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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 / 05 May 2015 at 7:00 GMT

Morning Markets: Eurozone's deflation spectre softens

Editor / Saxo Bank
Denmark







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Source: Saxo Bank

As of 0655 GMT
(Red indicates a move down, green indicates a move up)

Watchlist

  • Eurozone Producer Price Index (0900 GMT)
  • US Redbook Index (1255 GMT)
  • US: ISM Non-Manufacturing Index (1400 GMT) 

The risk of deflation in the Eurozone is expected to recede further with today's producer price inflation data. 

Economists are optimistic that the tide is turning on deflation in the region, but slowly. Year-over-year PPI will continue to fall by 2.3% through the end of the first quarter, according to consensus forecasts, with PPI’s deflationary bite expected to soften for the second straight month.

Elsewhere, the search for bright spots in the US economy after a lacklustre first quarter continues and investors will be keenly scrutinising store sales and services sector data.

US trade balance data published at 13:30 BST will be the highlight of the NY session. Canadian trade figures are also out today, with USDCAD trading at 1.2131 ahead of the release.

There are also Swedish industrial production data prints at 08:30 BST with USDSEK and EURSEK trading right now at 8.4060 and 9.3384 respectively.


Market signals

Asian session

  • The Reserve Bank of Australia cuts interest rates to a record low from 2.25% to 2%.
  • RBA cites 'ongoing economic weakness' for its decision.
  • Brent crude oil futures slip to $66 a barrel, falling from a 2015 high.
  • HSBC Manufacturing PMI for China lower than the previous reading. 
  • The Hang Seng Index trades down almost 1.5% currently.

Forex ahead

  • AUD pushes broadly higher, up nearly nearly 1% vs. USD.
  • EUR extends its negative streak, taking EURUSD to near 1.1130.
  • GBPUSD trading flat around 1.512.
  • USD steady against the yen, with USDJPY holding at 120.14.
  • EURJPY down 0.32% to 133.45.
  • EURUSD one month straddles open today at a volatility of 12.95%.

From the Floor

No further easing?The RBA removed a key part of its statement”, says Halley .

Short rally. “Any upside reaction in AUD will likely end quickly” says Hardy. 

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

In opinion

Supermarket sweep
Who would have thought grocery delivery times affect share prices? Alibaba seems to, as it hones its online grocery delivery platform, says Neil Flynn in this trade view. 

QE or not QE
Pauline Loong explains quantitative easing with Chinese characteristics - it's the hottest thing in town after the debt for bond flop

Euroflop
Eurozone enervation is eroding the euro, which is set to continue weakening against the dollar, says Stephen Pope

That uncertain feeling
Need help on how to trade what could be the most inconclusive general election in the UK in decades? Owen Thomas is here to help.

Moving on
The deflation risk is receding in Europe, reckons James Picerno.

Up in the air
Equity markets are soaring on modest growth and unprecedented monetary policy easing. Will the rally continue, asks Teis Knuthsen.

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It's hoped the Eurozone's brush with deflation might be over. Photo: iStock

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