Article / 28 August 2017 at 7:00 GMT

Morning Markets: EUR up, fuel spikes as c.banks dither, Harvey strikes

Consulting editor / TradingFloor
Norway







MM TABLE

 


Watchlist

  • EU: Monetary developments in the euro area, M3 (0800 GMT)
  • Italy: Business and consumer confidence indices (0800 GMT)
  • US: Dallas Fed manufacturing index (1430 GMT)


The US dollar fell and the euro rose after US Federal Reserve chief Janet Yellen and European Central Bank president Mario Draghi failed to provide new monetary policy clues in their Friday speeches to the Fed's annual Jackson Hole symposium.

The euro reached a 2-1/2-year high after Draghi refrained from talking down the single currency, and the dollar remained weak, with EURUSD climbing as high as 1.1965 as a result.

Meanwhile, gasoline futures prices spiked after Tropical Storm Harvey hit Texas on Friday, shutting roughly a quarter of US refining capacity and causing catastrophic flooding in the heart of the American energy industry over the weekend.

Crude oil prices initially jumped on Friday, but were mixed on Monday as markets tried to determine Harvey’s impact on oil output.

Asian equity markets were mixed on Monday, with Japan's Nikkei flat and Hong Kong's Hang Seng breaking above 28,000 for the first time in more than two years as financial stocks rallied. Shanghai stocks also gained, but South Korea's KOSPI fell.

With the US dollar softening during the Monday Asian session, China's offshore yuan (CNH) firmed to its strongest level against the USD in more than 12 months.

Though Monday's data calendar is light, markets will get plenty of macroeconomic data to trade on this week, including the US Labor Department's August employment report, also known as nonfarm payrolls, on Friday.


Market signals

Asian session

  • Disruption to Gulf of Mexico rigs and from Tropical Storm Harvey initially lifted crude prices
  • Gasoline futures on Nymex for September delivery soared 5.6%
  • However, WTI crude fell 0.4% to $47.70/b in Asian time, after its 0.9% rise on Friday
  • Gold rose 0.2% to $1,294.28/oz in Asia trading
  • North Korea has ratcheted up tensions with three missile launches
  • Samsung's acting chairman Lee Jaeyong has been jailed for corruption
  • BoJ governor Haruhiko Kuroda kept a low profile at the Jackson Hole summit
  • Australian Prudential Regulation Authority will investigate CBA, the top Aussie bank
  • ECB's Mario Draghi refrained from talking down the common currency at Jackson Hole
  • Japan's Nikkei share average was flat on Monday, down -0.04% at 0512 GMT
  • Hong Kong and Shanghai markets fared well, up 0.39% and 0.86% at 0518 GMT
  • South Korea's KOSPI was hit hardest, down 0.42% at 0533 GMT

Forex ahead

  • EUR gained against USD following Mario Draghi's optimistic speech at Jackson Hole
  • EUR was trading at $1.1920 after touching $1.1965, the highest since January 2015.
  • The JPY advanced 0.2% to 109.14 per dollar, extending gains from Friday

From the Floor

Yellen underwhelms. "I think it will go down in infamy as a very poorly timed and tone-deaf speech," says Hardy.

Harvey hits. "This morning and this week the market will try to gauge the impact on refinery and pipeline assets," says Hansen. 


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

In opinion

1..2..3
There is reason to be optimistic about US manufacturing, including the fact that non-defence capital goods orders excluding aircraft rose by 0.4% in July, says James Picerno

Loonie power
USDCAD has dropped 7% since the Bank of Canada announced a shift to tighter policy, and the technicals for the currency pair remain bearish, says Michael O'Neill.

Yen impact
How the Bank of Japan manages the trade-off between quantitative easing and yield curve control when it is put to the test will have a major impact on the yen, Max McKegg predicts.

Copper riding high
Copper has hit a multi-year high on signs of strong demand from China for the red metal, and comparatively low inventories, says the Singapore-based team at Saxo APAC Sales Trading.

Correction looms
EURUSD seems to have exhausted itself and could be ready for a correction down to at least 1.1365 before a new push higher, writes technical analyst Kim Cramer Larsson.


Jobs sign

 Key macroeconomic data due out this week include US nonfarm 
payrolls on Friday. Image: Shutterstock


Morning Markets goes out on the TradingFloor platform at 0700 GMT, Monday to Friday.
Click here
to make sure you're up to date with the latest developments.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Tradingfloor.com 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 Tradingfloor.com 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 Tradingfloor.com 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 Tradingfloor.com or as a result of the use of the Tradingfloor.com. 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 Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com 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