Macro Dragon: Make Time for Europe... Macro Dragon: Make Time for Europe... Macro Dragon: Make Time for Europe...

Macro Dragon: Make Time for Europe...

Macro 2 minutes to read
Kay Van-Petersen

Global Macro Strategist

Summary:  Macro Dragon = Cross-Asset Daily Views that could cover anything from tactical positioning, to long-term thematic investments, key events & inflection points in the markets, all with the objective of consistent wealth creation overtime.

(These are solely the views & opinions of KVP, & do not constitute any trade or investment recommendations. By the time you synthesize this, things may have changed.)

Macro Dragon: Make Time for Europe...


Top of Mind…

  • So been a pretty big set of wks for Euro-zone & Euro assets in general… not just from tactical break higher that we started to see in the Euro from last wk (accelerating structural breakdown lower in the USD that Dragon has been banging about)… yet from the France-German-Italy led recovery plans, to the massive fiscal spend in Germany (38% of GDP) & then ECB over-delivering yest…
  • From an internal note to our VIP’s o/n on the ECB, from our CIO & Chief Strategist Jakobsen:

“600 bn vs 500 bn expected

Tenor extended to 2022 vs 2021 expected

No support for JUNK – fallen angles

ECB clearly don’t feel confident in neither EU economy or EU next week. This is big.

The impact + - for BTP, OW EU equity vs. UW US (Garnry note), EURUSD…. Higher now.”

  • We now had a +0.93% uplift in the Euro to 1.1338 o/n… this is remarkable… i.e. just last wk getting above 1.1000 was herculean… & here we are over 3 big figures higher! We are up c. +4% from the 1.09 lvls of Mon 25 May 2020.
  • This almost solidifies the DXY 96.677 -0.62% move for a potential close south of the next critical lvl of support 96.43, the 200WMA. After that its pretty much 94.00 to 90.00… a lot of potential freefall for the USD to come.
  • Likely the only thing that can structurally turn the USD back up higher is Trump breaking the phase one trade deal with China, as a re-election strategy – which as KVP has said a number of times, has so many layers cakes stacked in his favor & would actually be positive for US assets (i.e. Fed/Treasury would be forced to step-up further, as would congress among others things). Don’t mistake USDCNH at 7.1100 lvls (from the ATH 7.1965) as things being all donuts & coffee between Trump & China… developments still in the works.
  • So, make time for what is going on in the Eurozone as its quiet important & the divergences also within Europe will be that much more visceral in 6-12-18m time.
  • We got some great works from Garnry comparing EU equities vs. their US cousins (i.e. advocating OW one & UW the other) as well as things like Adidas in relation to Germany’s fiscal policy moves.
  • And yes, once again Super Friday with NFP & unemployment rate due… the expectation on the latter is 19.5%! Yes that’s not a typo… we are literally at 20% unemployment rate in the US of A… & yes, a majority of those jobs will come back… but some never will… if we get 75% of those jobs back by year-end… KVP will go out, buy a hat, pull the rabbit out the hat & make some rabbit stew, eat the rabbit stew & the hat.
  • It was 14.7% last month. On the NFP its -8 million, it was -20.5 million last time. If this does not tell you there is a clear dislocation between what is driving the real economy & asset classes (Fed/Treasury liquidity & Fiscal support). For now the fundamentals in the economy do not matter… bad news is good news & good news is great news for market assets.
  • The regime we are in is still exceptionally bullish & a structural decline in the dollar is a tailwind for risk-on assets… in particular across EM where names potentially could run for a while… once again, Brazil - flagging for the 4th & final time until USDBRL 5.1184 +1.05% o/n [it clocked almost USDBRL -6% over Tue & Wed]… is sub 4.500
  • Lastly things like USDJPY 109.08 +0.23% (Moving against KVP’s structural yen strength thesis) has been breaking out higher, which likely a function of us being in the top range of US yields…
  • …which in by itself is also an interesting trade i.e. US yields are capped in KVP’s view… whether that 100bp or 120p on US10s… from these +0.8085% lvls… it’s a structural asymmetrical position to hold, you get paid for a hedge against risk-off, yet your upside is infinity in a world where we are almost certainly to see official YCC in the US & negative rates are much higher probability in the US than people think (In KVP’s mind, they are almost also a certainty… it’s the timing & sizing of course).
  • Also note the divergence between the VIX & the MOVE... 


On The Radar Today

  • JP: Householding Spending, Leading Indicators
  • AU: AIG Services Index 31.6a 27.1p
  • UK: House Prices
  • EZ: German factory orders
  • US: AHE, NFP -8me -20.5m p, U/R 19.5%e 14.7%
  • NZ: Milk auction this evening


Start-End = Gratitude + Integrity + Vision. Create Luck. Process > Outcome. Sizing > Idea.




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.