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 / 07 December 2017 at 7:54 GMT

Morning Markets: USD rebounds, oil falls, Bitcoin blasts past $14,000

Senior Editor / Saxo Bank




  • Australia: International trade (already published)
  • Germany: industrial production index (0700 GMT)
  • Switzerland: Swiss National Bank foreign currency reserves (0800 GMT)
  • US: Initial jobless claims (1330 GMT)
  • Japan: Second preliminary quarterly GDP estimate (2350 GMT)
  • Japan: Balance of payments (2350 GMT)

The US dollar has shaken off its latest weakness that was partly inspired by President Trump's decision to recognise Jerusalem as the capital of Israel, and this morning finds the greenback broadly higher on a fresh wave of optimism that the US tax reform package will soon be in place.

Oil meanwhile, slumped to a two-month low as it slid almost 3% on news of an unexpected  increase in US refined oil inventories indicated that demand may be slowing.

But the standard performer was Bitcoin as the speculators' darling put in another astonishing display and surged from around $12,000 past $14,000 – a rise of over 16% in less than 24 hours. This comes just days before the first Bitcoin futures are due to be launched, although today's FT is running a story saying major banks have begun a fightback on this over worries about insufficient regulation.

Brexit continues to be a worry, with the latest development being that Michel Barnier, the EU chief negotiator, has given the UK 48 hours to find a solution to the Irish border issue. If the UK fails, the negotiations will stall completely.

In equities, stocks made robust gains in some Asian markets today, in a welcome sign of restored investor confidence. Benchmarks indices headed higher in Tokyo and Sydney. But the revival was patchy, with falls in Seoul and Shanghai. Meanwhile Friday's nonfarm payrolls report from the US will attract plenty of market scrutiny.

Market signals

Asian session

  • Friday’s nonfarm payrolls report will impact the US outlook, interest rates and FX markets
  • The Fed may hike rates next week; China's PBoC is unlikely to follow suit: Bloomberg
  • Japan's Nikkei 225 rebounded; it closed up 1.45% at 22,498.03
  • Japan's labour shortage spells opportunity for robots, automation startups: Bloomberg
  • China's workforce is also shrinking, due to its now abandoned one-child policy
  • Australia's trade surplus fell to $A105 mln in October, from $1.6 bn surplus in September
  • The S&P/ASX200 closed up 0.54% at 5,977.70, with gains for consumer staples, banks
  • Shares in top miner Rio Tinto rose by 0.92%, defying gloom over falling iron ore prices
  • ASX-listed retailers retreated,on jitters about the e-commerce threat posed by Amazon
  • Trump's decision to move the US embassy to Jerusalem may spark a backlash
  • The cryptocurrency Bitcoin soared past $14,000
  • India will have third largest economy by 2018: Japan Centre for Economic Research

Forex ahead

  • The US dollar edged higher against the yen; it was worth ¥112.5300 at 0603 GMT
  • AUD retreated on the disappointing trade data; it was worth 0.7544 at 0602 GMT
  • Morgan Stanley predicts that the Aussie dollar will tumble to just 0.67 by Q1, 2019
  • State Street says the surging Malaysian ringgit looks overbought

In opinion

Staples save the day

Gains for consumer staples and banks helped keep the S&P/ASX200 in positive territory, despite falls in mining and energy, says Saxo Capital Markets Australia

Revival hopes

Stocks headed higher today in Japan and Australia, but the revival was patchy across Asia, with equities falling in Shanghai and Seoul, says Saxo APAC Sales Trading

Fed magicians

A 25 basis point hike is virtually "baked in" and certain next week, so the Fed will have to pull a rabbit out of a hat to have any impact on forex markets, says Max McKegg

Ageing populations and shrinking workforces in Japan (above) and China pose challenges, but spell opportunity for tech startups that find novel ways to replace humans. Photo: Shutterstock

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