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 / 25 September 2015 at 2:00 GMT

Morning Report APAC: Rate liftoff not written off

APAC Sales Trading Desk / Saxo Capital Markets


  • Fed chair Janet Yellen's comments seemed to support a strong USD
  • Commodity currencies reversed their early weakness amid a late-day rally
  • Shockwaves from the VW scandal continued to run through European markets


By Saxo APAC Sales Trading

Economic data of the day (Singapore Time)

  • 0730 (2330 GMT): JPY – Natl CPI YoY (Exp. 0.1%, Prev. 0.2%), Ex Food and Energy (Exp. 0.7%, Prev. 0.6%) 
  • 0750 JPY – PPI Services YoY (Exp. 0.5%, Prev. 0.6%) 
  • 1300: SGD – Industrial Production SA MoM (Exp. -0.2%, Prev. 1.0%), YoY (Exp. -5.0%, Prev. -6.1%) 
  • 2030: USD – GDP Annualised QoQ 2Q (Exp. 3.1%, Prev. 3.1%)
  • 2030 USD – GDP Price Index (Exp. 2.1%, Prev. 2.1%), Core PCE QoQ (Exp. 1.8%, Prev. 1.8%) 
  • 2145: USD – Markit US Composite PMI (Prev. 55.7) 09.45pm: USD – Markit US Services PMI (Exp. 55.5, Prev. 56.1) 
  • 2200: USD – Univ. of Michigan (Exp. 87.0, Prev. 85.7)  


  • 2115: USD – Fed’s James Bullard to Speak On Monetary Policy in St Louis

Overnight news

  • Fed Chair Janet Yellen sounded dovish in a speech this morning; remaining relatively optimistic about the US economy. Her comments seemed to support a strong USD, and the Feds will keep a fluid monetary policy environment. The comments support a gradual pace of tightening and highlight that if the world remains uncertain, there is still some risk around expectations of a ‘liftoff’ this year. 
  • US durable goods orders fell 2% in August, offsetting July’s 1.9% gain. Core orders ex-defence and aircraft fell 0.2% following July’s strong 2.1% gain. The modest trend recovery in capex remains intact. August new home sales rose 5.7% m/m to 552,000, a new high. Strong and improving consumer fundamentals are supporting the recovery in the housing market.
  • The German IFO index for September rose to 108.5 from 108.4 in August, with no spillover from the Chinese-driven volatility in August detectable yet. Importantly, the expectations component rose to 103.3 from 102.2. 
  • Norway and Taiwan both eased policy overnight: The Norges Bank cut its policy rate by 25bps to 0.75%, as did the Central Bank of the Republic of China (Taiwan’s central bank), who cut by 12.5bps to 1.75%.  

Foreign exchange


It was a night of consolidation for most currency pairs, though the NZD continued to outperform after a more upbeat assessment of the dairy sector from Fonterra.

Commodity currencies were the main focus with early weakness reversed amid a late-day rally. The USD finished lower ahead of Yellen’s speech, and the speech itself failed to give the USD much of a lift, however it did give the US dollar a solid backbone.

Emerging markets had a better night though official intervention drove much of the rally there. The PBoC was reported to have intervened aggressively in USDCNH, just adding to the flow of cross-currents in markets.

Foreign exchange movements


Volatilities were bid yesterday before Yellen’s speech as risk sentiment remained poor. AUDJPY spot touched 83.00 lows, which triggered another squeeze higher in volatilities and risk reversals. 

USDJPY volatilities also saw a slight move higher yesterday as spot went under 119.50 and front-end risk reversals were quickly paid for the downside. With USDJPY spot back above 120.00, we should see some easing back of the volatilities curve as implied are still much higher than actuals. 



US and UK yields declined overnight, which was attributed to equity weakness, while European yields rose modestly. Importantly, the spread between US inflation protected and nominal bonds, a good measure of inflation expectation, is at a new low.






Shockwaves from the VW scandal continued to run through European markets. As auto stocks tumbled, the DAX fell 1.9% (lowest level of the year) and investors failed to take heart from the closely watched German IFO Index, which showed business sentiment rose in September. 

The FTSE 100 ended roughly 1.2% lower, as the bleak outlook for the resources sector weighed on the commodity-heavy index. US stocks closed lower Thursday as investors awaited the post-close speech from Fed Chair Janet Yellen. 

Caterpillar was the greatest weight on the Dow, closing 6.3% lower as the firm will cut up to 5,000 jobs by the end of 2016 and lowered guidance.    


  Dark days ... auto stocks continued to be driven lower
 as a result of the VW scandal. Photo: iStock

– Edited by Gayle Bryant

This report was compiled by the Saxo APAC Sales trading team in Singapore – the home of social trading. Follow the team on @SaxoStrats or post your comment below to engage with Saxo Bank's social trading platform. Follow us on @SaxoStrats on Twitter

All material contained herein is provided for your general information. The information and commentaries are not intended to be and do not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort offered or endorsed by Saxo Capital Markets Pte. Ltd. (“SCM SG”). Any expression of opinion (which may be subject to change without notice) is personal to the presenter and/or author; they do not reflect the view or opinion of SCM SG or its affiliates, neither do they constitute an endorsement of SCM SG’s view or analysis of the same.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. SCM SG does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment based on any commentaries or information provided here.
For further information, please click here.  

Saxo Capital Markets Pte Ltd ("Saxo Capital Markets") is a licensed subsidiary of Saxo Bank A/S, an online trading and investment specialist. Saxo Capital Markets serves as the APAC headquarters and holds a capital markets services licence under the Monetary Authority of Singapore; and a commodity broker licence issued by the International Enterprise Singapore. Clients can trade Forex, CFDs, Stocks, Futures, Options and other derivatives via SaxoWebTrader and SaxoTrader, the leading multi-asset online trading platforms.
Trading risks are magnified by leverage - losses can exceed your deposits. Trade only after you have acknowledged and accepted the risks. You should carefully consider whether trading in leveraged products is appropriate for you based on your financial circumstances. Please consider our Risk Warning and General Business Terms before trading with us. Please see full General Disclaimer.

Thousands of serious traders receive free news and analysis from Saxo Capital Markets each day. Saxo Capital Markets never sends these emails unsolicited; they are sent following acceptance of your membership and subscription request by Saxo Capital Markets at If you do not wish to receive any emails from Saxo Capital Markets in the future, please reply to this email with the word "UNSUBSCRIBE" in the subject header.

Copyright | Disclaimer | Risk Warning | Privacy Policy | Contact Us
Samsung Hub | 3 Church Street | # 30-01 | Singapore 049483
Company No. 200601141M


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail