Article / 17 August 2017 at 7:00 GMT

Morning Markets: Trump isolated, dollar on back foot

Head of Editorial Content / Saxo Bank

Morning Markets


  • Japan: Provisional monthly trade statistics (published)
  • Singapore: Merchandise trade, incl non-oil domestic exports (NODX)(published)
  • Australia: Labour force, incl. unemployment rate (published)
  • France: ILO unemployment and labour market-related indicators (published)
  • UK: Retail Sales (0830 GMT)
  • EU: Harmonised CPI (0900 GMT)
  • Eurozone: ECB minutes of its last monetary policy discussion (1130 GMT)
  • US: Philadelphia Fed Manufacturing Index (1230 GMT)
  • US: Weekly jobless claims (1230 GMT)
  • US: Industrial production and capacity utilisation (1315 GMT)
  • US: EIA weekly natural gas storage report 1430 GMT)

US president Donald Trump's disconnect from the Republican mainstream is again in the spotlight after both of his corporate advisory groups cut ties in the wake of the civil unrest at last weekend's far-right protest in Charlottesville, Virginia.

The move shows the limits of Trump's promises to ease regulatory and taxation burdens as major US corporations seek to limit their reputational damage in the midst of the media's full-court press against Trump for ostensibly failing to issue a full-throated condemnation of the "Unite the Right" rally led by white nationalists.

With Trump now isolated to his hardened base of anti-globalisation, anti-free trade nationalists, businesses have determinedly sided with the long-standing bipartisan consensus in favour of a Clinton/Blair-style "Third Way" mode of governance that couples free-market openness with liberal social policy.

The result is perhaps the most trying climate that this administration has yet faced.

In markets, Asian stocks slid into the afternoon session with Tencent soaring by as much as 5.5% in the wake of a stronger-than-expected earnings report.

The USD gave up some of its recent gains and perceived solidity with the dollar index tumbling 0.2% and USDJPY falling below the psychologically important 110.00 level. on the back of political concerns and the release of Wednesday's Federal Open market Committee minutes which showed growing concerns over rate hikes and inflation.

Oil prices remain in recovery moder after Wednesday's plunges in both Brent and WTI variants while US Treasury yields rose one basis point on the politican tumult in Washington.

Today sees the US out with unemployment data at 1230 GMT, industrial production figures at 1315 GMT, and the weekly natural gas storage report at 1430. In Europe, we have harmonised CPI numbers out at 0900 GMT and the European Central Bank's latest minutes at 1130 GMT.

Market signals

Asian session

  • The dovish Fed minutes pushed USD lower, impacting FX, equities and metals markets
  • The US President disbanded two advisory councils after several CEOs quit
  • Trump's support of white nationalists was cited as the reason for the resignations
  • The strengthened yen weighed on Japan's Nikkei 225
  • Korea's Kospi Composite made gains, as North Korea conflict fears continued to recede
  • Sharp rises for miners gave the S&P/ASX200 an early lift
  • Telstra shares fell to five-year low after the Aussie telco announced a surprise dividend cut
  • Australia's unemployment rate remained at 5.6% in July, as 27,900 new jobs were created
  • The economy added 48,200 part-time jobs, but lost 20,300 full-time positions

Forex ahead

  • USD extended losses made overnight, including against the yen
  • AUD bounced back above 0.79, thanks to firmer metal prices and the sliding USD
  • USDCHF plunged by nearly one big figure to 0.9655 into the European bell
  • GBPUSD is rising again after finding apparent support around 1.2850

From the Floor

Low expectations.I don’t expect the ECB minutes to provide much,” says Hardy.

Drawdown.We had a very bullish stock draw yesterday in crude oil, but the market dropped afterwards,” says Hansen.

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

In opinion

If today's data show a deceleration in British retail spending growth, it will stir up debate about what's in store for the UK in the second half of the year, James Picerno predicts.

USD sentiment sours

The US economy is expanding, but sentiment towards the USD is turning sour, mainly because traders can’t see any inflationary light at the end of the tunnel, says Max McKegg.

Soft ore prices

Anecdotal evidence suggests China's steel mills are well stocked with iron ore, which gives them freedom not to chase the market higher, says the team at Saxo Capital Markets Australia.

Too strong?
The strength of the euro may be nearing the point where it's an issue for European growth, and EURUSD above 1.1800 is a medium-term sell, says Steen Jakobsen in his Macro Digest.

Fast-paced Russia
Russia's GDP growth jumped to 2.5% year-on-year in the second quarter and was as high as 3.5% y/y in May, but the brisk growth could prove to be short-lived, says Nadia Kazakova.

Shelter doubts
The row between Washington and Pyongyang has calmed down, but would US treasuries remain a safe haven in the event of a conflict, asks Althea Spinozzi.

Maersk's Q2 shines
Shipping and oil group A.P. Møller-Maersk reported a rebound in second-quarter underlying profits and said container shipping fundamentals are the strongest since 2010, writes John Acher.

The Federal Reserve in Washington

 The FOMC's minutes were published late on Wednesday (European time), revealing Fed concerns about low inflation and raising doubts about rate hikes. Photo: Shutterstock

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