Article / 28 August 2017 at 7:00 GMT

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

Consulting editor / TradingFloor




  • 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

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

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