Dollar slides, sterling flies, risk appetite returns

Geopolitical tensions have eased ever so slightly, with Trump rejecting calls to impose further Russian sanctions immediately, sparking some renewed risk appetite which caused the dollar to slip but gave a boost to US equities.

"The most interesting thing this week has been sterling and this was already set up last week with that move higher in cable and lower in euro-sterling, says John J Hardy, Saxo's head of FX strategy. The daily close in cable reached its highest since the Brexit vote in June 2016 and the market is now eyeing the 1.4350 level.

Meanwhile, the US dollar is struggling, following some rather insipid data releases yesterday. "Volatility remains very low but if we're starting to close above 1.24 in EURUSD and below 107.00 in USDJPY, it's starting to get some momentum into the move for new lows for the dollar," Hardy says.

In equities, sentiment took a turn for the better as investors saw past geopolitical risks and likely increased exposure ahead of Q1 earnings. "We could see a two-week rebound in equities simply because technicals and macro surprises are rock bottom," says Peter Garnry, Saxo's head of equity strategy. 

But the really big news in equities overnight was Netflix's earnings report, which Garnry describes simple as "mind-blowing". Accelerating international expansion has pushed its subscriber base beyond 125 million, a growth of 25% year-on-year.

Finally today, Saxo technical analyst Kim Cramer Larsson, runs us through an analysis of the latest patterns and emerging signals on a number of key charts, including the S&P 500 (where the 200-day moving average is holding, for now), and the Nasdaq 100, which might be shaping up for a retest of 6,800.