Saxo Bank’s Essential Trades Q3: “Brexit’s shadow”

Kim Fournais is co-founder and CEO of Saxo Bank

Kim Fournais, co-founder and CEO
of Saxo Bank

We provide global broker Saxo Bank’s Essential Q3 trades with an intro from Kim Fournais, the co-founder and CEO of Saxo Bank. He held various positions in the financial services sector, before establishing Saxo Bank with Lars Seier Christensen in 1992 under the name Midas. Fournais headed Midas alone until 1995, when Seier Christensen joined as co-CEO. In 2001, Midas attained European bank status and was officially renamed Saxo Bank.

Britain’s seismic decision to turn its back on Europe will inevitably reverberate through the third quarter and beyond as it undermines a narrative that has underpinned the continent since WW2.

The implications for the UK will be profound but there is a much bigger context here. Brussels must now fear a domino effect as the anti-elite groundswell gathers strength and threatens to send the whole European integration process into reverse.

The ongoing refugee crisis, the fundamental discord between the periphery and the core and a burning resentment that had its genesis in the global financial crisis in 2008 makes it a pivotal quarter for the European Union.

The rude awakening for Brussels is effectively a last warning to get its house in order or, before it’s too late, face the consequences.

The same discontent is also fuelling Donald Trump’s anti-establishment campaign in the US where he squares up to former first lady Hillary Clinton in a race for the presidency that threatens to be visceral and potentially highly volatile for markets and the dollar.

The macro headwinds are mounting and it is against this turbulent backdrop, that our Saxo Bank strategy team will be pitting their wits against the market and attempting to steer a clear and hopefully profitable course through our Essential Trades for Q3.

We’re in a new paradigm. Tread carefully.

Gold has been tracking higher - will in continue?

Gold has been tracking higher – will it continue?

Report Preview: Gold Looks Higher

Gold jumped higher following the Brexit vote and with gains for the year approaching 25%, traders and investors will increasingly be asking whether these gains can be sustained throughout the remainder of 2016.

Support for gold was strong even before the Brexit vote and the long overdue correction witnessed during May stopped short of breaking critical support at $1,200/oz. While tactical traders such as hedge funds and CTAs reacted by reducing bullish exposure during the May selloff, investors in exchange-traded funds backed by gold continued to accumulate.

ETFs are the preferred investment vehicle for investors with longer-term investment horizons including anything from retail to high-net-worth and institutional investors. The continued accumulation from this investor group has increasingly been led by the need to diversify portfolios.

The dovish shift in policy among key central banks from the Federal Reserve and Bank of England to the European Central Bank and the Bank of Japan continues to support the current compression of global-bond yields. An increased number of sovereign-government bonds have moved into a negative-yield environment thereby removing the opportunity cost of gold as an alternative.

Steen Jakobsen, Chief Economist Saxo Bank said:

Uncertainty looms large over the third quarter of 2016 and beyond, but that is not necessarily a negative. In fact, if the uncertainty is met by reforms and improvements, then all of the present risk events could appear in hindsight as harbingers of positive change.

For more trades and to download the full report click here (PDF).

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