellen (November 14), Bullard (November 14), Bostic (November 15), Evans (November 15), Mester (November 15), Kaplan (November 15), Brainard (November 15) and Williams (November 17/18)
  • ECB president Mario Draghi, FOMC chair Janet Yellen, BoJ governor Haruhiko Kuroda, BoE governor Mark Carney take part in European Central Bank Panel (November 14); Mark Carney (November 16), Mario Draghi (November 17), Bundesbank (November 17)
  • Economy: US: PPI, CPI 2.0%e 2.2%p CORE 1.7%e/p, RS, Empire, IP China: New Loans, Money Supply, RS +10.5%e, FAI +7.3%e, IP+6.2%e Eurozone: IP, ZEW, GDP 2.5%e/p, CPI 1.4%e/p CORE 0.9%e/p Japan: PPI, GDP +1.5%e +2.5%p, IP UK: CPI 3.1%e 3.0%p CORE 2.8%e 2.7%p, RS, PPI, Jobs data New Zealand: House Sales, Biz Mng. PMI 57.5p, PPI Australia: Credit data, Jobs data

What's the next catalyst? Events such as the US tax plan are likely to be next year's story
rather than 2017's. Photo: Shutterstock 

Thoughts on positioning

 Remaining 2017 catalysts

  • Federal Reserve December 13: Less about the hike, more about the change in dots and 2018 outlook.
  • Fed composition: William Dudley has flagged early retirement, will Janet Yellen announce hers as well? Also what about the other seats, ‘Consensus Powell’ would imply that this Fed’s composition, could be the most important of all time
  • US Tax Plan: To be a 2018 story. Something will get done – US midterm elections will drive this; it is not a 2017 story though.
  • Year-end melt-up, call it a Santa rally, or Fear Of Missing Out (FOMO), with indices like the SPX, Eurostoxx and Hang Seng up 15%, 21% and 32% respectively – a lot of managers are underperforming long-only strategies.
  • Razer IPO: 01337:xhkg, new IPO today in wake of the China Literature +100% on day 1. Hang Seng +32% YTD.
  • The IPO was priced at $HK3.88, imply a market cap of c. $HK35bn (c. $4.5bn) and raising of $HK4bn (c. $500mln)

 Source: Bloomberg


  • DXY: resistance at 95 handle proving to be very strong. Trendline from Sept-Oct holds on Friday. Key support at neckline at 94.00. Buy into the 94 with stops below 93.6.
  • EUR: Closed on 200 WMA, recovering to the neckline break level. A break higher of this 1.17 handle for a test higher. H&S should range still points a downside towards 1.1250 level.
  • USDCAD: Holds above the Sept/Oct trendline. Key that this holds this week. Risk tilted to topside.
  • AUDUSD: Struggles to break above the 200 DMA. 0.7620 the key base level to remain this week, failure to do so sees support at 0.7600
  • AUDJPY: Approaching the 2016/017 trendline support at 86, buying the dip remains the strategy.
  • NZDUSD: Fights back to key long term trendline break from recent weeks. Bias remains to sell the NZD.
  • US 10 years: Big sell off on Friday sees prices end below the key major trendline and downside bias remains.
  • USDJPY. Huge false break above the May July trendline. So bias to lower.
  • Nikkei: huge blow-out top before collapsing. Index remains hugely overbought. Pullback towards the key trendline break at 21,750 level. Showing signs of exhaustion.
  • S&P: trades in an outside weekly bar showing exhaustion. This sets up a risk of retracement this week.
  • S&P/ASX200: claims 6,000 and traded above here to 2007 levels. A pullback to 6000 / 5950 to provide traders opportunity to support index.
  • Gold: New weekly high, but with a bearish close on Friday. Deeper selldown in the making. Test towards the 200 WMA at 1230.

KVP's portfolio

Tactical Book: Unchanged
Strategic Book: Unchanged
For this week's recording the Macro Monday call click 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], 1130 [Sydney].


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