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​The Trump administration has not yet formally deployed the long-awaited latest $200 billion in tariffs against China, but a new Wall Street Journal report indicates that Japan might be next on the agenda.
Article / 25 November 2016 at 8:00 GMT

Morning Markets: USD strength hitting EM hard

Head of Editorial Content / Saxo Bank
Denmark







Morning Markets: Prices


Watchlist

  • Italy: Factory orders (0900 GMT) and Retail sales (1000 GMT)
  • UK: Q3 Gross Domestic Production (0930 GMT)
  • US: October Goods Trade Balance (1330 GMT)
  • US: November Services Purchasing Manager Index (1445 GMT)

The world is currently one of uncertainty with markets sidling with some trepidation around the election of Donald Trump and the will-they-or-won't they questions surrounding the prospects for an Opec production cut deal.

Uncertainty, however, does not mean a lack of direction in specific assets as we continue to see a pronounced selloff in emerging market currencies that has the Indian rupee and the Turkish lira reeling. While the latter was briefly aided by a rate hike from the central bank in Ankara, even this could not withstand the surging greenback and USDTRY continued to gain ground over the Asian session.

Today's data calendar sees a key UK GDP release for this year's third quarter (0930 GMT) that may prove a make-or-break event for the struggling pound if there are significant surprises to either direction. Investors, of course, are still trying to price in both the Brexit vote and the ongoing negotiations and negations as we try and see to precisely what extend the democratic decision to leave the European Union has on the hitherto housing- and banking-dependent UK economy.

Market signals

Asian session

  • Markets were closed in the US on Thursday, for Thanksgiving
  • Traders hope a pre-Christmas Santa rally will follow the post-Trump win equities rally
  • Japan's Nikkei 225 added to a week of gains; it closed up 0.26% at 18,381.22
  • Investor sentiment in Japan is buoyant on the weaker yen
  • Opec talks in Vienna next week will show if the oil cartel can agree on output
  • China's Shanghai Composite closed up 0.62% at 3,261.94
  • Australia's S&P/ASX200 closed up 0.41% at 5,507.80, adding to a strong week
  • Australia should resist protectionism: Rio Tinto CEO Jean-Sébastien Jacques 
  • Jacques made the comments in the wake of rising populism in the US and the UK
  • Emerging market currencies are losing ground as Fed hike expectations lift the dollar
  • However the strong outlook for commodities has helped support some EM currencies

Forex ahead

  • The US dollar rally against the yen rolled on with USDJPY breaking 113 before retreating
  • India's rupee and Turkey's lira have slumped in an emerging market currency selloff
  • The Turkish central bank decision to lift rates halted the lira's slide, but only briefly
  • The US dollar was worth 68.4400 INR and 3.4536 TRY at 0758 GMT
  • The Australian dollar clawed back some lost ground; it was worth 0.7452 at 0758 GMT

From the Floor

Italy’s D-day.There is a lot of concern that the vote could set off a chain reaction in Europe into 2017,” says Hardy.

Watch out.The gold/copper ratio is at 4.46 which is touching a trendline that goes all the way back to 2006 so we’re watching this closely,” says Hansen. 

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

In opinion

1...2...3

If the US job creation index shows a marked improvement, expectations for next week’s jobs report may start building up, and give the US dollar a boost, says Juhani Huopainen.

Dollar keeps giving

Despite subdued trading over the extended Thanksgiving holiday, the US dollar still managed to continue its push higher against the yen, writes the Saxo APAC Sales Trading team.

Inflation hopes

Japan's core inflation measure has risen, and there is a good chance that it will land in positive territory next year as well, predicts Max McKegg

'Elitist in every way'

While he called Hillary Clinton's defeat back in March, the real black swan is neither Brexit nor Trump but the imminent end of the debt cycle, says Steen Jakobsen.

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 Opec member nations meet in Vienna next Wednesday in talks that will decide the future of any output deal; key non-members such as Russia will be on hand too. Photo: iStock

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