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Gold begins trek towards USD 1710 an ounce and beyond
The crisis of confidence that has driven gold these past ...
The crisis of confidence that has driven gold these past few months has begun easing and the precious metal is slowly starting its ascent towards key resistance levels, says Ole Hansen, Head of Commodity Strategy at Saxo Bank. But in order to really shine once more, it needs to break beyond key price levels above USD 1710/oz. While it is recovering from a major early-January sell off, upward momentum has stalled at around USD 1695/oz on several occasions. Several worldwide developments that could have had a negative impact did not fulfill their potential. The Indian government raised import taxes but a reduced level of speculative interest in gold muted the impact. Similarly, concern that the US would cease quantitative easing has faded and investors in exchange traded funds retain a healthy appetite for the metal. The missing ingredient for the next part of the ascent is a driver to help scale the USD 1710/oz level. Once that is done, we could well see a move back up to USD 1750/oz and even further towards USD 1800/oz. For more information onprecious metals see TradingFloor.comSee whatOle Hansenis also saying about oil, grains and other commodities.
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Brent crude sees resistance at USD 112-113 per barrel
With the absence of any significant triggers to shift crude ...
With the absence of any significant triggers to shift crude oil out of the range in which it has been trading since September last year, prices for the commodity now seem to be approaching the high end of the current trend. This, says Ole Hansen, Head of Commodity Strategy at Saxo Bank, means that resistance is starting to appear at around the USD 112/barrel to USD 113/barrel. Though the market did move a little higher this morning, the quantitative easing plan announced by the Bank of Japan overnight was fully in line with expectations and failed to provide extra support. Meanwhile, the end of the Algerian hostage crisis has eased geopolitical tensions. But although economic data coming out of the US and China continues to improve – indicating a strengthening global economy – Brent crude has nonetheless been unable to escape from its current range. Intraday trends to track could include any selling opportunities above current prices and up towards USD 113/barrel. For more information on energy trends see TradingFloor.com See what Ole Hansen is also saying about gold, grains and other commodities
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US earnings season in full flow with Apple, Google and Microsoft in starring...
Another busy few days on the US corporate earnings season ...
Another busy few days on the US corporate earnings season calendar lies ahead with this week’s focus squarely on technology stocks, says Peter Garnry, Head of Equity Strategy, Saxo Bank. Google (GOOG:Nasdaq) starts the ball rolling on Tuesday. The story here will extend beyond its push into mobile phones: much market interest will focus on the state of internet advertising demand. Any sign of growth in this sector would be a positive signal in that it would indicate that companies are feeling more confident and are willing to spend more on advertising. Wednesday sees what is shaping up to be the news of the week: Apple’s (AAPL: Nasdaq) earnings report for the first quarter of 2013. (Apple’s reporting schedule does not follow the calendar year). Expectations as to the earnings potential of the world’s largest company (by market capitalisation) have been under pressure for months, with the main culprit being the success of rivals in luring customers away from Apple’s propriety operating system iOS. The Android platform has become extremely popular; Nokia’s (NOK:Nyse) new Lumia smartphone is being well received and Apple also faces tough competition from Samsung (SSNLF:OTC). Saxo Bank, however, believes the Apple stock still has some momentum and could provide an upside surprise particularly in light of new rumours suggesting it will launch three or four smaller and cheaper iPhones this year. Thursday’s agenda includes earnings reports from Nokia and Microsoft (MSFT:Nasdaq). While Nokia is far from the behemoth it once was, the success of its new smartphones lends interest. Microsoft, meanwhile, is more diversified with a range encompassing enterprise software, phones, the entertainment business and online business. Because it is being challenged on multiple fronts market participants will be especially keen to hear chief executive Steve Ballmer’s outlook for coming months. Friday sees the last significant earnings report of this week - Proctor Gamble. This release is especially noteworthy because this company has a huge range of products in the majority of global markets and is therefore seen as a bell-weather of consumer demand.See more commentary about equities from Peter Garnry on TradingFloor.com
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Earnings Season: JP Morgan and Goldman Sachs 4Q releases eyed;
The fourth-quarter 2012 corporate earnings season gets into full swing ...
The fourth-quarter 2012 corporate earnings season gets into full swing today with two of the biggest and most-keenly watched US banks – JP Morgan Chase (JPM:Nyse) and Goldman Sachs (GS:Nyse) – publishing results at 12:00 GMT and 12:30 GMT respectively.Peter Garnry, equity analyst at Saxo Bank, notes that the market’s earnings estimates for Goldman Sachs declined quite rapidly during the first half of 2012 before spiking 20 percent higher in the second half. These heightened expectations of Goldman Sachs’ fourth-quarter results were due to rising stock markets and slightly increased market activity in the latter half of the year.However, a sharp increase in earnings estimates over the last two weeks means that the upside potential for the stock today is somewhat muted. Key items to look out for in the earnings report are: Market activity in the fourth quarter of 2012; The outlook for the next two quarters; The pace of mergers and acquisitions activity.Changes to the market’s earnings estimates during last year for JP Morgan Chase followed a similar pattern as Goldman Sachs. But the reason here was the outfall from the USD 6bn loss by a rogue trader. Once the market was assured that the bank’s losses would be limited to around USD 6bn, earnings estimates ticked upwards again. But because the recovery was slower than at Goldman Sachs, the better potential for an upside surprise today is with JP Morgan Chase.
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Saxo Bank Q1 FX Outlook: Sterling to continue as safe haven to Eurozone
The pound will make a comeback against the Euro in ...
The pound will make a comeback against the Euro in Q1 and may trade slightly weaker against the US dollar. That is because we imagine the ECB will signal a move into a more aggressive easing position in the first quarter. In any case, the pound will either serve as a safe haven from the euro in the event that EU tail risks return. Meanwhile, there may be little monetary policy dynamism in the UK as the market bides its time until Mark Carney assumes the helm of the Bank of England in June.
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Saxo Bank Q1 FX Outlook: Stronger dollar during US fiscal process
The US Fed has put itself in a most interesting ...
The US Fed has put itself in a most interesting situation with the combination of promising a massive expansion of its balance sheet while also linking Fed rates to key economic variables of the unemployment rate and core inflation. Considering the demographic structure of the US (a swell in retiring baby boomers), the unemployment rate could continue to decline rapidly in 2013 and have the market projecting a 6.5 percent rate by some time in perhaps mid-2014 even on marginal improvements in payrolls. Meanwhile, core inflation in the US is only about half of one percent from the Fed threshold. Fiscal restraint from the US (for the first time), the reshoring phenomenon, Fed thresholds hampering further easing for some time, and the return of market volatility will mean that a more durable recovery in the US dollar will begin in Q1, and a fairly broad one at that.
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Saxo Bank Q1 FX Outlook: No Goldilocks scenario for the euro
There is no “goldilocks scenario” for the euro – the ...
There is no “goldilocks scenario” for the euro – the sharp recovery in late 2012 came as the market realised that the European Union members are more committed to union than was previously believed. But the current “solutions” of an European Central Bank backstop and an EU banking union still offer no real relief from debt deflation at the periphery. Even if Germany allows itself to be coerced into ever-deeper union and towards a euro bond, the EU only holds together longer term with massive new Quantitative Easing from the ECB, because one way or another, the periphery must be allowed to devalue. At some point in Q1, therefore, there will be a transition away from the reduction in tail risk theme and toward the view that the euro must maintain its relative position in the competitive devaluation race in which it has lagged greatly so far. It is either that or we see a spike in euro strength leading to an EU breakup as the disciplinary EU core sees the periphery bid adieu to the European Monetary Union. The first major testing ground for EU solidarity will be Italy’s pivotal general election in Q1.
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Saxo Bank Q1 FX Outlook: JPY weakening move could deepen
The JPY got quite a jolt with the sudden advent ...
The JPY got quite a jolt with the sudden advent of snap elections and firebrand rhetoric against the strong JPY from the incoming LDP Prime Minister Shinzo Abe in Q4 of 2012. The JPY weakening move could deepen a bit in Q1 as an Abe government moves to act on measures aimed to weaken the JPY and as speculation of less Bank of Japan independence grows because a new appointee will assume its helm in April. But in our scenario of a return of volatility, we could see a more two-way market for the Japanese currency in Q1 as the currency is unlikely to weaken in a straight line – particularly against the normally pro-risk currencies. Remember that Japan has an enormous accumulated external investment position of USD 3 trillion, even if its terms of trade have moved into deficit recently and are likely to continue to deteriorate. Still, longer term, the public debt overhang, Japan’s demographics, and weakening sovereign debt markets will encourage a weaker JPY.
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Saxo Bank Q1 FX Outlook: USDCAD best commodity dollar performer
The commodity dollars may do poorly in the New Year. ...
The commodity dollars may do poorly in the New Year. Already, the strong Aussie theme has worn rather thin, even as complacency reached new extremes. As the most overvalued of the major currencies, one cannot help but wonder how quickly the currency’s fortunes could reverse if risk aversion is ever “allowed” to return by the market-manipulating central banks. Already, the vast majority of Australian sovereign debt is in foreign hands and the country has an enormous accumulated current account deficit – a position it shares with its smaller neighbour to the south, New Zealand. Any move that spooks foreign investors could spell significant downside and volatility. Canada’s position is far better than either Australia’s or New Zealand’s, but the recent years of “forced” easy monetary policy means that the private debt position and housing bubble in Canada have spiralled to extremes that can only mean an ugly hangover going forward, particularly given the damage that a too-strong currency has done to Canada’s manufacturing base. If US demand weakens in the New Year and global economic growth underperforms, CAD could weaken broadly.
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Saxo Bank Q1 Commodity Outlook: Brent crude range bound USD 105-115
Oil market behaviour in the beginning of 2013 is most ...
Oil market behaviour in the beginning of 2013 is most likely going to be a repeat of what we saw during the second half of 2012. The range bound nature of the market will continue with Brent crude oil seemingly unable to move much away from USD 111 per barrel, the average price over the past two years. We see the price of Brent crude oil mostly range bound during the first quarter with the 105 to 115 USD/range seeing most if not all of the activity but with the greatest risk skewed to the downside.
