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Markets saw limited initial fallout from the joint US/British/French strike on Syria, but with new Russian sanctions levied Saxo Bank head of forex strategy John Hardy says that risk sentiment and geopolitics remain very much front-of mind for investors as we head into a new trading week.
"The risk-linked USDJPY broke minor resistance Friday, but the pair ultimately headed to a soft close with the breakout attempt into the Ichimoku cloud not really holding," says Hardy.
Elsewhere, sterling remains on the FX radar on the currency's recent strength into this week's data releases, most notably CPI on April 18, while Hardy reports that three Federal reserve speakers – non-voters Kaplan and Kashkari and voter Bostic – will be speaking today with possible consequences for USD direction.
While the risk landscape, characterised as it is by fears of major power conflicts in Syria and the developing Sino-US trade war, remains a distinct headwind for equities, Saxo's Peter Garnry says that a "very, very short-term" uptick remains a distinct possibility.
"Risk-reward is bad on equities as European data lead the 'macro disappointment' trend," reports Garnry, adding that Citi's G10 surprise index has declined to levels not seen since June 2017.
In single shares, Garnry says that Tesla sentiment remains negative with sell-side analysts seemingly abandoning the stock in the wake of reports that the firm may be concealing the number of injuries occurring at its factories. As for the corporate earnings season, Garnry says that sentiment on Wells Fargo, Citi, and JPMorgan was soft Friday despite encouraging numbers, a trend that he expects to see continue.
Netflix and Bank of America report earnings today ahead of the New York bell.
Finally, Saxo Bank fixed income specialist Althea Spinozzi reports that US 10-year yields hit 2.83% Friday as the spread between 10- and two-year yields flattened to 46.6 basis points, the lowest level seen since 2007.
On the ratings front, Spinozzi says that Moody's has upgraded Spanish debt to Baa1 while Fitch and S&P maintain an A- rating on the country's bonds.