Article / 18 October 2016 at 7:00 GMT

Morning Markets: Greenback felled by profit-taking

Deputy Editor / TradingFloor.com
Denmark

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Watchlist

  • UK: Consumer Price Index (0830 GMT)
  • US: Consumer Price Index (1230 GMT)
  • US: NAHB Housing Market Index (1400 GMT)
The US dollar is broadly lower as Tuesday's European trading session begins on what is likely to be profit-taking and position adjustment in the wake of last week's strong gains as well as fears that the Fed might find it necessary to maintain its accommodative monetary policy for longer. One noteworthy exception is the renminbi, which has weakened to a six-year low against the greenback despite a higher fixing by China's central bank overnight.

Back on this side of the globe, equities are set to open in uncertain mood following a soggy Wall Street start to the week and uninspiring Asia trading. That said, European technology and media stocks may be lifted by Netflix's stunning 20% gain in after-hours trading Monday as the company revealed an unexpectedly strong spurt in subscriber numbers.

In the UK, the many problems posed by the Brexit decision continue to weigh on markets and earlier today, Europe's largest discount airline, Ryanair, downgraded its 2017 earnings guidance by 5%, blaming the weaker pound sterling. British data also features on today's agenda with the inflation update due at 0830 GMT expected to provide a higher reading in line with the increased cost of importing goods and services into the country, proving the nonsense of those pre-vote claims that the whole exercise would be cost free.

Market signals

Asian session

  • Markets in Asia were mixed at the open but higher by mid-morning as oil prices rose
  • The ASX200 had a soft start and closed up 0.4%
  • Australia's monthly new motor vehicle sales were up 2.5% in September
  • New Zealand's third-quarter CPI dropped to 0.2%, from 0.4%
  • RBA chief Philip Lowe defends 'flexibility' of inflation target and says housing is 'mixed'

Forex ahead

  • The Aussie dollar jumped to a 16-month high against the euro in overnight trade
  • AUD was around 0.7660 against the US dollar at midday
  • USDJPY was 103.86 compared with levels near 104.04 on Monday

From the Floor

Netflix surprise. “The amount it has to spend on generating new clients is still a worry for me,” says Garnry.

Downbeat dollar. “The USD has been a little on the back foot as it looks like the Fed could be accommodative for longer,” says Moltke-Leth


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

In opinion

1..2..3
Stronger inflationary winds are set to blow in the UK in the near term, with consumer inflation expected to turn higher in September, explains James Picerno.

Aussie holds
The Australian dollar is showing resilience around the 0.7630 mark, writes the team at Saxo Capital Markets (Australia).

Kiwi sitting pretty
The New Zealand dollar rallied after inflation came in at 0.2%, writes Max McKegg, and now a rate cut next month might just about do the trick.

Mixed movements
Markets in Asia were mixed in early trade on Tuesday, with Japanese shares falling on the back of a relatively stronger yen, write Saxo's Singapore trading team.

ryanair

 Ryanair – the latest casualty of the Brexit experiment. Photo: iStock

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18 October
Martin O'Rourke Martin O'Rourke
UK inflation rose to 1.0% in September for its biggest rise in two years as the plunging value in sterling starts to infiltrate the system via higher prices for imported goods. http://www.bbc.com/news/business-37688593 Although still low by historical standards, inflation is expected to rise steadily over the next 12-18 months.
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