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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 / 06 October 2017 at 7:00 GMT

Morning Markets: Big banks flee Catalonia as independence looms

Head of Editorial Content / Saxo Bank
Denmark

Morning Markets


Watchlist

  • Germany: Manufacturing orders (0600 GMT)
  • US: Nonfarm payrolls (1230 GMT)

Thursday saw New York close at record highs with Asia-Pacific taking the baton overnight. Australian shares rose nearly 1% on a declining Australian dollar, while Hong Kong’s Hang Seng index rose by 0.22% as carmaker (and Saxo shareholder) Geely saw gains of close to 7% on the day.

In Europe, the ongoing standoff in Catalonia is beginning to weigh on the regional economy with Sabadell, the second-largest Catalan bank, announcing plans to move its legal headquarters out of the region.

CaixaBank, Catalan’s largest financial firm, has also said that it is considering a move out of the region.

Nintendo shares rallied by 2.49% in Japan on news that the company will increase production of its Switch games console to 2 million units/month. The Nikkei 225 rose by 0.27% overall.

Today sees the US release its latest confirm payrolls data with analysts expecting a decline from August with some forecasters expecting Hurricanes Harvey and Irma to have inhibited job growth to the tune of 125,000 positions. Goldman Sachs has said that it could see payrolls having expanded by as few as 50,000 new positions in September.

The US dollar strengthened overnight with gold and the yen losing ground on the move. Crude oil prices headed lower overnight after rising Thursday on news that Opec and Russia may extend their production cut deal through 2018.

Beyond nonfarm payrolls we have Canadian labour force and PMI releases due at 1230 and 1400 GMT respectively.

Market signals

Asian session

  • Crude soared 2% on hopes of a Saudi/Russian production curbs through to 2018
  • The rally on Wall St on Thursday gave Asian investor sentiment a lift
  • US natural disasters may weaken the Nonfarm Payroll figure to be released later today
  • Shares rose sharply in Japan in early trading, but later gave up some gains
  • Japan's Nikkei 225 closed up 0.30% at 20,690.71
  • Hong Kong's Hang Seng was up 0.22% to 28,442.36 at close
  • Korea's Kospi Composite closed up by  a hefty 0.90% at 2,394.47
  • Markets were closed in China for the Golden Week holiday
  • Banks and mining companies helped drive a rally on the ASX
  • Australia's S&P/ASX200 closed up 0.90% at 5,702.40

Forex ahead

  • USD made gains against the yen; it was worth ¥112.9590 at 0509 GMT
  • The fragile Aussie dollar tumbled below 0.80, thanks to renewed USD strength
  • AUD was worth just 0.7763 at 0755 GMT, well down from recent highs
  • NZD lost ground to USD, and weak dairy prices have left its outlook bearish

From the Floor

No great expectations. Nonfarm payrolls are the day’s key event with +75,000 to +80,000 seen,” says Hardy

Asian action.For equities we expect the biggest NFP action in EM markets,” says Garnry

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

In opinion

Sweeter outlook

Raw sugar has rebounded from bearish concerns, and found a firm footing above its 50-day and 100-day moving average lines says the team at Saxo APAC Sales Trading

Trump FX trade

While rate differentials are in the driver's seat when it comes to the major US dollar cross rates, it also appears that what's good for Donald Trump is good for USD, says Max McKegg.

Nonfarm scenarios

Kay Van-Petersen outlines three scenarios covering a variety of risks for today's US payrolls data, in his nonfarm payrolls breakfast update. 

Barcelona


Catalonia's big banks are making their exit as authorities prepare
 to declare independence from Spain. Photo: Shutterstock

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