Market Update

What Happened on Tuesday > Top 3?

• North Korean/US Tensions heightened the Risk-Off theme
• US Job Openings data very solid, lifting USD
• Tuesday saw quiet trading ranges until Geopolitics took centre stage

Outlook

• China CPI & Risk off theme dragging AUDUSD lower
• Crude Oil Inventories data tonight
• Markets looking ahead to RBNZ Thursday morning & US Inflation on Friday

Data & Event Risk Today?

• (OIL) Crude Oil Inventories data – 12.30am Sydney
• (NZD) RBNZ – 7am & 8am (Thursday on Asian Open) Sydney

USDX: 93.60

The USD was lifted last night by two key drivers, the safe-haven flow on the back of stern words from Donald Trump regarding North Korea, as well as the solid Job Openings data.

USDX still battling to break above 94, but watch this space, it should get back to 95.

USDJPY: 110.75

I love the USDJPY to slide lower amid risk-off FX flow this week.

With Donald Trump talking of “Fire & Fury like the world has never seen” in relation to the response to North Korea directly threatening the US island of Guam, there is only one way to play this, Sell USDJPY.

I think the tick back higher will be capped around 110.50, and the downslide (downside) looks more like 108 will prevail. In my experience USDJPY moved in bug runs when it takes off, so watch this pair closely.

EURUSD: 1.1735

Euro was interestingly drifting lower on Tuesday amid USD buying as I called towards 1.1700 on Monday for my active traders.

That near-term target wasn’t met and EURUSD has stalled at 1.1730. The Euro seems undecided from here as risk off flows may continue to be the dominating theme.

Look to fade any rallies leading into Friday’s US CPI data release.

GBPUSD: 1.2990

Sterling took another minor tumble lower in US FX dealing yesterday as the weakness played out across the board against USD bids.

Last night’s price action is a great indicator of what to expect if the CPI data is positive for USD, as it is expected to be.

Look for 1.2950 to be a key level before the end of this week.

AUDUSD: 0.7870

The Aussie dollar is in for pain as the risk sentiment tumbled, dragging AUD and NZD risk currencies lower.

We have seen a slight miss today on China CPI which also adds to the SHORT AUDUSD story, so look for 7750.

The moves we saw on the back of US Job Opening numbers indicates to me that the USD bulls are stalking the markets looking for any reason to get back long dollars. You would have to favour AUD lower against the greenback in this environment.

NZDUSD: 0.7320

NZDUSD fell to 7300 but found solid support at that level amid looming rate announcement.

I like the consolidation price action today for NZDUSD, so look to sell rallies.

RBNZ is Thursday early, so expect to see lower lows towards 7250 this week.

USDCAD: 1.2690

USDCAD was a great trade call on Monday, from 1.2650 with a target of 1.2750 still in play.

USDCAD was Bid back to 1.2700 today in Asian open trade, still shy of my target with more safe haven flow to lift the USD

The Canadian data was a mixed bag on Friday night, but as always was overshadowed by the US Jobs data released simultaneously. Again, look to stay LONG, back to 1.2750.

VIX: 10.96

The Fear index should be in for a boost this week as the geopolitical landscape with North Korea lifts tensions.

More to come, towards 12/ 12.5

GOLD: $1,265

Gold is caught solid Bids moving towards the $1270 level, but falling just short.

Markets are cautious about rushing into the risk off trade because the US CPI data is crucial for the USD & Gold outlook.

I am looking for $1275/$12180 at the end of this week.

Oil (WTI): $49.02

Oil is battling with the $50 handle quite hard here, so I like to favour a pullback.

It is as stable as a rollercoaster lately as again this week we have a key Oil production numbers to be released in the US session tonight.

Look for headline driven moves back to about $46/$47.

Macro Themes in Play

• USD Bid solidly on JOLTS US Job data
• Markets cautious about US CPI data
• North Korean tensions dominating the headlines and the market sentiment