Kim Cramer Larsson
Areas covered in this webinar by Saxo Bank technical analyst Kim Cramer Larsson include EURUSD, USDJPY, GBPUSD, EURGBP, gold, silver, S&P 500, the Nasdaq, the Dax, the FTSE and the Dow Jones.
Article / 21 March 2017 at 12:20 GMT

Mid-session Europe: UK inflation surprise boosts sterling

Saxo Markets


Foreign exchange

European shares are broadly up, but French stocks are outperforming by the largest margin on the back of pro-European Union, pro-globalisation politician Emmanuel Macron's poll defeat of the nationalist Marine Le Pen following Monday evening's televised debate.

The French new is also boosting the euro, with EURUSD having broken north of the 1.08 handle.

From the UK, a surprise uptick in inflation has the pound on the rise and equities lower, with cable up nearly one Big Figure from today's open.

Crude oil, meanwhile, is finding its footing on the back of a cheaper USD while fold prices find resistance at $1,238/oz.


  • US Current Account (1230 GMT)
  • US API Weekly Statistical Bulletin (2030 GMT)
  • JP Monthly Trade Statistics (2350 GMT)
  • JP BoJ Monetary Policy Meeting Minutes (2350 GMT)

Forex developments

EURUSD is also continuing its bid tone and breaking the 1.08 area towards midday. The 50% Fibo level from the Trump drop in EURUSD comes in at 1.0817, which was an area swiftly rejected on February 2, so a break here opens for the next very interesting tech level at 1.0889 (200-day moving average)

USDJPY continues losing steam and so far we are in our third day below the 100-day moving average at 113.35. We need to start seeing USDJPY back above this level to avoid the drop extending into the range we had spoken of yesterday from 111.50 to the 113.30 area.

GBP is dominating the European FX session headlines following a stronger CPI reading for February at 0.7% versus an expected 0.5% (month-over-month) giving further weight to BoE hiking potential. GBPUSD is trading comfortably above its 100-day moving average at 1.2412. The next key level is 1.2500 which has been very decent tech resistance throughout February
Commodity currencies: AUDUSD 
FX Options volatilities

The curves are better offered after small buying interests yesterday; this is being driven by better risk sentiment after the French debate yesterday evening. Euro crosses are particularly better offered.

The most buying interest we have seen is in euro upside, while there is some unwinding of downside and at-the-money strikes.

(Keep in mind that the levels we are trading at are decent buying levels and we don’t expect curves to dramatically fall from here. ..)
In the Asian crosses, we think AUD against USD or EUR is the best gamma buy. EURUSD is neutral, with the pair still overly dominated by range-trading and driven by strike maturities.

Fixed income




French stocks rose this morning, outperforming other European equities after respondents in a poll showed they favored centre-right politician Emmanuel Macron in the first debate between the candidates running to become France’s next president.

The CAC 40 rose 0.3% to 5,025, stronger than the Stoxx Europe 600’s rise of less than one point to 377.7 Elsewhere, the Dax 30 was up 0.1% at 12,064.

The FTSE 100, meanwhile, underperformed its European peers and fell 0.2% to 7,418.53, with the benchmark index pulled down as the pound climbed on the back of data showing British inflation rising by the fastest pace in more than three years.

Shares of Barclays rose 1.5%, Royal Bank of Scotland PLC shares gained 1.1% and Lloyds Banking Group PLC was up 0.8%. But shares of Asia-focused lenders Standard Chartered turned down 0.1%, and HSBC Holdings PLC swung down 0.2%.

Elsewhere, Akzo Nobel NV pushed 3.7% higher as PPG Industries Inc. PPG, +1.03% is said to be preparing another bid for the Dutch paints and chemicals company after its first attempt failed earlier in March.

The replay of our Morning Call can be found here.

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.

 British consumer prices are on the rise, taking sterling upwards in their slipstream. 
Photo: Shutterstock

— Edited by Michael McKenna

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


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