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The U.S cruise missile strikes have seen crude oil jump over two percent in a straight line with both Brent and WTI testing resistance.

The situation remains fluid in Syria at the moment as the implications of the massive crude missile strike from the United States gets digested. Among the most pressing questions will be,

• Is this a one-off attack and are other nations going to join in?
• What will be the response of Iran and Russia? Two of the world’s largest oil producers and staunch allies of the Assad regime.
• What will be the response of the North Koreans and indeed the Chinese? This is a clear message to them as well.

All of this adds up to potential turmoil in the world and also to potential supply disruptions to crude which have reacted as expected and moved materially higher. We will have to wait for these answers as the day moves on, but unsurprisingly, it would be expected that both crudes will remain bid on any dips.

Brent spot is trading at 52.60 a barrel and has major resistance just above at 57.00, a daily close above here opening a possible technical move to the 60.00 area.

WTI spot is trading at 52.30 a barrel testing resistance right here. A break opens a technical move to the long-term resistance at the 54.50/55.00 level.

The market will be very much headline driven today, what is not in dispute is that safe-haven flows will be the theme of the day.

Gold jumps 15 Dollars to a high of 1264 as the U.S. announces a major cruise missile strike on Syria.

Gold has jumped from 1250 to a high of 1264 as the United States announces a major surprise attack on Syria in retaliation for the chemical attacks on its citizens earlier this week.

MORE THAN 50 MISSILES FIRED FROM U.S. NAVY DESTROYERS IN THE EASTERN MEDITERRANEAN, STRIKING SEVERAL TARGETS ON BASE – SECOND U.S. OFFICIAL – RTRS

The timing is somewhat shocking as the Chinese President Xi is on a state visit to the United States at the moment. My initial thoughts are the new president is sending a big message to the Chinese about their willingness to act on North Korea as well with this strike.

Geopolitics aside, safe-haven risk aversion should be the theme of the day now with Gold and Silver the major beneficiaries. Gold has broken the 200-day moving average intra-day and has tested its upper resistance at 1264, the February 28th high. A daily close above these levels can open a technical move to 1300 with support now at the 1250 level.

Expect Gold to be bid on any dips now and for crude oil to move higher as well. We expect stocks and bonds to also move and will comment on these in due course.

President Trump is due to address the nation shortly and the street will also look to see the reaction of the Chinese as well.

CRUDE OIL - The commodity took back its Wednesday losses to close higher on Thursday. On the downside, support resides at the 51.00 level where a break will expose the 50.00 level. A cut through here will set the stage for a run at the 49.00 level. Further down, support resides at the 48.00 level. On the upside, resistance resides at the 52.00 level. Further out, resistance comes in at the 53.00 level. A break above here will aim at the 54.00 level and then the 55.00 level followed by the 56.00 level. Its daily RSI is bullish and pointing higher suggesting further strength. All in all, CRUDE OIL remains biased to the upside short term.

We spoke yesterday about the GBP/USD wedge that saw price coiling up nicely, and I couldn't go past featuring the continued price action to end the week.

First up, let's take a look at what we said yesterday:

Zooming into any of the intraday charts, you can see that price is coiling into a wedge pattern:

GBP/USD 4 Hourly:

Seeing as though price is right smack bang in the middle of the daily range, the direction on which to trade this pattern isn't clear. Do you view it as a continuation pattern because price has rallied off support and this is merely a pause before a further push higher, or do you take the view that it is simply a turn as we get closer to the top of the range?

Yesterday's price action goes some way toward answering the question:

GBP/USD 4 Hourly:

As you can see, price shot up, tapped the upper trend line of the wedge and was rejected back down.

Zoom into an even lower time frame chart and you can see just how violent the rejection was.

Dollar higher ahead of NFP

The US dollar is higher against most majors currency pairs before the China-US summit and the release of the US employment report. Chinese President Xi Jinping has landed in Florida to meet with US counterpart Donald Trump to hold bilateral talks where trade and North Korea will be on the agenda. The two day meeting is sure to bring some market direction with the other driver being the US jobs report.

The U.S. non farm payrolls (NFP) will be released on April 7, at 8:30 am EDT (12:30 GMT). The forecast calls for a print of over 170,000 new jobs added to the US economy even after an impressive 235,000 announced last month. Although the headline number has shown consistent growth market watchers will be focusing on the average hourly earning for signs of higher pay leading to higher spending form US consumers. Analysts anticipate the hourly earning to gain 0.2 percent and allow the Fed to be patient on rates.

US employment has been the strongest pillar of the economic recovery and has kept pace with the US Federal Reserve two rate hikes in December (2015 and 2016) and the 25 basis point interest rate rise in March with the promise of more coming this year if the economy grows as expected. The Trump administration has struggled to recapture the optimism of the post election victory when the pro-growth policies were announced, but so far have not been delivered. Minutes from the March FOMC meeting showed internal debate on inflation and growth that could make the central bank rethink their hawkish view on the number of rate hikes this year.

The EUR/USD lost 0.06 in the last 24 hours. The single currency is trading at 1.0642 as political risk is one of many factors dragging it downwards. French elections anxiety has been dampened after the latest televised debate, but situations in Italy and elections later in the year in Germany have not painted an encouraging scenario for European unity.

Mario Draghi said on Thursday that the policies of the European Central Bank (ECB) remain appropriate and even despite positive signs of recovery it is too soon to talk about reducing stimulus. This means that the divergence between the Fed and the ECB will only grow as the Fed slowly but surely continues on a tightening path while the ECB is still unsure when it will abandon its expansionary policies. The German central bank governor does not agree in full with the ECB and would rather see and end to stimulus sooner rather than later.

The price of energy gained 1.33 percent during the Thursday trading session. West Texas is trading at $51.50 in a week that has seen the price of crude rising despite a larger than expected buildup of inventories in the US. Oil started the week barely above $50 and broke under that price level as inventory data started to be published hinting that despite all the effort from the Organization of the Petroleum Exporting Countries (OPEC) to stabilize prices. US crude inventories showed a buildup of 1.6 million barrels last week when the market had forecasted a drawdown of 100,000.

Fundamentals don’t fully explain the move as there is ample evidence of oversupply in the market, yet the price is still rising even as there are more US producers waiting to ramp up production. Asian markets that have been limited by the OPEC cut, have turned to US oil which reduces the overall negative impact of increased US crude. China has surpassed Canada as the main destination of US oil.

A disruption in Canadian supplies after the shutdown of the Syncrude oilseeds facility in Alberta has also helped WTI march higher.

The USD/CAD gained 0.186 percent in the last 24 hours. The pair is trading at 1.3408 ahead of employment data for both the US and Canada. The private payroll report published on Wednesday in the US has boosted optimism around the NFP to be published on Friday. The ADP had two massive data points back to back that have analysts improving their forecast for the NFP that is coming of a 235,000 jobs added and is now expected to deliver above 170,000. Canadian job gains are anticipated to be around 5,700 after a strong 15,300 last month. The data for both will go out at the same time with the market focusing on the US data before digesting the Canadian employment report.

The Canadian dollar has not fully taken advantage of the rise in oil prices as investors are anxious about macro events around the globe. The meeting between Presidents Trump and Xi in Florida could have far reaching implications for trade ahead of any Nafta renegotiation talks with Canada and Mexico. Risks are offsetting the rise in commodities with analysts also expecting the Bank of Canada (BoC) to remain in the sidelines as the U.S. Federal Reserve slowly hikes rates and as evidenced by the minutes released this week start trimming their balance sheet.

Market events to watch this week:

Wednesday, April 5
4:30am GBP Services PMI
8:15am USD ADP Non-Farm Employment Change
10:00am USD ISM Non-Manufacturing PMI
10:30am USD Crude Oil Inventories
2:00pm USD FOMC Meeting Minutes
Thursday, April 6
7:30 am EUR ECB Meeting Minutes
8:30am USD Unemployment Claims
Friday, April 7
4:30am GBP Manufacturing Production m/m
8:30am CAD Employment Change
8:30am USD Average Hourly Earnings m/m
8:30am USD Non-Farm Employment Change

GBP/USD is showing little movement in the Thursday session. In North American trade, GBP/USD is trading at 1.2480. On the release front, there are no major British indicators. In the US, unemployment claims dropped sharply to 234 thousand, easily beating the forecast of 251 thousand. On Friday, the UK publishes Manufacturing Production. Across the pond, US job numbers will be in focus, with the release of three key indicators – Nonfarm Employment Change, Average Hourly Earnings and the unemployment rate.

Although the Bank of England proved to be overly pessimistic about the Brexit vote back in June, policymakers continue to sound the alarm about the negative impact that Brexit will have on the British economy. On Wednesday, Gertjan Vlieghe, a member of the BoE Monetary Policy Committee, warned that that consumer spending in the UK was weakening and the situation was likely to worsen. Vlieghe weighed in on the discussion over monetary policy, as he cautioned the BoE against raising interest rates. The BoE, which has adapted a neutral stance towards a rate move, is not expected to raise rates before 2018, and lengthy Brexit negotiations could delay a rate hike even further. Although inflation levels have moved higher, wage growth and consumer spending remain soft, so there isn't much pressure on the BoE to raise rates in the near future.

The Federal Reserve released the minutes of its March policy meeting on Wednesday. At that meeting, the Fed raised rates a quarter-point to 0.75%, but the dovish rate statement disappointed the markets, triggering broad losses for the US dollar. In the minutes, policymakers noted upside risk to the US economy, but remained divided on whether inflation will rise to the Fed target of 2.0%. Most policymakers were in favor of taking steps to trim the $4.5 trillion balance, which has ballooned since the Fed implemented its aggressive quantitative easing program back in 2008. So what's next for the Fed? According to the CME's Fed Watch, the odds of a rate hike at the May meeting are just 5 percent, while the likelihood of a rate hike in June stand at 63 percent. Fed policymakers appear divided on how many more times the Fed will press the rate trigger. Last week, FOMC member Eric Rosengren called for three more hikes, saying the Fed should raise rates in June, September and December. Rosengren said that employment and inflation levels were close to the Fed's targets, and that three additional hikes were needed in order to prevent the US economy from overheating. However, a majority of FOMC members are in favor of just two more hikes this year.

S&P500 is making an intra-day rally from around the 2340 mark, where support may have been found for a flat correction. Ideally we will now see a five wave movement to the upside follow and hopefully a breach above the 2378 level.

S&P500, 1H

USD/JPY has posted gains in the Thursday session, as the pair trades just below the 111 level in the North American session. On the release front, Japanese Consumer Confidence improved to 43.9, above the forecast of 43.5 points. In the US, unemployment claims dropped to 234 thousand, its lowest level in five weeks. On Friday, US job numbers will be in focus, with the release of three key indicators – Nonfarm Employment Change, Average Hourly Earnings and the unemployment rate.

The Japanese consumer remains pessimistic about the economy, as the latest consumer confidence survey came in at 43.9 points for March. Although this reading improved over the February release of 43.1, a release below the 50-point level points to pessimism. There are some bright points in the economy, as manufacturing and export numbers are pointing higher. At the same time, domestic consumption remains soft and inflation levels remain well below the BoJ's target of 2.0% percent. The BoJ's preferred inflation indicator, BoJ Core CPI, remains weak and dipped to 0.1 percent. With inflation at low levels, the Bank of Japan is in no rush to tighten monetary policy.

There were no surprises from the minutes of the Fed March policy meeting. At that meeting, the Fed raised rates a quarter-point to 0.75%, but the dovish rate statement disappointed the markets, triggering broad losses for the US dollar. In the minutes, policymakers noted upside risk to the US economy, but remained divided on whether inflation will rise to the Fed target of 2.0%. Most policymakers were in favor of taking steps to trim the $4.5 trillion balance, which has ballooned since the Fed implemented its aggressive quantitative easing program back in 2008. So what's next for the Fed? According to the CME's Fed Watch, the odds of a rate hike at the May meeting are just 5 percent, while the likelihood of a rate hike in June stand at 63 percent. Fed policymakers appear divided on how many more times the Fed will press the rate trigger. Last week, FOMC member Eric Rosengren called for three more hikes, saying the Fed should raise rates in June, September and December. Rosengren said that employment and inflation levels were close to the Fed's targets, and that three additional hikes were needed in order to prevent the US economy from overheating. However, a majority of FOMC members are in favor of just two more hikes this year.

USD/CHF - 1.0042

Most recent candlesticks pattern : N/A

Trend                                    : Near term up

Tenkan-Sen level                  : 1.0047

Kijun-Sen level                    : 1.0053

Ichimoku cloud top                 : 1.0032

Ichimoku cloud bottom              : 1.0031

Original strategy :

Buy at 0.9950, Target: 1.0050, Stop: 0.9915

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.9950, Target: 1.0050, Stop: 0.9915

Position : -

Target :  -

Stop : -

As the greenback has maintained a firm undertone after last week’s rally above 1.0003 resistance, suggesting recent rise from last week’s low at 0.9813 is still in progress and bullishness remains for this move to 1.0080, then towards previous resistance at 1.0109, however, loss of upward momentum should prevent sharp move beyond latter level and reckon 1.0140-50 would hold, risk from there has increased for a retreat to take place later. 

In view of this, would not chase this rise here and would be prudent to buy dollar on pullback as support at 0.9948 should limit downside. Below 0.9925-30 would abort and signal top is formed instead, bring correction to 0.9905-10 but reckon previous resistance at 0.9869 would hold from here. 

GBP/USD - 1.2492

Most recent candlesticks pattern   : N/A

Trend                                 : Near term down

Tenkan-Sen level                 : 1.2478

Kijun-Sen level                    : 1.2478

Ichimoku cloud top              : 1.2475

Ichimoku cloud bottom        : 1.2459

Original strategy :

Sold at 1.2465, stopped at 1.2500

Position : - Short at 1.2465

Target :  -

Stop : - 1.2500

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

As the British pound has rebounded again finding support at 1.2450, dampening our bearishness and further choppy trading is in store, hence upside risk remains for recovery to 1.2520-25, however, as broad outlook remains consolidative, reckon upside would be limited and price should falter below resistance at 1.2559, bring retreat later.

As near term outlook has turned mixed, would be prudent to stand aside in the meantime. Below said support at 1.2450 would revive bearishness and bring weakness to said support at 1.2419, break there would bring test of 1.2400 but below there is needed to add credence to our view that the rebound from 1.2377 has ended at 1.2559, bring further fall towards support at 1.2377.