Quarterly Outlook
Equity outlook: The high cost of global fragmentation for US portfolios
Charu Chanana
Chief Investment Strategist
Access both platforms from your single Saxo account.
FX Breakout Monitor: Dollar higher into trade talks
John J. Hardy
Global Head of Macro Strategy
Summary: Everything could change in an instant, but the US dollar has tilted back higher for now ahead of whatever Washington and Beijing deliver in the way of trade talk outcomes tomorrow, and with US tariffs hanging in in the balance.
For a PDF copy of this edition click here.
The small G10 currencies have all gone over the edge against the US dollar as of this writing, taking some of the focus off JPY crosses as USDJPY has stabilised slightly at low levels toda. We won’t know the quality of these breaks until tomorrow brings an update of the state of play in US-China trade relations. There will plenty to look at on Monday, based on tomorrow’s market close.
Also today, we saw an interesting test for NOK where the Norges Bank continues to signal that it will hike again in June. This marks a strong divergence with other global central banks, and yet after a brief kneejerk rally, NOK finds itself near its lowest levels for the cycle again – obviously in part driven by the general level of risk aversion afoot here, but it's still an ugly sign for the currency.
Breakout signal tracker
We update the prices for the three signals we are tracking. These positions are really too correlated, but we’ll hang in there... note the raised stops for the EURAUD and USDCAD longs to limit some of the downside risk as these positions are too old to hang around with the full risk now that they are threatening higher again.
The small G10 currencies have all gone over the edge against the US dollar as of this writing, taking some of the focus off JPY crosses as USDJPY has stabilised slightly at low levels toda. We won’t know the quality of these breaks until tomorrow brings an update of the state of play in US-China trade relations. There will plenty to look at on Monday, based on tomorrow’s market close.
Also today, we saw an interesting test for NOK where the Norges Bank continues to signal that it will hike again in June. This marks a strong divergence with other global central banks, and yet after a brief kneejerk rally, NOK finds itself near its lowest levels for the cycle again – obviously in part driven by the general level of risk aversion afoot here, but it's still an ugly sign for the currency.
Breakout signal tracker
We update the prices for the three signals we are tracking. These positions are really too correlated, but we’ll hang in there... note the raised stops for the EURAUD and USDCAD longs to limit some of the downside risk as these positions are too old to hang around with the full risk now that they are threatening higher again.
Today’s FX Breakout monitor
Page 1: the USD is pulling higher versus CAD and NZD in addition to AUD today. In general, AUD pairs are threatening to move lower (these will likely react the most strongly to the US-China trade talk news flow.
Page 1: the USD is pulling higher versus CAD and NZD in addition to AUD today. In general, AUD pairs are threatening to move lower (these will likely react the most strongly to the US-China trade talk news flow.
Page 2: here we note the NOK weakness despite the fairly hawkish message from Norges Bank today. Can that NOKSEK break higher hold? Also observe USDTHB doing its own thing in the USD/EM universe.
Chart: USDCAD
USDCAD pulling through resistance as of this writing, but like all USD/commodity pairs, the incoming news could take things sharply either way over the next 24 hours and more as US trade tariffs are set to go into effect tonight.
USDCAD pulling through resistance as of this writing, but like all USD/commodity pairs, the incoming news could take things sharply either way over the next 24 hours and more as US trade tariffs are set to go into effect tonight.
REFERENCE: FX Breakout Monitor overview explanations
The following is a left-to-right, column by column explanation of the FX Breakout Monitor tables.
Trend: a measure of whether the currency pair is trending up, down or sideways based on an algorithm that looks for persistent directional price action. A currency can register a breakout before it looks like it is trending if markets are choppy.
ATR: Average True Range or the average daily trading range. Our calculation of this indicator uses a 50-day exponential moving average to smooth development. The shading indicates whether, relative to the prior 1,000 trading days, the current ATR is exceptionally high (deep orange), somewhat elevated (lighter orange), normal (no shading), quiet (light blue) or exceptionally quiet (deeper blue).
High Closes / Low Closes: These columns show the highest and lowest prior 19- and 49-day daily closing levels.
Breakouts: The right-most several columns columns indicate whether a breakout to the upside or downside has unfolded today (coloured “X”) or on any of the previous six trading days. This graphic indication offers an easy way to see whether the breakout is the first in a series or is a continuation from a prior break. For the “Today” columns for 19-day and 49-day breakouts, if there is no break, the distance from the current “Quote” to the break level is shown in ATR, and coloured yellow if getting close to registering a breakout.
NOTE: although the Today column may show a breakout in action, the daily close is the key level that is the final arbiter on whether the breakout is registered for subsequent days.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Commodity Outlook: Commodities rally despite global uncertainty
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
Upending the global order at blinding speed
John J. Hardy
Global Head of Macro Strategy
We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ... -
Quarterly Outlook
Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever
Jacob Falkencrone
Global Head of Investment Strategy
-
Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Global Head of Macro Strategy
-
Quarterly Outlook
Equity Outlook: The ride just got rougher
Charu Chanana
Chief Investment Strategist
-
Quarterly Outlook
China Outlook: The choice between retaliation or de-escalation
Charu Chanana
Chief Investment Strategist
-
Quarterly Outlook
Commodity Outlook: A bumpy road ahead calls for diversification
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
FX outlook: Tariffs drive USD strength, until...?
John J. Hardy
Global Head of Macro Strategy
-
Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy