Market Quick Take - February 1, 2022 Market Quick Take - February 1, 2022 Market Quick Take - February 1, 2022

Market Quick Take - February 1, 2022

Macro 6 minutes to read
Saxo Strategy Team

Summary:  Equity markets finished January with a flourish as the US market squeezed nearly two percent higher on the day. The rally off the lows has cut the losses from the top at the start of the year in half. Overnight, the Australian RBA provided surprisingly dovish guidance even as it ended its QE purchases. Today sees the release of the January US ISM Manufacturing survey, as the pace of improvement in the US economy looks set to decelerate significantly this quarter.

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) - Nasdaq 100 futures rose 3.3% yesterday with our bubble stocks basket gaining 9.6% as traders brought stocks that had been selling off hard this year. These types of moves are typical during correction periods and are technical and flow based, and as such these moves can quickly be faded again. The two-day gain in Nasdaq 100 futures is 6.6% the biggest gain since early November 2020 when the first successful Covid-19 vaccines were announced. The natural gravitational anchor is the 200-day moving average which sits around 0.8% above yesterday’s close in Nasdaq 100, so if we see a continuation in the risk-on then this is the next target.

EURUSD - the pair squeezed violently higher yesterday as the US dollar came under pressure, but with isolated euro strength proving a significant driver, particularly in the wake of a far hotter than expected German CPI print, but potentially also on end-of-month rebalancing. The buying took the price action back well above 1.1200, but a more robust reversal of the recent sell-off wave might require a quick spring up to 1.1300-50 area. The ECB meeting on Thursday and whether these latest hot inflation prints (France will report Jan. Flash CPI today, Euro Zone Jan. Flash CPI tomorrow) will see the ECB pulling forward the potential time horizon for a rate hike will be critical, as will risk sentiment.

AUDUSD – Australia’s central bank refused to provide guidance that matches market expectations for a string of rate hikes in this calendar year, as discussed in the RBA decision wrap below. The AUDUSD pair avoided any significant downside on this development only due to very strong risk sentiment and a weak US dollar, but this is an important signal from the RBA and could make for tough slogging for the Aussie from here in the crosses and against the US dollar if risk sentiment reverts back to the defensive. The 0.7000 area is a critical line in the sand for the pair if a new sell-off develops and could open for a run significantly lower.  RBA Governor Lowe will speak tonight.

Crude oil (OILUSMAR22 & OILUKMAR22) trades near a seven-week high as the forward curves signal tight market conditions. Continued tensions over Ukraine and a blast of icy US weather which may freeze oil and natural gas production areas also attracting some attention ahead of Wednesday’s OPEC+ meeting. While the group is expected to raise the official target by another 400k barrels per day, the market is more interested in finding out how much the group can deliver after more than half of its members struggled in recent months, thereby supporting a continued rally.

Gold (XAUUSD) trades higher with yields and the dollar trading softer after Fed officials dialed back on some of the hawkish rhetoric from last week's FOMC meeting. With $1780 support holding, selling from traders caught with longs above $1830 has faded. Institutional investors meanwhile have taken the latest dip as an opportunity to add exposure with total holdings in bullion-backed ETF’s rising to a four-month high. Our bullish medium-term outlook has not changed, with the flattening US yield curve potentially signaling the risk of a policy mistake as the FOMC starts hiking rates into a slowing economy. However, a break above $1809 and $1825 is needed to signal an end to the current weakness.

Bitcoin (BITCOIN_XBTE:xome) and Ethereum (ETHEREUM_XBTE:xome) – Cryptocurrencies rallied overnight, and the price of Bitcoin and Ethereum went up by 4 % and 9 %, respectively. A report from CoinShares shows a net inflow to digital asset investment products last week, primarily driven by Bitcoin. The Ethereum-focused funds, however, have experienced eight consecutive weeks of net outflow.

US Treasuries (IEF, TLT). After last week’s FOMC meeting, more bear-flattening of the yield curve is to be expected. The Federal Reserve is looking to use interest rate hikes as primary tool to tighten the economy. It means that the front part of the yield curve will continue to rise as the Fed’s becomes more aggressive while long-term rates will remain compressed due to growth fears. The yield curve is close to inverting between seven and ten years. The market’s focus is on Friday’s nonfarm payrolls, which will pave the way for a rate hike in March.

Italian BTPS (BTP10). Sergio Mattarella has been elected president of the republic for a second mandate, leading to a political status quo that appeals to foreign investors. Therefore, we can expect the BTP-Bund spread to tighten this week to reflect a decrease in the country’s political risk. However, as volatility will continue to remain high in the rates market, we can expect the BTP-Bund spread to resume its widening.

European sovereigns (VGEA). European government bond yields rose yesterday, as the market expects the ECB to acknowledge the risks coming from high inflation on Thursday, which might lead to a first rate hike by the end of the year. Ten-year Bund yields broke above 0% for the second time since 2019. However, this might be the week negative Bund yields will become a memory, as a hawkish Fed together with an aggressive BOE will inevitably sustain European sovereigns above this level and drive them higher.

Gilts (IGLT). The market is expecting a 25bps interest rate hike this week from the BOE, which could lead to the beginning of QT in March. Therefore, we could see the yield curve shifting higher across maturities on the back of the monetary meeting. At the same time, we could see the Gilt-Bund spread widening further to pre-Brexit levels to reflect the divergence between BOE and ECB.

What is going on?

The euro area is back to its pre-pandemic GDP level. According to the preliminary flash estimate from Eurostat, the euro area GDP increased by 0.3 % in Q4 2021, and 4.6% compared with Q4 2020. Not all countries are already back to the pre-pandemic GDP level, however. Think Spain and Germany. Expect GDP growth to slow down in Q1 2022 as millions of people were de facto in quarantine in early January in several countries because of restrictions measures introduced to fight the Omicron variant. In other news, Spain January HICP decreased less than expected, at 6.1 % year-over-year versus anticipated 5.5 %. In Germany, January HICP stood at 5.1 % year-over-year, from 5.7 % in December. The base effects from the VAT reversal no longer show in the year-over-year print. But inflation remains elevated due to the services component and notably packaged holidays and leisure. At Saxo Bank, we consider that inflation is structural

Australia’s RBA ends QE, but guidance dovish. The RBA was expected to end its QE purchases at the meeting and did so, but expressed uncertainty on whether inflation and especially wages would be sustained at sufficiently high levels to require a shift to hiking rates any time soon, thus requiring patience before further policy moves. Most explicitly dovish, the new monetary policy statement said that “Ceasing purchases under the bond purchase program does not imply a near-term increase in interest rates.”

UBS beats Q4 net income expectations. The Swiss-based investment bank delivered Q4 net income $1.35bn vs est. $916mn and plans to buy back $5bn of shares in 2022. The bank says that it sees higher client activity in Q1 vs Q4.

What are we watching next?

US-Russia tensions: Today, US Secretary of State Antony Blinken and Russian foreign minister Sergei Lavrov will discuss ongoing tensions over the telephone as UK Prime Minister Boris Johnson is set to visit Ukraine and the US and UK have said that they would sanction Russian oligarchs with close ties to President Putin, were Russia to invade Ukraine.

Hearings for three Fed nominees for the Board of Governors on Thursday – these include Lisa Cook and Philip Jefferson, two economists thought to hold dovish views on policy and Sarah Bloom Raskin, who is nominated for the role of Vice Chair of supervision at the Fed. The US Chamber of commerce recently sent an article to the Senate warning of Raskin’s views on oil and gas as she has called for cutting off access to support for the oil and gas industry from the federal governments. This was an unprecedented move.

China’s market closed all week for Chinese Lunar New Year Holiday while Hong Kong will reopen on Friday.

Earnings Watch. Large US earnings reports expected today with PayPal, UPS and AMD being the most watched ones while Exxon Mobil will also attract some attention given that the company said yesterday that it will move its headquarters to Houston and streamline several business lines to cut costs.

  • Today: Novozymes, Keyence, UBS Group, Exxon Mobil, PayPal, UPS, AMD, Starbucks, Gilead Sciences, GM, Electronic Arts
  • Wednesday: Novo Nordisk, Orsted, Kone, Sony, Mitsubishi UFJ Financial, Denso, Prudential, Telenor, Banco Santander, Hexagon, Swedbank, Novartis, Alphabet, Meta Platforms (Facebook), Alibaba, AbbVie, Qualcomm, Thermo Fisher Scientific, Ferrari, Spotify Technology, DR Horton
  • Thursday: Suncor Energy, Danske Bank, Nokia, Dassault Systemes, Siemens Healthineers, Infineon Technologies, Merck KGaA, Enel, Nintendo, SoftBank, Mitsubishi, Takeda, Shell, ING Groep, BBVA, Siemens Gamesa Renewable Energy, Nordea, Roche, ABB, Amazon, Eli Lilly, Merck & Co, Honeywell, ConocoPhillips, Estee Lauder, Ford Motor, Fortinet
  • Friday: Carlsberg, Sanofi, Vinci, Intesa Sanpaolo, Assa Abloy, Bristol-Myers, Regeneron Pharmaceuticals

Economic calendar highlights for today (times GMT)

  • 0815-0900 – Euro Zone Jan. Final Manufacturing PMI
  • 0930 – UK Jan. Manufacturing PMI
  • 0930 – UK Dec. Mortgage Approvals
  • 1330 – Canada Nov. GDP
  • 1500 – US Jan. ISM Manufacturing
  • 1500 – US Dec. JOLTS Job Openings
  • 2130 – API's Weekly Oil and Fuel Stock report
  • 2145 – New Zealand Q4 Employment and Earnings data
  • 0130 – Australia RBA Governor Lowe to speak
  • During the day: OPEC+ Joint Technical Committee Meeting

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.