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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 / 22 August 2017 at 7:00 GMT

Morning Markets: Asian stocks, Afghan troops surge

Head of Editorial Content / Saxo Bank
Denmark







Morning Markets


Watchlist

  • Germany: ZEW economic sentiment indicator (0900 GMT)
  • US: API weekly statistical bulletin, incl. crude oil stocks (2030 GMT)
  • UK: CBI industrial trends orders survey (1000 GMT)
  • US: Richmond Fed manufacturing index (1400 GMT)

US president Donald Trump, as expected, announced a buildup of 4,000 troops in Afghanistan citing the potential for a power vacuum in the event of a hasty withdrawal from the region.

While military commitments may be in line with Republican party norms, Trump used the opportunity to excoriate US foreign policy leadership on their longstanding regime-change policy, signalling a continuing disconnect between GOP leaders and his populist base.

Asian stocks climbed overnight on the back of several positive regional earnings releases, while the Chinese onshore renminbi rose to its strongest level versus USD in almost two weeks after the People's Bank of China fixed the daily trading midpoint at 6.6644.

The USD index edged higher with the dollar making tentative gains against EUR ahead of European Central Bank president Mario Draghi's speech at Jackson Hole on Friday. Meanwhile, gold slid after its highest close since early June Monday.

Today brings the latest German ZEW sentiment indicator, with investors broadly expecting a positive result.

Market signals

Asian session

  • The US experienced its first total solar eclipse in nearly a century
  • “Wish the moon wasn’t the only thing casting a shadow," tweeted Goldman Sachs CEO
  • Trump's new Afghan strategy focuses on fighting terrorism instead of nation-building
  • Lioaning posted a 20% drop in GDP after President Xi urged accurate data reporting
  • Japan's Nikkei 225 crept into positive territory after sharp falls on Friday and Monday
  • The Nikkei 225 was up by a slim 0.02% to 19,397.69 at 0549 GMT
  • The Hang Seng soared on earnings optimism; it was up 1% to 27,426.05 at 0543 GMT
  • WTI gained 0.2% to $47.50/b after tumbling 2.4% on Monday
  • Iron ore prices have soared 50% from their June 13 low of $53.36/tonne
  • Prices for the industrial metal zinc have hit their highest level in a decade
  • Zinc closed up 0.05% at $3,125.5/tonne on the LME on Monday
  • BHP shares soared, even though the miner's $5.9bn profit fell short of expectations
  • Australia's S&P/ASX200 rebounded, helped by gains for resources sector
  • The S&P/ASX200 was up 0.4% to 5,748.90 at 0535 GMT

Forex ahead

  • The Australian dollar ticked higher; it was worth 0.7934 at 0533 GMT
  • JPY lost 0.3%, erasing Monday’s gains; USD was worth ¥109.2565 at 0515 GMT
  • Renewed tensions with North Korea weighed on the US dollar
  • USD, however, gained ground versus EUR ahead of Draghi's Jackson Hole speech

From the Floor

Crude’s path. Oil is struggling to gain some momentum in either direction,” says Hansen.

Nasdaq 100.We are in a bearish trend, at least short-term,” says Cramer Larsson.

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

In opinion

1..2..3
Germany's ZEW data could dip slightly but that isn't expected to materially change the generally upbeat outlook for Europe's top economy, writes James Picerno.

Is it too late for the 'Trump trade'?

The US presidentappears to be preparing a pivot back to tax reform and infrastructure, but at this point his credibility may not be enough to move markets says Michael McKenna.

BHP in the black
The world's largest miner has swung back from last year's massive loss to a $5.9bn profit, but its earnings missed expectations, writes the team at Saxo Capital Markets (Australia).

Precious exposure
Hedge funds boosted their exposure to precious and industrial metals in the week to August 15, while farm commodities were sold heavily across the board, writes Ole Hansen.

Mannheim


Expectations are upbeat about economic sentiment data due out today from the ZEW Institute in Mannheim, Germany. Image: Shutterstock

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