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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 / 24 September 2015 at 7:03 GMT

Morning Markets: Abe's lost arrow


 
 

Watchlist

  • Germany: GfK consumer sentiment (0600 GMT)
  • Sweden: Producer price index (0700 GMT)
  • Germany: IfO business climate (0800 GMT)
  • Norway: Norges Bank interest rate decision (0800 GMT)
  • US:                  Durable Goods Orders (1230 GMT) 
  • US:                  Initial Jobless Claims (1230 GMT)
  • US: New home sales (1400 GMT)
  • US: Fed's Yellen lectures at Amherst (2100 GMT)


The Chinese slowdown's impact on neighbouring Japan was thrown into sharper focus overnight as new PPI figures revealed that the rate of growth in Japanese manufacturing has stalled. Coming on the heels of an unexpected dip in GDP and with consumer prices doggedly refusing to inch higher, it is becoming increasingly clear that prime minister Shinzo Abe's "third arrow" of economic stimulus is missing in action. This means that another dose of monetary policy easing is a distinct possibility, though what buttons Abe has yet to press is rather a mystery.


In the United States today, market participants will be eager to hear Fed chief Janet Yellen's Amherst lecture, especially for any insight it might offer into the reasoning behind her decision last week to keep interest rates steady.


The VW fraud scandal, meanwhile, thunders on with increasing ferocity. As Saxo's head of equity strategy, Peter Garnry, pointed out yesterday, the scandal may well spread to the European car industry. Worse still, Reuters says that the scandal could pose a bigger threat to the German economy than the Greek debt crisis. 

Market signals

Asian session

  • Shares surged into positive territory in Shanghai afte the worrying slide on Wednesday
  • The Shanghai Composite was up 0.86% to 3,142.68 at 0613 GMT
  • Korea's Kospi Composite Index was up 0.14% to 1,947.37 at 0421 GMT
  • The Tokyo bourse reopened after a five-day break and took a sharp plunge at the open
  • Japan's Topix was down 1.8% to 1435.71 and the Nikkei down 2.3% at 0400GMT
  • Stockmarkets in Singapore, Kuala Lumpur and Jakarta were closed for holidays
  • The ASX shrugged off China worries and rebounded from Wednesday's low
  • The S&P/ASX200 was up 1.25% to 5,060.60 at 0545 GMT
  •  The AUDUSD rebounded from its $0.69 low, and reached close to $0.70 at 0544 GMT

Forex ahead

  • USD continues to be bid, except against the euro
  • Market looks ahead to Yellen speech tonight
  • EUR gains as Draghi downplays QE urgency
  • No relief for EM currencies as commodity pressure persists


From the Floor

On alert. “We are looking at a very nervous market,” says John J Hardy.

Real pain. “The present situation in Brazil is extremely tense,” says Simon Fasdal.

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion


1...2...3
Volkswagen has 400,000 employees in Europe and extensive transnational supply chains, so the car maker's scandal will hurt business sentiment in many countries, says James Picerno


Commodity blowback
The Volkswagen scandal has hit platinum, which is under pressure on fears of falling demand for the metal used in diesel catalytic converters, says the team at Saxo APAC Sales Trading


More QE on the menu
Time is running out for the inflation-fixated Bank of Japan and the European Central Bank Another QE round for both central banks is entirely possible, says Max McKegg


rust


The Volkswagen rot might spread to Europe. Photo: iStock

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