Daily Analysis: North Korea and Cryptocurrencies in Focus as Irma Targets Florida

Tuesday Market Recap

Asset Current Value Daily Change
S&P 500 2448 -1.09%
DAX 12123 0.18%
WTI Crude Oil 48.66 2.85%
GOLD 1342.00 0.93%
Bitcoin 4278 2.16%
EUR/USD 1.1900 0.03%

With the major North American exchanges closed for Labor Day and Canada Day yesterday, global markets traded with thin volumes, but today, traders and volatility are back in full force. The most important indices are trading lower after the opening bell, and Asian stocks are underperforming their global peers. This is especially true of Japan, as local equities got hit by the Korean escalation and the jump in the Yen that surged together with other safe-haven assets.

After Hurricane Harvey caused devastation in the Gulf of Mexico, another Category 5 storm, Irma is nearing the coast of the US, already causing damages in the Caribbean region, and giving a boost to the risk-off sentiment. The hurricane will likely make landfall in Florida, and although the extent of the damage is highly uncertain, the event contributed to a spike in the VIX and a steep decline in stocks. Crude oil is trading sharply higher on the renewed supply and war fears, nearing the $50 per barrel level agian int he WTI contract amid the persistent long-term fundamental pressures.

S&P 500, 4-Hour Chart Analysis

Forex markets are fairly active on the first post-Labor Day session, as the hydrogen bomb test and coupled by the preparation for yet another ICBM launch in North Korea caused massive buying in safe haven currencies and gold. The Dollar is broadly lower today, and even the Great British Pound is up against it as the currency rebounded strongly from yesterday’s slump, recapturing the 1.30 level in the pair.  The Euro is also slightly higher compared to the USD, although it’s down against most of its peers in the negative environment.

Huge decline towards kewy support in the USD/JPY, 4-Hour Chart Analysis

Cryptocurrencies

The segment experienced an oversold bounce today, as the major coins rallied in early trading after the Monday massacre. The Chinese ICO ban is still affecting the market that has surged tremendously in the past one and a half months, with the likes of NEO and Ethereum suffering steep losses thanks to the legal troubles. Bitcoin is holding up well amid the sell-off, but the long-term picture suggests that more correction is on the horizon for most of the segment after the monster rally.

NEO/USDT, 4-Hour Chart Analysis

Technical Picture

The precious metal is probably approaching a more durable top after Monday’s gap higher, as the daily chart is overbought, and some consolidation is likely after the break-out above $1300. The long-term picture remains encouraging for the metal, and the coming correction could form a bottom slightly below the key $1300 support. That said, further escalation in the North Korean situation could fuel more upside in the commodity, and investors should keep a core position in gold despite the likely pull-back, but wait with adding to their holdings.                

Gold, 4-Hour Chart Analysis

Key Economic Releases on Tuesday

Time, CET Country Release Actual Expected Previous
6:30 AUSTRALIA Rate Decision 1.5% 1.5% 1.5%
6:30 AUSTRALIA RBA Monetary Statement
10:30 UK Services PMI 53.2 53.6 53.8
16:00 US Factory Orders -3.3% -3.1% 3.0%

Key Economic Releases on Wednesday

Time, CET Country Release Expected Previous
3:30 AUSTRALIA GDP 0.8% 0.3%
14:30 CANADA Trade Balance -3.8 bill -3.6 bill
14:30 US Trade Balance -44.6 bill -43.6 bill
16:00 CANADA Rate Decision 0.75% 0.75%
16:00 CANADA Monetary Statement

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Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.