What Happened on Thursday > Top 3?
- Gold screams higher to $1,287 amid escalating North Korean tensions
- USDJPY sees massive offers as Yen safe-haven flow, as well as soft USD data
- RBNZ Talks down the Kiwi dollar
Outlook
- Markets are on a risk knife edge as North Korean tensions rise
- US Secretary of state attempts diplomacy regarding N. Korea but Trumped by comments
- Markets looking to tonight’s crucial US Inflation data
Data & Event Risk Today?
- (USD+) US CPI/ Inflation Data – 10.30pm Sydney
USDX: 93.25
The USD is a very interesting story, as last night softer than expected PPI data saw USD sell down.
USD index is holding for now as the USD fights a battle between safe haven USD buying, versus the Selloff we saw on the back of softer PPI US data last night.
USDJPY: 109.05
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.
As per Tuesday’s comments: “I think the tick back higher will be capped around 109.50, 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: 1.1775
Euro traded down to 1.1705 yesterday narrowly missing my target by 5 pips.
EURUSD has clawed back up to 1.1775 purely because the USD was sold off on the back of PPI data (missing expectations).
The Euro wants to push higher but what will likely drag it down tonight, is the CPI data for the US.
Look to sell at these current levels for a move to 1.1700.
GBPUSD: 1.2980
Sterling took another minor tumble lower in London FX dealing yesterday as the weakness played out across the board against USD bids.
Then came the soft US data and reversals in the majors were minor but evident, pushing Sterling back to the 1.2980 level.
If the CPI data is positive for USD, as it is expected to be, Sterling will move to 1.2850.
AUDUSD: 0.7870
The Aussie dollar is in for pain as the risk sentiment tumbled, dragging AUD and NZD risk currencies lower.
The USD bulls are stalking the markets looking for any reason to get back long dollars. Tonight is likely to be the catalyst for AUDUSD correction lower, with renewed USD strength.
You would have to favour AUD lower against the greenback in this risk environment.
NZDUSD: 0.7270
NZDUSD fell out of bed yesterday after the RBNZ held interest rates but then talked down the NZD fiercely.
I nailed my target on this pair yesterday but markets took a reset when the PPI data missed the analysts’ expectations.
This pair will be a huge target for Selling pressure when the US CPI data hits tonight.
Look to sell around these 7280 levels looking for 7150.
USDCAD: 1.2740
USDCAD was a great trade call on Monday, from 1.2650 with a target of 1.2750 still in play.
USDCAD was Bid back through 1.2700 in Asian dealing yesterday trade, still shy of my target by 15 pips, with more safe-haven flow to lift the USD tonight I feel.
The USDCAD may even take a run to 1.2800 or 1.2850 in this environment. I love this pair. xoxo
VIX: 16.04
The Fear index should be in for a boost this week as the geopolitical landscape with North Korea lifts tensions. I have been saying for a month that Volatility will spike, last night it finally did!
Volatility jumped a whopping 44%
GOLD: $1,288.40
Gold rallied enormously yesterday in one of my most brilliant trades in my 12 years in the markets.
I believe (with no doubt) that the CPI data may jolt some profit taking, then the Buying (of GOLD) will resume again due to the Trump dialogue being very aggressive regarding the North Korean issue!
Here are my comments on Monday: “I am looking for $1275/$1280 at the end of this week.”
Do not underestimate the USD, namely the CPI data may pull Gold back to 1275/1280 before a resumption of heavy Bids to 1300.
Oil (WTI): $48.70
Oil battled with the $50 handle quite hard, so I like to favour a continued pullback.
Look for headline driven moves back to about $46/$47.
Macro Themes in Play
- Safe-Haven Assets Bid very strongly, namely Yen, GOLD & Swiss.
- Markets cautious about US CPI data
- North Korean tensions dominating the headlines and the market sentiment
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Russell Sandiford / Dealer |
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