With the JPY TWI under severe pressure and both sovereign and corporate CDS prices down, it looks like we could again have a risk-embracing environment, in which the USD strengthens.
What's going on?
· Much stronger than expected US labor market data on Friday. So strong, that the negative correlation between the USD and stocks broke down (turned positive). We note that the avg. Weekly Hours was out at 33.2 vs. 33.0 expected. An increase in Weekly Hours is what is usually seen in recoveries, since employers first ask their employees to work longer hours before hiring again.
· This might be very significant. With the JPY TWI under severe pressure and both sovereign and corporate CDS prices down, it looks like we could again have a risk-embracing environment, in which the USD strengthens.
· The downtrend in USDJPY might be coming to an end, but we need a couple more days in order to conclude. EURUSD and especially Gold are under pressure.
Calendar
Economic Data Releases
|
|
Country
| Time (GMT)
| Name
| Saxo
| Consensus
| Prior
|
EC
| 09:30
| Sentix Investor Confidence (DEC)
|
|
| -7.0
|
GE
| 11:00
| Factory Orders MoM (OCT)
|
| 0.8%
| 0.9%
|
CA
| 13:30
| Building Permits MoM (OCT)
|
| 1.0%
| 1.6%
|
FX
FX
| Daily stance
| Comment
|
EURUSD
| 0/-
| Sell on rallies towards 1.4950 and target 1.4825. Stop above 1.50.
|
USDJPY
| 0/+
| Buy on dips towards 89.25 and target 90.25. Stop below 88.60.
|
EURJPY
| 0/+
| Buy on dips towards 132 and target 134. Stop below 131.00.
|
GBPUSD
| 0/-
| Sell at the break of 1.6423 and target 1.63. Stop above 1.6470.
|
USDCAD
| 0/+
| Buy at the break of 1.06 and target 1.0750. Stop below 1.0520.
|
FX Options
FX-Options
| Comment
|
EURUSD
| Vols should remain well supported in the front end especially with the market getting
|
| bullish about the dollar after Friday but unlikely to last too long after the FOMC next week.
|
USDJPY
| Gamma looks to be well supported over the FOMC date next week and mid curve is still
|
| seeing decent bids this morning so we do not expect vols to come off too much.
|
AUDUSD
| Vols moved lower from Friday’s post nonfarm numbers. There were noted interest to buy
|
| upside 93-9400 area strikes for 1-2mth area in Asia today.
|
Equities
Equities
| Daily stance
| Comment
|
DAX
| 0/+
| Buy on dips towards 5767 and target 5815. Stop below 5745.
|
FTSE
| 0/+
| Buy on dips towards 5263 and target 5310. Stop below 5240.
|
S&P500
| 0/+
| Buy on dips towards 1100 and target 1114. Stop below 1094.
|
NASDAQ100
| 0/+
|
|
DJIA
| 0/+
|
|
Futures
Commodities
| Daily Stance
| Comment
|
Gold
| 0/-
| Sell on rallies towards 1175 and target 1150. Stop above 1186.
|
Silver
| 0/-
| Sell at the break of 18.10 and target 17.75. Stop above 18.25.
|
Oil (CLF0)
| 0/-
| Sell on rallies towards 76.30 and target 74.90. Stop above 77.50.
|
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