Article / 19 May 2017 at 7:00 GMT

Morning Markets: When every trade is a 'Trump trade'

Senior Editor / Saxo Bank
Denmark






Morning Markets



Watchlist

  • Eurozone March current account (0800 GMT)
  • Canada: CPI (1230 GMT)
  • EU Flash consumer confidence indicator (1400 GMT)

US equity markets may have clambered their way back into the green Thursday, but the global risk-off climate sparked in part by the Trump administration's ongoing political difficulties weighed on a Friday Asian session characterised by cautious buying and safe-haven strength. 

The Nikkei 225 gained 0.38%, the ASX 200 lost 0.20%, the Hang Seng gained 0.29% and South Korea's Kospi index edged into the green with a 0.09% rise. Spreadbetters expect the FTSE 100 and the Dax to open in positive territory today. 

The widespread safe-haven bid sees the yen back at the 111.00-plus levels (versus USD) last seen in early May while gold poked back above the $1,250/oz level first after Thursday's New York session closed and later again into the European open. 

Today's data calendar sees Eurozone March current account data out at 0800 GMT followed by May consumer confidence numbers at 1400 GMT; we also have inflation data due out from Canada at 1230 GMT.

We suspect that the real story, however, will be the US president and his political opposition.

Trump begins his first foreign trip today and arrives in Riyadh tomorrow for a series of engagements at which the president is expected to seek cooperation with his foreign policy initiatives. Given the backdrop of fierce opposition from Democracs, certain establishment Republicans, and the US media, expect his every move to produce headlines, and expect at least certain of these headlines to move asset prices.

Market signals

Asian session

  • Trump denied collusion with Russia but admitted that he can only speak for himself
  • Asian stocks fluctuated as investors sized up the impact of turmoil in Brazil and the US
  • Australia's S&P/ASX200 had its worst week in months; it closed down 0.20% at 5,726.60
  • Australian Tax Office deputy commissioner to face charge over son’s alleged tax fraud
  • Credit Suisse predicts the RBA will have to cut interest rates several times in 2017
  • The tumbling Brazilian real could flood world markets with cheap soybeans and coffee
  • US stocks will fall 11% if Trump is impeached, says hedge fund Bridgewater Associates
  • A fresh political crisis has ensnared Brazilian president Michel Temer

Forex ahead

  • USD fell heavily against the yen; it was worth just ¥111.27 at 0655 GMT
  • After reaching a lofty 0.7466 overnight, AUD had fallen back to 0.7426 by 0655 GMT
  • Brazil's real posted its biggest slide since 2008 even after the central bank intervened 
  • USDCAD in 1.3575-3675 channel ahead of Canadian CPI release at 1230 GMT

From the Floor

VIX vacillations. "Once volatility does spike, it seems like everybody wants to dive in right away and fade the move," says Hardy

Caution advised. "I remain short-term negative US stocks on a tactical basis," says Garnry

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

In opinion

1..2..3
Expectations about Donald Trump’s first official foreign trip, which includes a visit to Saudi Arabia, are running so low that he may provide a positive surprise, says Juhani Huopainen.

ASX angst
Australia's benchmark S&P/ASX200 had a shaky start to the end of what could be its worst week in six months, writes the team at Saxo Capital Markets (Australia).

Real impact

The falling real has already impacted corn prices, and it will affect soybeans and coffee, as Brazil is the top exporter of both commodities, says the team at Saxo APAC sales trading.

Trump turmoil
The political turmoil surrounding US President Donald Trump has had a significant impact on financial markets, if it has not yet been a game-changer, writes Neil Staines.

Ugly islands
An 'island reversal' chart formation occurs when a market reaches highs and leaves gaps, and they are something to worry about, says Clive Lambert.

US Capitol in Washington

 US politics has been the primary driver of financial markets this week. Photo: Shutterstock

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