The expected AIG loss of 60 bln. USD for Q4 and the planned Nomura raise of capital through equity markets will hit banks throughout Europe today


Economic Data Releases
CountryNameTime (GMT)ExpectationPriorComment
GEIFO-Expectations (FEB)09:0081.179.4
ECIndustrial New Orders YoY (DEC)10:00-21.7%-26.2%
USS&P/CaseShiller Composite-20 YoY (DEC)14:00-18.30%-18.18%

Earnings Releases
CountryNameTime (GMT)ExpectationPriorComment
NOAker Solutions07:002,325
GEDeutsche Boerse-1,127
UKThomson Reuters13:300,394

What's going on?

Banks are under pressure and will be today's losers in the stock market. Current fear is that the major banks of the world needs to nationalized in order to save them. AIG is going to post a 2008-loss at 60 bln. USD. Nomura is going to sell for 3 bln. USD of equity to bolster their balance sheet.

Central Europe's battered currencies rallied on Monday after four of the region's central banks (Poland, Hungary, Czech Republic, Romania) issued co-ordinated statements calling recent currency weakness unjustified. We still recommend short positions in any of the above mentioned currencies.


FXDaily stanceComment
EURUSD0While holding below 1.2745-50 risks re-test of 1.2640. Else we target 1.2850.
EURJPY+Buy dips to 120.60 support for push above o/n highs at 122.0.
USDJPY+Support at 94.85-00 expected to hold for rally through 95.75, target 97.40.
GBPUSD+Above 1.4660 sees 1.4750-70 target area. Risk of retracement down to sub-1.4450 first.
AUDUSD+Buy dips to 0.6425 for a re-test 0.6550 and higher.


EquitiesDaily stanceComment
DAX-Sell at the break of 3900 targeting 3813 initially, 3743 finally. S/L at 4000.
FTSE-Sell at the break of 3830 targeting 3665. S/L at 3957.


CommoditiesDaily StanceComment
Gold (XAUUSD)0Retreat from 1,000 continues on p/t. Slippage to 975-980 expected
Silver (XAGUSD)0Potential double-top at 14.60 contains upside for now. Ranging 14.20-14.60
Oil (CLJ9)0/-Aiming for 37.10 support while 41.50 caps

FX Options

EURUSDVols were pushed higher at the opening as many were caught short gamma after the move on Friday. Risk reversals moved closer to par and should range around 1.27.
USDCHFVols traded higher with interests looking to buy USD puts but good part of the interests was likely just to get some options on the book so likely to range with slight bias lower.
USDJPYVols are much higher from last week with plenty of interests looking for upside 96-97s and skew is coming off steadily so spot is likely to move higher.


Analysis Disclosure & Disclaimer

Saxo Bank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by Saxo Bank that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis do not occur as anticipated.

Saxo Bank utilizes financial information providers and information from such providers may form the basis for an analysis. Saxo Bank accepts no responsibility for the accuracy or completeness of any information herein contained.

Any recommendations and other comments in Saxo Bank's analysis derive from objective fundamental macro economical and company specific calculations, statistical and technical analysis, and subjective general market assessment.

If an analysis contains recommendations to buy or sell a specific financial instrument, such recommendation should be seen as Saxo Bank's opinion that the specific instrument will respectively outperform the relevant market or underperform compared to the market. Saxo Bank's recommendations should statistically correspond to an even distribution between buy and sell recommendations.

The recommendations may expire promptly due to market volatility and in general, Saxo Bank does not anticipate its recommendations to be valid more than one month. An analysis will be updated if and only if a market development or other issues relevant to the analysis render a new analysis on the same topic relevant. Saxo Bank's analysis does not cover any specific financial product over time but only products which Saxo Bank's strategy team finds it important to cover at any given point in time.

In order to prevent conflicts of interest, Saxo Bank has established appropriate business procedures, incl. procedures applicable to research and analysis to ensure objective research reports. Saxo Bank's research reports have not been discussed with the parties, e.g. issuers of securities, mentioned in the analysis.

Saxo Bank is under supervision by the Danish Financial Supervisory Authority. Saxo Bank does not engage in corporate finance activities and accordingly, Saxo Bank's employees, incl. the persons responsible for an analysis, do not receive remuneration associated with investment banking transactions.