Article / 06 March 2018 at 22:39 GMT

US Wrap: North Korea says 'give peace a chance'

FX Trade Strategist /

  • US January Factory orders give back a large part of December gains 
  • Tariff tensions ease on Republican party push-back 
  • Whippy Wall Street ekes out gains 

By Michael O’Neill
NY Focus: North Korea leader Kim Jong-un may have dusted off his old John Lennon albums and  grooved to “Give Peace a Chance” before he met the delegation from South Korea. 

How else do you explain South Korea President Moon’s statement: “It made it clear that it would have no reason to keep nuclear weapons if the military threat to the North was eliminated and its security guaranteed.”

The news hit the wires just as New York was starting the day. Before you could say “risk on”, EURUSD jumped to 1.2404 from 1.2338 and Sterling touched 1.3910 from 1.3844. 

They weren’t alone. The commodity currency bloc soared, and so did gold prices. Kiwi traders ignored the global dairy trade auction result of a 0.6% drop in prices.

 Plenty of chinks: Trump's tariff plans are coming under political pressure. Photo: Shutterstock

USDJPY spiked from ¥105.852 to ¥106.40 and then dropped to ¥105.90 by the close in Europe. Prices regained ¥106.17 by the end of the New York session. Japanese year end flows positioning may be distorting flows.

Earlier, tensions from President Trump’s plan to levy tariffs on steel and aluminium appeared to be dialled back a notch as some Republicans and White House economic adviser Gary Cohn were pushing back.

Wall Street rode a roller-coaster of gains and losses throughout the session, but managed to close on an “up” note.

WTI oil prices gave back their “North Korea headline” gains, dropping from $63.25/barrel to $62.20/b. The American Petroleum Institute reported a 5.6 million rise in US crude inventories at the end of the day.

Wednesday Focus:  Eurozone Q4 GDP data (forecast 0.6%, q/q and 2.7%, y/y is the major data, but it is unlikely to have much impact.  

Neither will the Bank of Canada policy rate statement EURUSD broke above short-term resistance at 1.2360 today, which has capped top-side moves since February 22.  

That opens the door to further gains to 1.2510.

EURUSD 4 hour chart
Source: Saxo Bank

-- Edited by Adam Courtenay

Michael O'Neill is an FX consultant, currency strategist and author of the Trade of the Day at Follow Mike or post your comment below to engage with Saxo Bank's social trading platform.


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