Saxo Bank's head of equity strategy Peter Garnry is flagging up the Nikkei as "a train to jump on" after the index breakout in the wake of the Bank of Japan's QE move last week was confirmed.
The breakout is also being given legs after BoJ governor Haruhiko Kuroda said there are "no limits" to what Japan can to do to pursue its 2% target inflation. The impact on USDJPY has been considerable, sending up around 114 but Saxo head of forex strategy John Hardy says a potential cap of around 115 for USDJPY could be on the cards.
Hardy says we are "getting towards the end in the very short term of what this [USDJPY] cycle can achieve."
Hardy says the ECB needs to "come out strong" to keep EURUSD trending lower ahead of tomorrow's key meeting while Mario Draghi's role is also coming under pressure for his style of leadership, something, Hardy says, "to keep an eye on".
He also warns AUD and GBP bulls to be careful ahead of key data releases in tandem with dollar strength.
New Zealand data was stronger than expected suggesting AUDNZD pressure. Chinese PMI also fell slightly to 52.9 which has affected sentiment in Asia and may reverberate as more "easing pressure comes out of China in the coming months." Christoffer Moltke-Leth at Saxo's Asia desk says.
USDCHF volatility is "up significantly" says the FX desk's Kresten Bechmann possibly due to hedging ahead of the Swiss referendum vote on November 30, when the potential impact on the gold price could be significant.
Garnry says the Alibaba bandwagon rolls on as it touches $106/share pointing towards its very good results Tuesday, a week prior to the massive Single's Day event in China. "This is the best bet out there for the transformation of Chinese society into a consumer society," he says.
Traders will keep a very close eye on Alibaba's share price especially
with Single's Day in China homing into view. Photo: Thinkstock
Metals continue to be "wiped out" says commodities strategist Ole Hansen. From a technical perspective, he is keeping a close eye on 1,090 USD/oz on gold, the "big one" and a 50% retracement of the 10-year point from the rally that began in 2001.
Opec's strategy, intended or not, of sending the oil price lower is hurting the US shale sector where prices have dipped below $70/barrel. "That's starting to hurt," says Hansen, who adds "Opec may achieve a reduction in shale production ultimately."
In the bonds segment, Michael Boye says Italian and Spanish yields are a "little higher" but tomorrow's ECB meeting and reports of divisions among the leadership is clearly "weighing on markets".
To subscribe to the Daily Shot letter by e-mail please enter your e-mail address here: Subscribe to the Daily Shot