Originally published by AxiTrader
Markets Overview:
- Equities: Nikkei 225 (-0.74 %), Hang Seng (+0.30 %), CSI 300 (+0.22 %), KOSPI (-0.13 %), S&P/ASX 200 (-0.97 %)
- Commodities: WTI Crude $47.09 (-0.65 %), Brent Crude $49.15 (-0.65 %), Natural Gas $2.98 (-0.17 %), Gold $1284.94 (+0.40 %), Copper $255.70 (-0.02 %)
What traders are talking about:
Asian stock markets had a mixed performance. Several major indices – including the Japanese Nikkei and Australia’s ASX 200 are down on the day. There is a slight risk aversion in markets, with the Japanese Yen and Gold in demand.
Gold benefited from the tensions in the Middle East, as well as broad Dollar weakness. The precious metal rallied to a high of $1284 in Asia, and is likely to test $1300 soon. A break above that level would pave the way for a continuation of the rally to at least $1340. Silver also had a decent rally since it bounced off $16.00 support. Decent resistance can be expected ahead of $18. Should it clear that obstacle, there is not much resistance until $18.65.
In FX, the Yen caught a bid amid the risk-off sentiment. USD/JPY fell below 110.50 and stops lying below the support level accelerated the downside momentum. Eventually the currency pair fell as low as 109.75. Further losses seem likely, and the next big support level now lies at 108.20. Expect solid resistance at 110.20 and 110.50.
The Australian dollar consolidated overnight. Traders are waiting for the RBA rate decision. While no changes are expected, the market is expecting slightly upbeat comments from the central bank following solid econ data in the recent weeks.
Economic data releases could be less important this week. Geopolitical risks are once again in the focus of both traders and investors. Yesterday, several Arab countries cut their diplomatic ties with Qatar, a move that surprised many market participants.
Oil prices rallied initially, but reversed gains quickly. Qatar is a major LNG exporter, but not a significant oil producer. Further, worries about the future of OPEC are rather unfounded. The organization has existed even during wars between some of the member states, so it seems highly unlikely that this event will damage the organization.
Further, on Thursday, the former FBI Director Comey will testify about his conversations with US President Donald Trump regarding the suspected Russian interference in the 2016 election. It is difficult to predict what Comey will deliver. However, both US stock markets and the Greenback are likely to come under pressure should Comey present new evidence against Trump. Investors are already skeptical about Trump’s economic plan, and a further detoriation of confidence in the President would be bad for stocks and the dollar alike.
On the same day, UK voters will head to the polls. One month ago, the party of Prime Minister Theresa May had a clear lead. However, her lead has been shrinking following two terrorist attacks in the UK. Given the current uncertainty, volatility in the GBP pairs is likely to increase ahead of the UK election.
Key Events: Euro Zone Retail Sales, US JOLTs Job Openings, Canadian Ivey PMI