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 / 13 March 2017 at 7:59 GMT

Morning Markets: Article 50 headlines prompt GBP buying surge

Head of Editorial Content / Saxo Bank

Morning Markets


  • Italy: Industrial Production (0900 GMT)
  • US: Labor Market Conditions Index (1400 GMT)

The British pound is surging into Monday's European open on news that UK prime minister Theresa May is set to invoke Article 50 this week, setting the Brexit decision in motion. Given that the Brexit vote saw the pound crater from over 1.50 versus the USD to near the 1.20 level (excluding the "flash crash" that saw it briefly spike as low as 1.10 in October 2016), today's movement seems to reflect a desire for certainty on the part of traders.

Recent data prints out of London have also appeared to reflect a resilience on the part of the UK economy that not all analysts expected as we head into the Brexit process. 

Also up this week is the Federal Open Market Committee Wednesday, where a 25 basis point interest rate hike is all but entirely priced into the USD, US equities, and other assets. 

Monday's Asian session saw bourses broadly green, although energy shares were hit hard by the drop in WTI crude prices that began in earnest following last week's US inventory data. The energy-sector weakness hit Australia's S&P/ASX 200 particularly hard, where shares like Santos Limited (minus 2.1%) and Oil Search (minus 2.7%) pulled the index 0.4% lower on the day. 

On the data front, today sees Italian industrial production data expected to show a recovery, while Tuesday sees European CPI data as well as the latest ZEW economic sentiment figures; Chinese industrial output is also due during Tuesday's Asian session, with analysts calling for a 6.1% (year-over-year) expansion. 

Finally, this week also sees US president Donald Trump meeting with German chancellor Angela Merkel in what is likely to be a contentious summit as the two leaders represent the two divergent poles of economic nationalist and pro-globalisation sentiment. 

Market signals

Asian session

  • Asian markets – apart from the ASX200 – were up ahead of the Fed's rates decision 
  • Japan's Nikkei 225 traded up as the yen continued to slip against the dollar
  • Japan's core machinery orders fell 3.2% in January after rising 6.7% in December
  • NZ food prices rose 2.2% in the year to February, the largest increase since Dec 2011
  • Free trade and the euro will be hot topics when Trump meets Angela Merkel on Tuesday

Forex ahead

  • The Australian dollar edged higher; it was worth 0.7571 at 0755 GMT
  • The Aussie fell to a five-week low of EUR 70.49¢ this morning before recovering 
  • GBPUSD gains over 50 pips from overnight lows, now trading at 1.2222
  • NZDUSD adds 0.30% to its value as it heads for the 0.6950 level
  • EURUSD breaches 1.07 handle into Monday's European open

From the Floor

Euro rate hike.Draghi is speaking today and he could stamp out this rumour,” says Hardy.

Bond boost.We’ve got the Dutch elections, Article 50 could be triggered. With all this volatility this week there’s reason to believe we could see more support for bonds,” says Boye. 

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

In opinion

Italy's industrial production numbers for January are set to remain upbeat with output on track to record its sixth positive change, says James Picerno.

Golden recovery
Gold recovered late Friday in response to the US non-farm payrolls report, prompting a drop in the dollar and Treasury yields,
write Sydney's Saxo trading team.

Surprises ahead
The week ahead boils down to a potential upside risk to Fed rate expectations and surprises from the Dutch elections and central bank meetings, says Kay Van-Petersen.


Brexit, currencies, free trade, refugees, Nato, and Ukraine will be on the agenda when German chancellor Merkel meets US president Trump on Tuesday. Photo: Shutterstock

Morning Markets goes out on the TradingFloor platform at 0800 GMT, Monday to Friday.
Click here
to make sure you're up to date with the latest developments.


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