James Kim@Saxo
James Kim, sales trader at Saxo Capital Markets Australia, examines trading strategies during week 43 in a technical analysis of charts for forex, indices and commodities.
Article / 07 September 2016 at 7:00 GMT

Morning Markets: US data send investors back to gold

Editor / Saxo Bank

Morning Markets: Prices


  • Germany: Industrial Production (0600 GMT)
  • UK: NIESR GDP Estimate (1400 GMT)
  • US: Job Openings (1400 GMT) 
The latest US data releases, particularly the soft ISM non-manufacturing print released yesterday, have not been kind to the greenback. The recent dollar rally has come on the back of increased expectations for a September rate hike, but it now appears as if the Federal Reserve would be swimming decidedly upstream were it to attempt a rise.

Yesterday's print saw EURUSD jump from the 1.1170 area to north of 1.1250, with USDJPY falling from above 102.00 down to an overnight low under 101.25. Gold rallied on the trend as well, with prices capturing the $1,1350/oz area as markets went USD-negative.

The "imminent hike" narrative not only represents a localised, US-centric debate but instead contains a host of expectations regarding global markets, the ability of major economies to recover from the 2007-8 financial crisis, and the actual strength of the one economy whose central bank might – just might – dare to take a hawkish stance amidst the worldwide festival of easing and stimulus that is 2016.

Consequently, the erasure of US rate hike expectations signals a broad despair concerning the health of the global economy that goes beyond the greenback or US equities.

Today's calendar features US crude inventories and the latest UK GDP estimate; German industrial production data for July were also released at 0600 GMT this morning and came in softer than expectations, posting the largest decline since 2014 and dropping 1.5% from June, putting yet another dent in the recovery narrative.

Market signals

Asian session

  • Asian shares traded mixed on weak US data and waning US rate rise hopes
  • Australia's economy grew 0.5% in the second quarter, 3.3% over the year
  • This marks Australia's fastest annual growth since 2012
  • It also means Australia has been recession-free for 25 years 
  • Nikkei trades lower after massive downgap at open
  • An August fall in Australian house building pushed the construction sector into contraction
  • Spot gold is up 0.2% after jumping 2% overnight
  • Fairfax Media formalised a deal to merge NZ operations with APN spin-off NZME

Forex ahead

  • USD was hit by a much weaker than expected US ISM non-manufacturing print
  • AUD gained nearly a cent against the USD and could hit 0.77 by the weekend
  • AUD was 0.7673 against the US dollar at 0600 GMT 
  • USDJPY tumbles below 101.25 as poor US data hit rate hike hopes
  • EURUSD gains nearly one big figure following weak ISM release

From the Floor

FX risks.There is a lot of event risk, particularly in sterling, loonie, and the US dollar crosses,” says Van-Petersen.

ECB meets.ECB tomorrow – if there’s a currency that could fall against the dollar, it would be the euro,” says Hardy. 

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

In opinion

The recent downshift in growth in annual industrial output in Germany is expected to edge lower, pointing to softer growth overall, writes James Picerno.

Not-so-free trade
Donald Trump is bellowing about China as the number-one trade culprit, but what do the economists say, asks Stephen Pope.

ISM surprise
Weak US services data pushed down the dollar and makes a September rate hike much less likely, writes the Saxo APAC Sales Trading team.

Dollar bears down under 
With commodity prices holding up it's onwards and upwards for the Aussie and Kiwi dollars, says Max McKegg.

'It's a bubble!'

US presidential candidate Donald Trump has lashed out at the Fed, saying that it is creating an asset bubble for political reasons ahead of the election writes Michael McKenna.

Camden, New Jersey

No one home: once again, the narrative of US outperformance is taking a hit 

as the data don't live up to the hopes and headlines. Photo: iStock

Morning Markets goes out on the TradingFloor platform at 0700 GMT, Monday to Friday.
Click here
to make sure you're up to date with the latest developments.

07 September
asena asena
thanks, ı need advise for DAX


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