HomeContributorsFundamental AnalysisGold, Yen Overshoot On Korean Missiles

Gold, Yen Overshoot On Korean Missiles

Just as Hurricane Harvey was grabbing the headlines by further damaging USD bulls via ongoing dilution of hopes for a Fed December hike, safe-haven assets shot up after on news from Japan that N. Korea has launched a missile in the direction of Japan, passing over the island of Hokkaido and landed about 1000 km from East Japan. Both Premium longs in gold and silver hit their final targets — (XAUUSD from 1222 entry to 1300 final & XAGUSD from 15.90 entry to 17.50 final). The chart below shows the strongest and weakest currrencies/metals since 10 pm London.

Earlier on Monday, gold confirmed its technical break as it climbed $20 to $1311, before pushing to $1324 following PyongYang’s missile strikes. The initial gold was Hurricane Harvey. The loss of economic activity due to the storm will hit Q3 GDP and cloud the picture on growth and inflation for months. That makes the Fed less likely to hike in December. With Draghi also reluctant to curb QE, gold is signaling more-dovish global central banks.

Earlier, the Chinese yuan jumped to start the week while the Shanghai Composite broke above a major triple top in a pair of moves that didn’t get much attention. For the yuan, it was the ninth consecutive gain and a 14-month high. There can be little doubt that Beijing is allowing the currency to strengthen. The renminbi could be headed for another bout of turbulence if the reports out of Washington are true.

They say Trump is hell bent on slapping some kind of tariff on China as he attempts to score points on trade. The machinations of FX moves in China are always tough to decipher. For stocks, there has been good news for corporate earnings but the two-day, 2.7% rise is tough to justify on fundamentals. Technically, however, the break is compelling and the index is now less-than 9% from the 2015 highs.

Ashraf Laidi
Ashraf Laidihttp://ashraflaidi.com/
Ashraf Laidi is an independent strategist and trader, founder of Intermarket Strategy Ltd and author of "Currency Trading & Intermarket Analysis". He is the former chief global strategist at City Index / FX Solutions, where he focused on foreign exchange and global macro developments pertaining to central bank policies, sovereign debt and intermarket dynamics. Ashraf had also served as Chief Strategist at CMC Markets, where he headed a global team of analysts and led seminars and trainings in four continents. His insights on currencies and commodities won him several #1 rankings with FXWeek and Reuters. Prior to CMC Markets, Laidi monitored the performance of a multi-FX portfolio at the United Nations, assessed sovereign and project investment risk with Hagler Bailly and the World Bank, and analyzed emerging market bonds at Reuters. Laidi also created the first 24-hour currency web site for traders and researchers alike on the eve of the creation of the euro. Laidi's analysis of currency markets stand out based on his distinct style in bridging the fundamental and technical aspects of the markets. Laidi regularly appears on CNBC TV (US, Europe, Arabia and Asia/Pacific), Bloomberg TV (US, Asia/Pacific, France and Spain), BNN, PBSs Nightly Business Report, and BBC. His insights also appear in the Financial Times, the Wall Street Journal and Barrons. He has given numerous interviews and lectures in Arabic, French, and to audiences spanning from Canada, Central America and Asia/Pacific.

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