Article / 20 February 2017 at 13:04 GMT

Mid-session Europe: Sterling shines with FX markets mainly calm

Saxo Markets


Foreign exchange

European equities scored modest gains, with investors keeping an eye on a Monday meeting of Eurozone finance ministers, who were expected to discuss a deadlock over debt-wracked Greece’s bailout.

Forex markets were mainly calm, though sterling was the main exception, and GBP was bid across the board .

Funds cut bullish bets on gold last week, while adding silver . Crude oil remained range-bound in a tight interval.

Shares in Anglo-Dutch consumer goods group Unilever shares plunged 7% after Kraft-Heinz withdrew its $143 billion bid.

  • EU Flash consumer confidence indicator (1500 GMT)
Forex developments

It's been a relatively quiet day, with US traders away for the Presidents' Day holiday. Rallying sterling has been the main exception, despite weaker retails sales on Friday that dragged GBP lower amid confirmation that Bank of England dovishness is justified. 

GBPUSD is now back from the 1.2480 area which has been the magnate we have highlighted. Cable has been in a downtrend since February 9, with the top of the channel around the 1.2480-90 area for today and then opening up to the 1.2540 area. The next important data for sterling will be UK preliminary fourth-quarter GDP on Wednesday; the data has been stable since the Brexit referendum, and any weakness could add interest for weaker GBP. The 100-day moving average has been decent technical support on the downside at 1.2408 for today. GBPUSD has failed to close below this moving average since January 23, and a close below could trigger new moves.

USDJPY rose in the Asian session on Cleveland Fed president Loretta Mester’s speech in Singapore. Currently finding the 21-day moving average as the lid at 113.25, with low liquidity due to the US holiday. Notable technical support in USDJPY is in the 112.88 area, corresponding to the 61% Fibonacci level from a rally that began on February 7 to highs of February 15. It is important to see the pair closes day above this level, as it did on Friday, to avoid deeper moves .

FX Options volatilities
After last week’s selling in all majors, the market is slightly better bid in most pairs this morning. The US market is closed today for Presidents' Day, so we still see good selling interest of options in the overnight and 1-week segments.

Brokers are still mainly interested in structuring correct positions (from a protective point of view) heading into the French election. In the medium term, curves seem to be well supported at present levels, while the very short end is still driven by low historic versus implied values. The 1-month covers the March Federal Open Market Committee meeting and is still fairly well bid in most USD crosses, so it is the first tenor given the best selling value without involving any political risk.

No particularly interesting expiry today, nor a lot of important news, so we expect range trading to continue.

Fixed income



European stocks scored modest gains. Investors were keeping an eye on a Monday meeting of Eurozone finance ministers, who were expected to discuss a deadlock over debt-wracked Greece’s bailout.

Shares in Royal Bank of Scotland jumped 6% following news the bank might not sell its Williams & Glyn business. The bank had agreed to the sale during the financial crisis, but it has proved troublesome. 

Rolls-Royce leapt 4% after Goldman Sachs analysts upgraded their rating for the engines maker to "Buy" and put the stock on their “conviction” list.

Steinhoff International Holdings climbed 7%, for the Stoxx 600’s biggest gain, after the Netherlands-listed furniture retailer ended deal talks with South African supermarket operator Shoprite Holdings.

Among decliners, Unilever fell more than 7% after American rival Kraft Heinz on Sunday dropped its $143 billion offer for the Anglo-Dutch consumer-goods giant.

Latest and still open trades on #SaxoStrats

Read more

Mid-session Europe is part of TradingFloor's stable of commentary running through from the US close, through Asia to the European session. Click below to keep abreast of all the developments as they happen.

Asia:      Morning Report APAC: Euro falls on renewed French election concerns

Europe: Morning Markets: Europe looks to Pence for answers

London bus
 The British pound was the lone bright spot in a drab 
FX market on Monday. Image: Shutterstock

— Edited by John Acher

The Global sales Trading desk is a multi-asset team providing customised trading solutions


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