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September 22nd, 2017: Markets Wary on North Korea H Bomb Threat

Morning Report: 07.00 London

Donald Trump’s poking of the hornet’s nest appears to be having the predictable result of pushing North Korea to up their rhetoric. Markets are in retreat after the North Korean threat to test a H bomb.

The biggest casualties have been the Australian and New Zealand dollars which are pulling back this morning. The AUD/JPY in particular has been hit hard.

The yen pairs have generally been hit hard as money flows back into the Japanese yen at the expense of the dollar and other currencies.

The pound and euro have performed well though, helped by better than expected public borrowing figures in the UK and the latest speech from ECB President Draghi.

Coming up today

Coming up today, we have a series of European flash manufacturing and services PMI data points. We start with French data at 08.00, followed by German at 08.30 and EU wide at 09.00. ECB President Draghi also speaks at 09.00. ;

Prime Minister May is also due to make a crucial Brexit speech today.

At 13.30, we get Canadian CPI and core retail sales.

Trade Idea

The Canadian dollar halted its rally at the beginning of September, losing ground to the US dollar.

This slump comes despite oil prices firmly holding and gaining above $50. The latter will provide significant cushioning for the Canadian dollar and could spark further downside for the USD/CAD.

September 22nd, 2017: Markets Wary on North Korea H Bomb Threat

A good way to play this is a LOWER trade predicting that the USD/CAD will close below 1.2250 in 21 days for a potential return of 118%.

September 22nd, 2017: Markets Wary on North Korea H Bomb Threat