Focus Trades from SaxoStrats team

FX FOCUS

USDJPY / USDCNH

  • Saxo Bank head of APAC macro strategy Kay Van-Petersen continues to favour USD strength & favours higher moves in DollarYen & DollarYuan longs. He remains sceptical on a ‘favourable’ deal between the US & China – as Trump is likely to wave the foreign policy card on national security grounds a lot more often, now that a domestic agenda needs to include the democrats on the table. Trump also looks much stronger to his base, being seen as tough on China, than he would if he was getting a deal done.
  • Those who feel that trade deal could very much be in the works, could look to express this through a higher move in AUDUSD – key level to close above is the 100D of 0.7258. Whereas those that expect a break in any kind of potential deal could look for further downside in the like of AUDJPY & NZDJPY – the latter in particular is highly elevated given the stellar rise in the NZD over the last few weeks.
  • Trade your view with Saxo
    [USDJPY Spot]
    [USDCNH Spot]

MXN

  • MXN is starting to look more & more overextended over the likes of the EURO, CAD & USD. We could be in for a serious pullback & mean reversion favouring peso strength
  • Trade your view with Saxo [USDMXN Spot]

GBP

  • Brexit Optimism – Theresa May’s Cabinet met last Wednesday to discuss a draft Brexit agreement
  • As with everything regarding Brexit, you can’t be complacent with any one position. To seal the deal Theresa May’s agreement must pass Parliament, in that event cable will fly and on the flipside, failure will send cable into a plummet. The deal passing parliament could open the doors for a move up towards 1.40 with a BOE rate hike being priced in also.
  • But the GBP is beholden to Brexit and we are always one headline from success and one from failure.
  • For GBP shorts make sure you’re covered for any topside blow out.
  • Trade your view with Saxo [GBPUSD Spot]

EQUITIES FOCUS

Seasonality in the hands of Xi and Trump

  • The odds of a short-term deal may be going up with Liu He travelling to Washington, but we wouldn't expect it do anything to address the broader issues in the relationship.
  • The best outcome = tariff truce, and even that may be misplaced optimism.
  • Uncertainty surrounding this outcome will keep markets subdued, regardless of seasonality and calendar effects.
  • If we see a tariff truce that could open the doors for the “Santa rally” but a disappointing outcome along with the impending January tariffs could throw the markets off, Investors who position cautiously will be rewarded!
  • Trade your view with Saxo
    Sasa International (00178:xhkg)
    Samsonite (01910:xhkg)
    Kweichow Moutai – A (600519:xssc)

COMMODITIES FOCUS

WTI

  • As of Tues close, since the 1980s we had a never before seen 12 sessions of consecutive selling of in WTI – resulting in a c. -30% pullback from recent $76.90 highs. This despite the indicated steps by OPEC to curtail future production by c. 500,000 barrels, a significant figure.
  • As WTI tries to find a base around these $50-60 range, irrespective of one’s bullish or bearish view on oil – we could be due for a technical bounce higher. A potential way of expressing this is 3-4m calls & call spreads with say $58.00 or $60.00 strike levels, with the trading plan of closing off these trades post a strong oil bounce of +4-8%
  • Local oil related names such as CNOOC (883), China Petroleum (386), China Oilfield Services (2883) could also potentially be a way of looking to play a bounce. Whereas those that look at Australia could consider Santos, Woodside Petroleum or Oil Search. Those with a Japanese equities view could consider Inpex.
  • Trade your view with Saxo [WTI Crude Oil Futures CLZ8]

Weekly Most Traded A-shares*

Stock CodeStock NameSaxo CodeAverage Daily Value
Traded RMB
(8-14 Nov)
601318 CH EquityPING AN INSURA-A601318:xssc3,381,610,000
000063 CH EquityZTE CORP-A000063:xsec3,169,790,800
600519 CH EquityKWEICHOW MOUTA-A600519:xssc2,609,205,200
600030 CH EquityCITIC SECURITI-A600030:xssc2,002,546,000
300059 CH EquityEAST MONEY INF-A300059:xsec1,991,975,200
600036 CH EquityCHINA MERCH BK-A600036:xssc1,949,862,600
002027 CH EquityFOCUS MEDIA IN-A002027:xsec1,461,147,900
600895 CH EquitySHANG ZHANGJIA-A600895:xssc1,400,773,820
603799 CH EquityZHEJIANG HUAYO-A603799:xssc1,394,268,940
000725 CH EquityBOE TECHNOLOGY-A000725:xsec1,314,926,660

* Source: Bloomberg