President Trump may have been grooving to Rage Against the Machine’s Guerrilla Radio on Spotify when he lost his sh*t with North Korea. The Leader of the Fee World threatened “fire and fury” on North Korea after a rash of inflammatory rhetoric from Kim Jong-Un.
Predictably, the North Korean leader reacted in kind, although he was a tad more specific. He threated the US Pacific Territory of Guam with a preemptive missile strike.
FX traders reacted predictably as well. They bought safe-haven currencies. The Japanese yen and Swiss franc soared. Japan is 1,000 kilometers closer to Pyongyang than Guam, so buying yen as a safe-haven from a NK threat doesn’t look like a great strategy.
USDJPY dropped from 110.55 to 109.66 which is where it is trading in New York. USDCHF fell from 0.9657 yesterday morning to 0.9620 as of 6:00 am PDT.
US nonfarm productivity data released this morning beat the 0.7 forecast and clocked in at 0.9%. That news was offset by a dip in unit labour costs to 0.6% from 5.4% previously.
The data didn’t do anything for EURUSD which remained locked within its overnight 1.1720-1.1763 range.
Sterling stayed at the bottom end of its 1.2969-1.3027 range, lost in its own world of Brexit and Bank of England speculation.
AUDUSD and NZDUSD were under pressure in Asia but recovered somewhat in Europe. Both currency pairs trimmed gains in New York trading.
USDCAD was ignored overnight but rallied in New York trading, rising from 1.2670 to 1.2710. The rally is occurring despite WTI oil prices above $49.50/ barrel, suggesting the move may be due to a “short squeeze” of weak short USDCAD positions, in a thin summer market.
USDCAD Technical outlook:
The intraday USDCAD technicals are bullish. The uptrend channel from the August 1 low is still intact while prices are above 1.2660 looking for a break of 1.2720 to extend gains to 1.2770. For today, USDCAD support is at 1.2660 and 1.2620. Resistance is at 1.2720, 1.2750 and 1.2770.
Today’s Range 1.2660-1.2750
Chart: USDCAD 30 minute