Originally published by AxiTrader
Markets Overview:
- Equities: Nikkei (-0.01 %), Hang Seng (-0.68 %), CSI 300 (-0.78 %), KOSPI (-0.57 %), S&P/ASX 200 (-0.68 %)
- Commodities: WTI Crude $52.31 (-0.19 %), Brent Crude $54.76 (-0.24 %), Natural Gas $3.15 (+0.22 %), Gold $1286.71 (-0.24 %), Copper $256.50 (+0.96 %)
What traders are talking about:
Investors in Asia are still risk averse. The majority of equity indices declined overnight, led by China, where the CSI 300 fell almost 0.80 %. Australia’s ASX 200 and the Hang Seng both tumbled around 0.70 %.
Geopolitical tensions remain a concern for the market. US Vice President Pence warned North Korea overnight, not to test the resolve of the US military. A few days before, Pence already said that the "era of strategic patience" with North Korea was over. The country responded by saying that further missile tests will be conducted.
Further, Secretary State Tillerson announced that President Trump has ordered that the lifting of the Iran sanctions should be reviewed. The state is compliant with its commitments under the nuclear deal, but there are concerns about its role as state sponsor of terrorism, according to Tillerson.
The major FX pairs traded in a rather tight range overnight, following a day of high volatility. The Pound soared after UK Prime Minister May announced an early election in June. CFTC data from Friday showed that GBP short positions remained near a record high, so it’s fair to assume that plenty of speculators were forced to unwind their positions yesterday.
GBP/USD looks a tad overbought on the hourly charts, but is likely to remain bid in the near-term. It should reach 1.30 without much difficulties.
Generally, the short-term outlook for the US Dollar has turned somewhat negative. Recent US econ data has been rather disappointing. Meanwhile, geopolitical risks are increasing and there is no sign that Trump’s promised tax reform is coming soon.
The euro strengthened as well, supported by the GBP rally. Nevertheless, it is difficult to see the Euro extending gains much beyond 1.07 as the first round of the French election is approaching. The uncertainty still remains high, and it is unlikely that traders will want to go into the weekend with large EUR long exposure. Expect strong resistance in the area between 1.0750 and 1.0775.
Looking ahead, the main event today is the release of Euro Zone inflation data. The market is expecting a 1.5 % CPI and 0.7 % Core CPI print.
Economic Calendar:
- 10:00 GMT - Euro Zone CPI
- 10:00 GMT - Euro Zone Trade Balance
- 15:30 GMT - US Crude Oil Inventories