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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 / 17 January 2018 at 8:00 GMT

Morning Markets: Euro equities to open softer after Dow touches record

Senior Editor / Saxo Bank
Denmark

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Watchlist

  • Japan: Machinery orders (already released)
  • EU: Harmonised CPI (10:00 GMT)
  • US: Industrial production and capacity utilisation (12:15 GMT)
  • Canada: Bank of Canada interest rate announcement (15:00 GMT)
  • US: API weekly statistical bulletin (21:30 GMT)

European bourses are poised for a softer opening today after the Dow touched a sizzling record high only to subsequently fall back lower, followed by weaker Asian and Australian equities that were mired by mining declines.


The Dow's record was to break past 26,000 for the first time ever and hit an intraday high of 26,086.12, before retracing to 25,792.86, a 10.33 point or 0.04% loss on the day. Whether it'll have another go at the magic 26k mark later today remains to be seen, but new worries about the possibility of a US government shutdown next week (the usual budgetary issues) may prevent a fresh assault on the summit for another while. That said, breaching this new high was certainly a record to be noted, especially so as the Dow only broke beyond 25,000 on January 4 this year. 


Elsewhere, there's trouble in the world of cryptocurrencies with Bitcoin, the most famous brand on the market, down 14% and other leaders – Ethereum and litecoin – sharply lower too while smaller players have suffered even heavier declines. The plunges come as former Wells Fargo CEO Dick Kovacevich warns that Bitcoin is "a pyramid scheme" and the chair of the European Securities and Markets Authority cautions that "investors could lose everything" betting on new cryptos.


On the data front today we've got Eurozone harmonised CPI at 10:00 GMT and at 15:00 GMT, an interest rate announcement from the bank of Canada. A hike is is already priced into the market, largely because of the country's robust jobs growth in recent months.

Market signals

Asian session

  • A slide on Wall St weighed on sentiment in Asian markets
  • Japan's machinery orders rose by a robust 5.7% in November, beating forecasts
  • The upbeat data did not help investor sentiment; the Nikkei 225 took a hefty tumble
  • Brent crude has fallen sharply, with a 1.5% slide to just under $70/b
  • Bundesbank president Jens Weidmann said a mid-2019 rate hike by the ECB is realistic
  • Traders have priced in a 25 basis point rate hike by the Bank of Canada
  • Bitcoin has fallen 25%; regulation by S Korea and China has affected the cryptocurrency
  • Iron ore prices took a tumble, driving down share prices for top Australian miners
  • Falls for miners, energy companies weighed on the ASX200; it closed down 0.5% at 6015

Forex ahead

  • The NZD fell against the AUD on Australia's growing consumer confidence
  • USD lost ground against the yen and fell to a three-year low against its peers


From the Floor


China crypto? "Volatility is really picking up across asset markets," says Hardy

Dollar effect. "There's a bit of a correction building in the market," says Hansen

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

In opinion

Red metal optimism
Copper prices have fallen, but HSBC has raised its price forecast for the red metal, given the USD slump and rebounding factory output growth, says Saxo Capital Markets Australia.

Crude caution
Crude prices have fallen amid caution ahead of the release of International Energy Agency inventory data, says the team at Saxo APAC Sales Trading.


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Japanese machinery orders had their sharpest rise in four months in November, pointing to an upbeat outlook for Asia's second-largest economy. Photo: Shutterstock

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