Saxo Morning Call

Federal Reserve chair Jerome Powell's testimony to a US House Committee is the key risk event today and USD pairs have largely entered into "holding patterns" ahead of the release, says Saxo Bank head of forex strategy John Hardy.

"The markets expect a focus on stimulus effects, financial stability, and inflation, and if Powell plots a stay-the-course path regarding these factors, the USD could be impacted," says Hardy.

"I suspect, however, that Powell expects a bit more leeway to conduct policy than was seen in the Bernanke/Yellen era, and a departure from this sort of hand-holding forward guidance could prove dollar-positive and risk sentiment-negative," adds Saxo's FX chief.

The risk barometer, of course, is crucial for equities which remain in recovery mode following the early February volatility shock. In Saxo Bank technical analyst Kim Cramer Larsson's view, the charts indicate that new highs are likely over the next for days for the Nasdaq Composite while 2,800 is the key level to watch for the S&P 500.

"The S&P 500 has broken resistance and the next key level is 2,800 — we remain in bullish territory above 2,700," says Larsson, adding that the Relative Strength Index is testing 60 and a close above that level would likely be bullish for the benchmark US index.

S&P 500

In single shares, Saxo Bank head of equity strategy Peter Garnry recommends keeping an eye on Sky post- the London open as US media giant Comcast has upped its bid for the company to £12.50/share, 16% up from rival Fox's current bid.

Also noting the broad market pause ahead of Powell's testimony, Garnry reports that the Nikkei 225 pulled ahead overnight led by technology firms and automakers, adding that retail shares have been the best performing sector over the past month.

"Despite this we recommend and underweight or short stance on retail as valuations remain very expensive," says Saxo's equities head.

Looking at the macro data, Garnry says that the US releases have grown increasingly mixed of late with the most recent Dallas Fed manufacturing release coming in ahead of expectations while new home sales disappointed.

For more on equities and technical analysis of some key forex pairs, watch today's Morning Call in full.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. 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 Saxo News & Research 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 Saxo News & Research 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 Saxo News & Research or as a result of the use of the Saxo News & Research. 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. Saxo News & Research 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 our trading 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 Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.