Market Quick Take - February 10, 2021 Market Quick Take - February 10, 2021 Market Quick Take - February 10, 2021

Market Quick Take - February 10, 2021

Macro 4 minutes to read
Saxo Strategy Team

Summary:  Global equity markets generally sustaining a positive mood overnight on a very strong final session in China ahead of a week of market closures to celebrate the New Year holiday there. Strong risk sentiment and fresh rises in commodity prices have the US dollar under pressure. Today sees an auction of US 10-year treasuries after long US yields recently surged. A further rise in yields could at some point unsettle the market.

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) – US equity futures are higher in early European session driven by strong sessions in Hong Kong and China mainland shares up 2%. In the short-term, lower yields on credit (US junk bond yields hit fresh lows yesterday) and huge expected stimulus push in the US, are fueling equity valuation expansion and growth expectations. With Nasdaq 100 futures trading at 13,735, close to all-time highs, there are no natural resistance levels. Momentum continues to be strong.

Bitcoin (BITCOIN_XBTE:xome) and Ethereum (ETHEREUM_XBTE:xome) - Bitcoin is backfilling a bit after its recent remarkable surge on the news that Tesla has invested $1.5 billion in the cryptocurrency, trading below $47,000 this morning after rising above $48,000 yesterday, while Ethereum is seizing the initiative again and has pulled up to its all-time high above $1,800 this morning.

USDJPY – we continue to watch USDJPY as it descends back into the pivotal zone near 104.40 - the area where it broke higher on a recent squeeze, although arguably a retreat all the way to 104.00 is needed to erase the most recent rally wave and firmly set sights back lower toward the 102.60 area low for the cycle and possibly beyond. An especially important coincident indicator is likely to be the direction of US yields, as the surge in 10- and 30-year yields in the US coincided with the recent rally in USDJPY. New highs in long US yields (note US treasury auctions today and tomorrow discussed below) could act as a counterweight to downside momentum.

AUDUSD and EURUSD – the weakening of the US dollar over the last few sessions suggests that the USD bear is back for now, as EURUSD erased most of the recent sell-off wave and AUDUSD did likewise, setting the sights back on the cycle highs for the two pairs. If commodities continue to surge here, commodity linked currencies like the Aussie are likely to outperform, with a test toward 0.8000 or even the huge 0.8135 (more than five year higher) possible on the next rally wave. The action in EURUSD could prove more slow moving, as the Euro struggles more with its outlook and the virus, and held back to a degree by negative interest rates, but EURUSD may still set its sights on 1.2500+ on a new wave of USD weakness.

Copper (COPPERMAR21) - used in everything from wiring and electronics to electrical vehicles, has rallied to an eight year high on a wave demand optimism as governments around world unleash green economy initiatives. Copper also benefitting from renewed investor demand for inflation hedges and concerns about supply from South America as the coronavirus has forced a reduction in production there. Last week it briefly challenged support at $2.50 after China tightened liquidity, before resuming its rally to reach $3.7755 overnight, the highest level since October 2012, with the next major resistance level being $4/lb.

Crude oil (OILUSMAR21 & OILUKAPR21) - has paused following the longest run of gains in two years with momentum indicators increasingly pointing to a market in need of consolidation. The +50% rally since November now also driving speculation that producers will try to produce more crude into a market where Saudi-led supply tightness has been the main supporting factor. Ahead of today’s weekly stock report from the EIA, the API last night reported a 3.5-million-barrel drop. Supporting the market is the rising backwardation which means that WTI and Brent are effectively yielding around 8% on an annual basis for investors who keep rolling their long positions from one month to the next.

The periphery is benefitting from the Draghi Effect and Spain issues 50-year Bonos (IS0P, BTP10). Upbeat market sentiment as Mario Draghi is looking to form a government in Italy is benefitting the periphery. Yesterday Spain issued €5 billion Bonos with 50-year maturity with a yield of 1.458% attracting more than €65 billion bids. We expect more spread compression within sovereigns in the periphery.

Gilt yields hedged lower ahead of Bailey’s speech today (IGLT). The market is waiting for Bailey speech today to understand whether hawkish sentiment can be restored following a report that shows that the nation’s gross domestic product will not return to pre-crisis levels until the end of 2023. Amid uncertainty, Gilt yields fell slightly in the past few days, however if Bailey today confirms BOE’s upbeat forecasts, yield may resume their rise and break and sustain to trade above 0.5%.

Adyen (ADYEN:xams) and Toyota (7203:xtks) - Adyen reports strong 2H earnings with revenue hitting €379mn vs est. €375mn and significant upside on EBITDA at €237mn vs est. €212mn, and lifting its long-term EBITDA target to 65%. Toyota reported very strong Q3 earnings with operating income beating expectations and lifting the FY (ending in March) guidance on operating income to JPY 2trn vs est. JPY 1.53trn. The Japanese carmaker does not see any impact from the ongoing microprocessor chip shortage.

What is going on?

UK releases Covid vaccine efficacy data - the UK has taken a controversial approach to vaccinations in giving as many people as possible a first round of vaccines before following up with a second shot many weeks after the initially recommended 3-4 weeks. According to UK health authorities, the first shot of the Pfizer vaccine reduced symptomatic infection risk by 65% for younger adults and 64% for those over 80. The UK has administered approximately 20 shots per 100 people since vaccinations began in December.

Corn (CORNMAY21) dropped 5% from a seven-year high yesterday after the US cut supplies by less than expected. The monthly WASDE report pegged ending stocks at 1.5 billion bushels, somewhat higher than the 1.38 billion bushels forecast by analysts. Soybean (SOYBEANSMAR21) and wheat (WHEATMAR21) stocks meanwhile both hit expectations but were dragged lower by corn’s slump. With top importer China continuing to buy at a record pace the risk of a major setback seems limited with weather worries in South America still raising questions about the supply outlook for the coming year. Excluding Chinese corn stocks, the USDA said global ending stocks could fall to an eight-year low by next summer.

What are we watching next?

US CPI, 10-year Treasury Auction and Fed Chair Powell speech up today in the US. The US inflation data will be increasingly interesting to watch as the US has taken a more “cash drop” approach to stimulus than other countries, which could mean negative real interest rates in the US decline more rapidly than elsewhere (the level of inflation over risk-free treasury yields) and recent inflation gauges have already started running hotter than expected, so today we’ll watch the US CPI number for January, as well as whether any upside surprise triggers fresh weakness in demand for US treasuries, where yields have risen to cycle highs at the long end of the yield curve ahead of today’s auction of 10-year treasuries. US Fed Chair Powell will also speak later, though he is unlikely to send any pointed message, with the Fed likely wanting a look at how the economy performs on the other side of the vaccine roll-out before sending any policy adjustment signals.

Earnings releases to watch this week
Today is the most important day in terms of earnings releases. We have already got strong earnings from Toyota Motor and Adyen boosting sentiment in equities. MercadoLibre, the South American e-commerce giant we featured in our earnings preview this Monday, reports earnings today and could help on sentiment for other South American ADRs trading on US exchanges but also lift the overall e-commerce segment.

  • Today: Toyota Motor, Commonwealth Bank of America, MercadoLibre, Adyen, Heineken, Air Liquide, CME Group, General Motors, Uber Technologies, Coca-Cola, Equinor
  • Thursday: Zurich Insurance, PepsiCo, Duke Energy, Brookfield Asset Management, Disney, L’Oreal, Illumina, AstraZeneca, Schneider Electric
  • Friday: Enbridge, Dominion Energy

Economic Calendar Highlights for today (times GMT)

  • 0745 - France Dec. Manufacturing and Industrial Production
  • 0830 – Sweden Riksbank Interest Rate
  • 1300 – ECB President Lagarde to speak
  • 1330 – US Jan. CPI
  • 1530 – US Weekly DoE Crude Oil and Product Inventories
  • 1630 – Canada Bank of Canada Deputy Governor Lane to speak
  • 1700 – UK Bank of England’s Bailey to speak
  • 1900 – US Fed Chair Powell to Speak to the Economic Club of New York
  • 0001 – UK Jan. RICS House Price Balance

Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:

Apple Sportify Soundcloud Stitcher


Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, 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. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such 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.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets 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 made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.