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Article / 16 February 2018 at 8:00 GMT

Morning Markets: More of the same – equities up, dollar down

Senior Editor / Saxo Bank
Denmark

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Watchlist

  • UK: Retails sales (09:30 GMT)
  • US: New residential construction (13:30 GMT)
  • US: University of Michigan consumer survey (15:00 GMT)


At the risk of sounding repetitive, today's markets story is the same as it's been every single day this week: equities worldwide are bounding higher, the dollar is bleeding and the yen is scaling new heights. And in another little snippet of déjà vu, Bitcoin has surged past $10,000 as cryptocurrencies pick up the pace once more.


The yen touched an overnight high of ¥105.52 against the dollar before settling back to ¥105.68, a gain of 0.4% and yet another 15-month high. Against this backdrop, the reappointment of Haruhiko Kuroda for another term as governor of the Bank of Japan passed almost unremarked. As well as the yen, other major currencies, notably the euro and sterling, firmed against the dollar too, with greenback bulls (if there are any left) unsettled by a whole range of issues, from inflationary tendencies in the US, to geopolitical tensions and concern about the fiscal and budgetary shortfalls that President Trump's grand tax revision might bring.


So is there anything on the horizon that might feed some fresh direction into these markets? Sadly, the economic calendar is on the light side, though the UK retail sales report for January will be worth a look given a looming Brexit deadline in Brussels. Across the Atlantic, the University of Michigan consumer sentiment survey and an update on the US housing market will both attract interest. All three of these data points are expected to show higher readings.

Market signals

Asian session

  • Wall St rallied strongly overnight thanks partly to Apple and Cisco
  • Bitcoin surged past $10,000 as cryptocurrencies resumed their rally
  • Economists expect the Fed to step up  pace of its rate hikes this year
  • The Lunar New Year holiday starts today in Asia
  • The Shanghai Stock Exchange will reopen on February 22 
  • Other Asian markets shut include Hong Kong, Taiwan, South Korea, Malaysia and Vietnam
  • The RBA's Philip Lowe plans to leave interest rates at their current record lows for a while
  • NZ's manufacturing lifted by 4.5 points in January to a seasonally adjusted 55.6
  • The 10-year yield hit a four-year peak of 2.944%, but crept down to 2.906%
  • Japanese stocks extended a rally in global equities, with the Nikkei up 1.27%
  • The ASX 200 ended the day down 0.08% at 5904, despite rising in earlier trade
  • West Texas Intermediate crude rose 0.4 % to $61.67/barrel.
  • Gold rose 0.4% to $1,358.54/oz

Forex ahead

  • EURUSD rose 0.3% to $1.2546 – the USD was down against most currencies
  • The JPY rose 0.5% to 105.62 per dollar in late trading

From the Floor

Even keel.  "It'll likely be a light end to this volatile week for equities, the VIX is again below 20, so things are normalising," says Garnry.


Commodity strength. "Hedge funds like the rising inflation focus combined with the dollar weakness – it looks like the best week for commodities in six months," says Hansen.


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

In opinion

Down day
The US dollar finished down against all major currencies on Thursday except for the Australian and Canadian dollars, says Michael O'Neill.

Upbeat assessment
The RBA's Philip Lowe delivered an upbeat assessment of the global and domestic economy and reiterated that his next rate move was more likely to be up, writes Saxo's Sydney trading team.


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 Back in the spotlight ... Bitcoin surged above $10,000 overnight as
cryptocurrencies resumed their rally. Photo: Shutterstock

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