Article / 29 May 2017 at 7:00 GMT

Morning Markets: Three hikes a charm, says Fed's Williams

Head of Editorial Content / Saxo Bank
Denmark

Morning Markets


Watchlist

  • Eurozone: Money Supply (0800 GMT) 

San Francisco Federal Reserve head John Williams told a Singapore audience overnight that the US does not need fiscal policy to boost its economy and added that he sees three 2017 rate hikes (including the one made in March) as the best course for the Fed.

Williams' remarks came during a mixed Asian session that saw Australian shares weighed down by a weak financial sector while Japan- and Hong Kong-listed stocks gained some ground.

Crude oil prices are lower today while mainland Chinese exchanges were closed for a public holiday.

US president Donald Trump's trip to Europe, meanwhile, exposed the broad diplomatic rift between his administration and the centrist Franco-German alliance that has emerged following Emmanuel Macron's win in France.

According to German chancellor Angela Merkel, Europe can no longer "count on" its postwar partnership with the US and must chart its own course; Merkel's remarks followed a contentious discussion in which Trump refused to endorse the Paris climate change agreement.

The US dollar index edged slightly higher this morning and trades at 97.37 into the European open.

Market signals

Asian session

  • North Korea launched a missile into Japanese waters, but market barely reacted
  • It's a long weekend holiday in China, the US and Britain
  • Fed's Williams says that medium-term trends in US inflation are "pretty favourable"
  • Oil lost 0.2% to $49.68/barrel after rallying 1.8% on Friday
  • Gold fell less than 0.1% to $1,265.96/oz. 
  • At 0507 GMT, the Nikkei was up 0.13% and the Kospi was flat
  • The Hang Seng was also treading water up just 0.09% at 0514 GMT
  • The Aussie market was hit hardest, with the AUS 200 down 0.7% at 0538 GMT

Forex ahead

  • The USD edged higher with the dollar index up 0.1%
  • AUDUSD remains under selling pressure as iron ore continues to decline
  • The AUD fell 0.1% to 74.32 US cents, while NZD rose 0.1% to 70.67 US cents.
  • The JPY was little changed in at 111.25 per dollar.
  • EURUSD was down 0.1% to $1.1175 after its six-month high of $1.1268 last week.

From the Floor

June discount.The market is back to discounting a June hike by almost 100%” says Boye.

Worry point.The big worry in Europe should be Italy,” says Garnry. 

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

In opinion

1..2..3
Today’s monthly report on the Eurozone's monetary aggregates will be closely read for any signs that the ECB is tweaking its policy stance, writes James Picerno.

North Korea tests nerves
Asian markets digest the North Korean regime's launch of what appears to be a ballistic missile, writes the Saxo APAC Sales Trading team.

Survival guide
Forex trading is a highly competitive undertaking and there are a number of key factors that separate the successful traders from the unsuccessful ones, explains Max McKegg.

Demand concerns
Iron ore prices fell below $60/t to hit the lowest level since October as traders continued to fret about the outlook for demand, say Saxo's Sydney trading team.

San Francisco
The view from San Francisco appears sunny as SF Fed president Williams calls for three 2017 interest rate hikes, disavowing the need for more stimulus. Photo: Shutterstock

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2y
Fashionapolis Fashionapolis
rate hike looks like a done deal if NFP and CPI are within expectation. Market will hv to start pricing in and make USD a comeback

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