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 / 21 November 2017 at 8:00 GMT

Morning Markets: Focus on Merkel and UK data

Senior Editor / Saxo Bank




  • CH: Trade balance (already published)
  • UK: Public borrowing/finances (09:30 GMT)
  • UK: CBI Industrial Trends (11:00 GMT)
  • US: Existing home sales (15:00 GMT)
  • US Fed chair Janet Yellen speaks (23:00 GMT)

European bourses are likely to open higher after a buoyant Wall St. session yesterday and strong gains in Asia where the Hang Seng index was propelled over 2% ahead on renewed confidence in the insurance sector.

Market developments elsewhere are less easy to predict following the euro's jittery performance yesterday which saw it plunge after the German coalition talks fell apart, then recover and then wilt again. But a pall of uncertainty still weighs over Angela Merkel's political future – and by extension the future of the European Union itself – for as long as the government question remains unresolved. The chancellor has already declared that she will run again if fresh elections take place because “Germany needs stability” but there is no certainty yet that this will happen.

In the United Kingdom, the still-muddled and messy Brexit process will focus attention on today's batch of economic releases (which are just about the only interesting data out of Europe this week). The UK numbers, which include public borrowing and finances as well as the industrial trends report from the Confederation of British Industry, should provide a useful measure of what many see as a self-induced, Brexit-inflicted economic decay.

Market signals

Asian session

  • Gold lost ground overnight; it was down 1.2% to $1,277.33/oz
  • The Dax shrugged off Angela Merkel's political impasse and headed 0.5% higher
  • Asian markets took a positive lead from Wall St and European stockmarkets
  • The Nikkei 225 rebounded strongly from Monday's slide; it was up nearly 1% in late trade
  • Activist investors have bought into Toshiba's ¥600bn ($5.4bn) share offer
  • The S&P/ASX200 rebounded, thanks in part to firmer iron-ore prices lifting the miners
  • It closed 18 points or 0.3% higher to finish at 5964
  • The RBA's minutes showed doubt about the timing of a return to meaningful wages growth 
  • The European Banking Agency will shift from London to Paris after Brexit
  • Janet Yellen's resignation is effective from when Jerome Powell takes over as FOMC chair 
  • Trading was subdued in US markets in the lead up to Thanksgiving on Thursday

Forex ahead

  • The NZD was little changed against the greenback ahead of tonight's dairy auction 
  • Merkel's failed coalition talks weighed on the euro
  • Talk of the UK Brexit 'divorce settlement' from the EU could prompt more GBP volatility
  • The Australian dollar dropped sharply following the release of the RBA minutes
  • The AUD fell from US75.58¢ ahead of the release to US75.49¢ just after

From the Floor

Euro outlook. "In Germany, Merkel is said to favour new elections," says Hardy.

Costly Brexit. "Sterling has firmed on the story that the UK is willing to double its EU divorce  bill offer to £40bn," says Hardy.

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

In opinion

Crude hopes
The Saudi energy minister said Opec will ensure its exit from the current accord on output will be a gradual adjustment to prevent the return of a glut, says Saxo Capital Markets Australia.

Euro struggles
The EUR is struggling against the USD on German Chancellor Merkel's news that she would prefer new elections over leading a minority government, writes Saxo APAC Sales Trading.

Brexit fallout ... Paris will be home to the European Banking Agency after it leaves the UK; rival bidders Brussels, Dublin, Frankfurt, Prague, Luxembourg City, Vienna and Warsaw missed out.
Photo: Shutterstock

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