The last trading day of the week kicks off with an unsettling "very odd set of market circumstances," says John J Hardy, Saxo’s Head of Forex Strategy. For one thing the status of the recent big climb by US yields is very much in question, and remember that this rise is being cited as a major driver of the US dollar rally.
That rally itself remains intact although a more vigorous Japanese yen rally has now emerged, taking some of the steam out of the dollar focus. "There's just something odd about the whole backdrop across markets. The S&P looks eerily quiet – it hasn't gone higher but it hasn't fallen lower – and some of the other risk measures don't look very healthy," Hardy says. "Something is flashing red lights for me across markets and I would ask that traders be respectful of that," he concludes.
In commodities, the big theme is the likelihood of increased output, says Ole Hansen, Saxo’s Head of Commodity Strategy. "The speculation that has been rife this week about Opec and Russia easing their supply cuts was more or less confirmed yesterday by the Russians." The pair will get into the details of this at their meeting on June 23, the trigger for the move being the Venezuelan production collapse which has resulted in over-compliance with the output cut targets.
Still, this hasn't yet knocked oil out of its range as the unquantifiable supply risk from Iran has kept the market in a relatively tight range this week with sellers emerging above $80 on Brent and $72 on WTI, Hansen says. But there is the risk of a correction nonetheless which would see WTI focusing on $70.25/b (20 DMA) and $67.20/b, and Brent on $77.4 followed by $75.50/b (38.2% and 61.8% of April run up).
Gold, meanwhile, trades back above $1300/oz with the combined geopolitical ills of Trump's war of words with North Korea, Turkey's messy election and failing economy as well as the existential threat to the European Union from Italy's new populist regime, all making the yellow metal bask in a safe-have glow.
Finally today, periphery bonds are suffering a bout of weakness sparked by unsettled politics in Spain where the main opposition party is threatening a no-confidence vote in the centre-right prime minister, reports Althea Spinozzi, from Saxo’s bond trading desk.
The market is trying to get back to the pre-Covid and pre-war times, but that model is broken. A new dawn is here and the financial world needs to adapt.
Steen Jakobsen,
Chief Investment Officer
A political switch in China towards less tough control of its people and companies may kick things back into gear.
Redmond Wong,
Market Strategist
While the economic situation in Europe may not be as bad as feared, there's still a plethora of things to fix.
Chris Dembik,
Head of Macroeconomic Research
As the world turns increasingly bipolar, equity markets face harsh times as they transition into the new reality.
Peter Garnry,
Head of Equity Strategy
New alliances and collaborations outside of China may lead to prosperous times in Asia.
Charu Chanana,
Market Strategist
For years, it was thought that the balanced portfolio was a thing of the past. But recent developments may have changed that.
Peter Siks,
Investment Coach
Following a dramatic and volatile 2022 with good returns, a lot of this year's commodity performance may be driven by Chinese politics.
Ole S. Hansen,
Head of Commodity Strategy
2023 could be a tough year for currencies but EUR and JPY may have some upside.
John J. Hardy,
Head of FX Strategy
The commodity-heavy Australian market may have a good start to 2023, as the Chinese focus on growth signals demand for Aussie resources.
Jessica Amir,
Market Strategist
From a near-perfect environment for speculative assets before 2022 to the opposite, crypto faces fundamental challenges.
Mads Eberhardt,
Cryptocurrency Analyst
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research 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. To the extent that any content is construed as investment research, you must note and accept that the 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 under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)