Daily Analysis: Yen Hits 10-Month High as Florida Braces for Irma

Friday Market Recap

Asset Current Value Daily Change
S&P 500 2463 -0.11%
DAX 12303 0.05%
WTI Crude Oil 48.12 -1.89%
GOLD 1352.00 0.14%
Bitcoin 4372 -5.29%
EUR/USD 1.2039 0.14%

There has been a distinct duality between forex markets and stock markets in recent days, as the most important safe haven assets, namely gold and the Japanese Yen have been rising strongly amid the geopolitical tensions and the rising risk of hurricane Irma, while equities held up well in the meantime. The only exception is the Nikkei that had it all; a rising currency and the North Korean escalation.

As far as the rogue nation is concerned, the huge steps that Kim Jong Un took towards delivering a nuclear warhead by a ballistic missile have wider implications than those in the US-China-Korea triangle. Should a country manage to become a real nuclear power amid the direct opposition of the most powerful nation in the world, a domino-effect could be triggered that could multiply the, very small, risk of a nuclear conflict.

USD/JPY, 4-Hour Chart Analysis

While stock markets mostly ignoring the increased risks, gold surged to $1360 today in early trading, while the USD/JPY pair fell below 108 for a new low. The major US indices are mixed today (with the NASDAQ underperforming) before the weekend break, and although the majority of stocks are after a slightly negative week, the relative strength of equities is apparent. This is especially true in Europe, where even the post-Draghi strength of the Euro (back above the 1.20 level in the USD pair) failed to push prices lower. Irma is expected to make landfall in Florida during the weekend, and although preparations are going well, the storm could have devastating effects, as meteorologists expect the worst hit to Florida since Andrew in 1992.

Gold, 4-Hour Chart Analysis

Cryptocurrencies

This week will go down in history as the week of the China-Flash-Crashes in the crypto segment, as today yet another new plan to curb speculation in the sector surfaced in the Asian country. The major coins all tumbled significantly after the news release, and although a large part of those losses is now reversed, it’s still hard to judge the damage that this new legislative wave will cause. What looks certain, is that volatility will be the name of the game for crypto traders, especially given the current long-term outlook of the segment. Before the flash-crash, Monero and Dash were showing strength, and should the market push back to the morning levels we expect the early trends to resume. All eyes are on NEO again, as the volatile token is probably the best gauge of the markets opinion on the Chinese developments.

ETH/USD, 4-Hour Chart Analysis

Technical Picture

The German DAX got very close to our primary target of 12,375 yesterday, and the index continues to act encouragingly for bulls in the face of the strong Euro. The benchmark is likely to hit 12,500 during the current move after breaking out from the dominant prior downtrend The MACD indicator still leaves room for short-term gains, with strong support between 12,150 and 12,250.

DAX, 4-Hour Chart Analysis

Key Economic Releases on Friday

Time, CET Country Release Actual Expected Previous
3:30 JAPAN Final GDP 0.6% 0.7% 1.0%
3:30 CHINA Trade Balance 287 bill 337 bill 321 bill
9:30 UK Manufacturing Production 0.5% 0.3% 0.0%
13:45 CANADA Employment Change 22,200 15,000 10,900
14:30 CANADA Unemployment Rate 6.2% 6.3% 6.3%

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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.