Article / 30 January 2017 at 12:57 GMT

Mid-session Europe: Trump immigration curbs add layer of worry

Saxo Markets
Denmark

t

Foreign exchange
FOREX TABLE
 















European stocks opened lower on Monday as US president Donald Trump’s immigration curbs sparked worries about the potential economic effects of the new administration's policies. 

President Trump signed an executive order banning immigration to the US from seven countries with predominantly Muslim populations, igniting widespread protests at US airports and other locations.

Brent crude oil and WTI remain well and truly stuck within their respective ranges. Opec compliance and support from traders holding a combined gross long of 1 billion barrels is offsetting the rising number of rigs and production in the US.

US futures indices pulled back as investors prepare for a heavy week of data, with meetings at the Bank of Japan, US Federal Reserve and Bank of England slated, as well as numerous important corporate earnings results.


Watchlist
  • Germany January preliminary CPI (2.0% exp. y/y) (1300 GMT)
  • US December personal income (0.4% exp.) (1330)
  • US December PCE core (1.7% exp. y/y) (1330)
  • US December pending home sales (1500)

v
Forex developments

Trading has been very choppy on the FX side of the financial markets by Europe’s midsession on Monday. The USD index erased all its morning losses and reapproached local key support levels at 100.6.

EURUSD has been offered, down by about 0.25% to the current 1.067 as the broadly watched EU business climate index missed estimates (0.77 vs 0.8e). The economic sentiment Index, however, narrowly beat expectations (108.2 vs 107.9e). Germany’s provisional CPI numbers are expected at 1300 GMT.

USDJPY slips 0.4%, trading near 114.65, with minimums of 114.24 tested earlier during the Asian session.

GBPUSD keeps sliding off resistance, found at the 100-day exponential moving average at 1.258-1.26. With today’s decrease equal to 0.25%, it is currently traded at 1.2515.


FX Options volatilities
 
Vols
Vols TABLE
 
Nothing to report from the Asian vols market this morning due to holidays.

In Europe, we saw good selling interest in USDJPY. Overnight opened around 18.5 and is now 15.0. On the curve, we saw 9-month given at 11.9 and 2-month at 12.6.

EURUSD is also dominated by sellers today. Some 500-600 million of one-month was traded at 8.05, with one buyer, and the market is still quoting around this level.

GBP vols almost unchanged, if anything small bid relative to Friday. Term structures: the market is small bid for 3-month and even better bid for 4-month euro crosses. Nine-month also relatively bid compared with 6-month and 1-year in euro crosses, or 8-month even better. All of this stems from potential euro risk related to politics.


Fixed income
Rates TABLE

















Commodities

Commodities table
 

d
Equities
EQUITIES TABLE
 
















Shares fell in Europe after immigration curbs introduced by US president Donald Trump added an extra layer of uncertainty about the economic impact of the new administration's policies. The pan-European STOXX 600 index dropped 0.8%, led by a 1.6% fall in resources-related stocks as commodity prices fell.

On the movers list today, Vodafone rose 2.7% as the telecom company said it is in talks with Aditya Birla Group to acquire its Idea Cellular unit. Idea Cellular shares in Mumbai leapt 27%.
 
Lloyds Banking Group fell 1%. The UK government has cut its stake in the UK’s largest retail bank to 3.57 billion shares, or about 4.998% of issued share capital, from a previous holding of 4.24 billion shares. Lloyds was bailed out by UK taxpayers during the financial crisis, with the government taking a 39% stake.

Asset manager Aberdeen lost 3.5% after a negative article in the Sunday Telegraph.

Germany's Software AG traded up 5% after being upgraded at UBS and HSBC on its growth outlook. 

US futures indices pulled back as investors prepare for a heavy week of data, a Fed meeting on Wednesday and plenty of important company results. The coming week will bring reports from a fifth of the S&P 500 index, plus five Dow components. Among those — and crucial for the consumer-reliant technology sector — will be Apple Inc. on Tuesday and Facebook on Wednesday, while Amazon.com reports on Thursday.

Latest and still open trades on #SaxoStrats



Join our Weekly OptionsLab on Wednesday  to find out more on covered call strategy.

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.





Federal Reserve system

Attention swings to the Fed with an FOMC scheduled 
for Wednesday. Image: Shutterstock

— Edited by John Acher

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

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Tradingfloor.com 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 Tradingfloor.com 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 Tradingfloor.com 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 Tradingfloor.com or as a result of the use of the Tradingfloor.com. 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 Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com 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