MACRO DIGEST: Trouble in Italy, US dollar strength confirmed for now and North Korea don't like NSA John Bolton

Action:

 

Long dollar vs. EUR, DXY, JPY, XAU for now…

 

Why:

 

Break higher in 2y & 10y US yield

Break of 12 month SMA DXY, EURUSD, USDJPY, XAU

Increased EUR risk on the back of Italian polictics

Geo-political escalation can work both ways but most likely for risk off…

 

Stop loss: 100 basis above EUR here – 1.1930 vs. 1.1835 now…..XAU above 1330/35.

 

Italy new big risk from potential new government: (Christopher Dembik will write follow up this am)

 

From: Christopher Dembik (CDK)
Sent: 16. maj 2018 06:58
To: Strategy And Research <StrategyandResearch@saxobank.com>
Subject: Draft of Lega-M5S agreement

 

https://t.co/BscRKnYyzM?amp=1

 

It includes:

- a shadow cabinet 

- dropping Russia sanctions 

- mechanism to leave the euro 

- change EU treaties, stability rules 

- commit to NATO but wants to revisit Italy's role in some missions 

- ask the ECB to cancel 250bn Italy's debt 

 

Obviously, it is a draft and it has been leaked for a reason.. but still worrying.

 

http://dzrhnews.com.ph/struggling-agree-government-pact-italys-league-turns-eu/

 

 

 

Technical break of long-term indicator (12 mnth Simple Moving Average) – Indicates final leg of this US Dollar strength correction……

 

 

'

 

US Fixed Income broke big levels yday – focus on Fed policy, deficit increases…

 

 

 

 

Plus finally the overnight North Korean response to the US:

 

 

======================================

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Investment Officer

 

Saxo Bank A/S  |  Philip Heymans Allé 15  |  DK-2900 Hellerup
Phone: +45 39 77 40 00  |  Direct: +45 39 77 62 23  |  Mobile: +45 51 54 50 00

 

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