- North Korea’s ambassador to the UK confirmed another nuclear test to be carried out. And described potential attacks from the US. “If the US attack us, our military and people are fully ready to respond to any kind of attack.” He said a pre-emptive strike on his country would not be possible because they would turn US assets in the region “to ashes” at the first sign of movement towards an attack.
- This has seen USD/JPY sell off ~60pips, currently sitting below the 114 level after breaking through it overnight. The comments also rallied gold $10, reversing most of last night’s losses, currently trading 1,224.
- USD/JPY’s impressive run over the last month may see some profit taking in today’s Asian session. A 38% Fibonacci retracement on its 630-pip move since mid-April will see the 112-level touched. A 24% Fibonacci retracement will see the 113 level, a previous resistance level, tested. Headlines re North Korea will need to heat up for these levels to be touched.
- The Australian budget did little to move the AUD/USD overnight, the currency trading a 30-pip range most of the night. ASX200 little changed from the announcement currently trading the 5,847-level coming into today’s open. AAA rating concerns appear not to be making headlines today.
- VIX volatility in the US S&P 500 is in single digits, its lowest level in nearly a quarter of a century. The US equity markets are again in tight daily ranges under 1%.
- Some further profit taking in the EUR/USD post French elections. The pair trading lows of 1.08635 overnight, approx. 130 pips off its Monday morning highs, as the RSI approaches lows. Longer term the pair looks an attractive long on dips given economic improvements throughout the Eurozone and expected lifting of some stimulus measures at the June 8 ECB meeting.
Today’s Economic calendar (AEST)
- 11:30am China CPI and PPI y/y
- 4:45pm French Trade Balance
- 10:00pm ECBs Draghi speaking in Netherlands
- 10:30pm US Import Prices m/m
- Thurs @ 12:30am Crude Oil Inventories
