Article / 20 November 2017 at 7:59 GMT

Morning Markets: APAC posts potential double-top, EUR wilts

Head of Editorial Content / Saxo Bank
Denmark

Morning Markets


Watchlist

  • Japan: Provisional trade statistics (already published)
  • Switzerland: Trade Balance (0700 GMT)

The euro slumped overnight on reports from Berlin that Angela Merkel’s Christian Democrats may find themselves unable to form a coalition government. The news came following the Free Democrats’ decision to pull out of talks with Merkel’s party and the Greens, with the potential result being a fresh round of elections at Europe’s economic heart.

EURUSD plunged from over 1.18 to as low at 1.1712 before rising to the 1.1750 area ahead of the European bell. 

In Asia, stocks broadly retreated from last week’s recovery rally with the Kospi and the Nikkei in the red while the Hang Seng index eked out a 0.15% gain on the back of continued post-earnings outperformance from Tencent. The Shanghai Composite was in the red for much of the session before pushing higher into the close.

From a technical analysis perspective, Bloomberg reports this morning that the APAC trend could be leading towards a double-top on the MSCI APEC index, potentially pointing to a future downturn. The Asian session saw Japan release a series of better-than-expected exports figures for October, but they were not sufficient to halt the benchmark index's decline.

The weekend saw Bitcoin hit fresh highs north of $8,000 while the US dollar index climbed 0.3% overnight. Trading volumes are likely to be slower than usual today and potentially this week due to the impact of the US Thanksgiving holiday.

Market signals

Asian session

  • The Nikkei 225 retreated, adding to Friday's drop; it closed down 0.60% at 22,261.76
  • Japan's exports made double-digit gains in October; they were up 14% from last year
  • Its exports to the US soared 7.1%; that could spark protectionist talk from Donald Trump
  • Online retailer Alibaba will pay $2.9bn for a 36% stake in retail chain Sun Art Retail
  • Bitcoin rose 4.6% over the weekend to a record $8,053.34.
  • There is pessimism about whether this week's NAFTA talks will bear any fruit
  • The S&P/ASX200 clawed back part of its early fall; it closed down 0.19% at 5,945.70
  • ASX-listed energy explorers made gains, thanks to firmer crude prices
  • Germany faces uncertainty after coalition talks broke down

Forex ahead

  • The euro fell on news of failed coalition talks in Germany
  • USD regained some of its slide against the yen; it was worth ¥112.01 at 0755 GMT
  • The Australian dollar hit a five-month low; it was worth just 0.7563 at 0755 GMT
  • NZD is performing poorly, despite RBNZ comments that the currency is now at fair value

From the Floor

Euro wobble.There’s tremendous uncertainty in Germany and the immediate fallout is uncertain,” says Hardy

Oil talk.Comments from various oil ministers ahead of Opec meeting will dominate,” says Hansen

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

In opinion

Aussie drops

First it was the decline of the AUD, then came the turn of the ASX in early trading. Only energy stocks showed any power this morning, writes Saxo Capital Markets

Cryptic forecast

We're heading to a structural shift, with the CME's imminent launch of Bitcoin trading and more to come in the crypto asset space, says Kay Van-Petersen in his Macro Monday column

Harvest fears

Grains have moved higher on worries that the La Niña pattern will bring colder winters to the northern US, droughts to Brazil and rains to Asia, says Saxo APAC Sales Trading

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Back to the polls? A minor party has walked out of coalition talks with Angela Merkel, leaving the top EU economy, and the rest of the economic bloc, facing uncertainty. Photo: Shutterstock

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