Article / 08 September 2017 at 7:01 GMT

Morning Markets: USD weakens to 33-month low, EURUSD back above 1.20

Consulting editor / TradingFloor
Norway







 

MM TABLE
 


Watchlist

  • Japan: Balance of payments (published)
  • Japan: 2nd preliminary quarterly GDP estimate (published)
  • China: Trade (published)
  • France: Industrial production index (published)
  • UK: Trade (0830 GMT)
  • UK: Production index (0830 GMT)
  • Greece: CPI (0900 GMT)
  • Canada: Labour force survey (1230 GMT)


The greenback fell against major currencies, weakening to a 33-month low as the euro firmed after Thursday's European Central Bank meeting, with EURUSD gaining above 1.20 and USDJPY dropping below 108. Meanwhile, Asia-Pacific equities slipped amid lingering worries about a conflict with North Korea.

US Treasuries climbed on Friday, with yields sinking to their lowest level since the day after Donald Trump was elected president in November.

The S&P 500 ended Thursday virtually flat, the Dow a whisker lower and the Nasdaq just barely in positive territory.

Japan's Nikkei 225 index fell 0.6%, and the Shanghai Composite shed 0.15% on Friday.

Japan’s second-quarter GDP growth was revised down to 2.5% as business investment was weaker than previously estimated.

A tsunami warning has been issued for much of Central America’s western coast after an earthquake off Mexico's southwestern coast on Friday.


Market signals

Asian session

  • Caution reigns as Hurricane Irma heads for Florida and N.Korea tensions linger
  • A massive earthquake has hit southern Mexico
  • Pyongyang is widely expected to launch an ICBM on Saturday
  • Gold hit a fresh 12-month high of $1,357.20/oz, boosted by a weak USD
  • Some Asian markets lost ground over persistent North Korea tensions
  • Korea's Kospi Composite gave up some of the gains it made on Thursday
  • Korea's Kospi Composite was down 0.21% to 2,341.24 at 0523 GMT
  • China's exports soared 13.3% in August, while imports rose 5%
  • The top Asian economy recorded a $41.99 bn trade surplus for the month
  • Japan's GDP for the June quarter grew just 2.5% annualised, well below expectations
  • Japan's Nikkei 225 was down 0.53% to 19,292.95 at 0511 GMT
  • Hong Kong's Hang Seng defied the gloom; up 0.48% to 27,655.71 at 0528 GMT
  • Shanghai Composite edged higher as well; up 0.12% to 3,369.44 at 0528 GMT
  • Australian home loan approvals rose 2.9% in July, beating expectations
  • The S&P/ASX200 was down 0.35% to 5,670.00 at 0530 GMT

Forex ahead

  • EUR held above 1.20; it was worth 1.2081 at 0544 GMT
  • Jobless claims data and strength in the EUR pushed USD dollar down
  • USD extended falls against JPY; it was worth just ¥107.7340 at 0545 GMT
  • AUD soared to a level not seen since May 2015; it was worth 0.8115 at 0544 GMT

From the Floor

Feeble effort. “Draghi tried to talk down the euro a bit, but the verbal intervention was not nearly strong enough,” says Moltke-Leth.

USD surrenders. “In our time zone, we had the US dollar capitulating, […] next stop for USDJPY should be around the 106.50 level,” says Bresler.


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

In opinion

China data ahead
Japan's Nikkei index fell and the US dollar continued its slide against the yen as Asian markets awaited the release of China trade data, writes the team at Saxo APAC Sales Trading.

Whither the euro?
The euro held at 1.20 against the US dollar in today's Asian trade, but ECB analysis suggests it may have to trend down to 1.05, writes Max McKegg.

Mean-reversion
With geopolitical risks up, the global credit impulse having peaked, and central banks relying on outdated models, Saxo's Steen Jakobsen says mean-reversion is the key concept now.


Japanese street

 Japan's Q2 GDP growth came in at just 2.5%, well below the expected 4% figure, due to 
softer- than-expected capital spending. Photo: Shutterstock

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2y
Patto Patto
Excellent summary as usual...
2y
fxtime fxtime
There is an irony here....when Trump was elected everyone expected an infrastructure boom period to boost the economy but Trump being Trump excelled at mismanagement bordering incompetence but now we are seeing the devestating hurricane effects and Texan flooding too we may well have the infrastructure expenditure period anyway ! Of course we will have to endure Trump claiming he planned this all along.

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