Summary:
- Gold hits highest level since November as North Korea test Hydrogen bomb
- Large-scale selling seen in Cryptocurrencies
- Oil.WTI has gained and is close to moving above last week’s high
- RBA rate decision overnight
Gold prices soared early during the Asian session to reach $1337/oz as markets were once again surprised by a bold step made by the North Korean regime. A test of hydrogen bomb has been hailed as successful and clearly complicate a picture for the US administration.
This could be a real game changer. Until now, the US and its allies sought to pursue a strategy of economic isolation to make it impossible for the regime to acquire nuclear technology. Now this strategy seems to have failed. Economic sanctions could kill more people in the country due to starvation but seem insufficient, especially at this stage. 3 markets to watch: Gold, USDJPY, US500
The other big story on the day has been the gathering of pace seen in the sell-off in cryptocurrencies. The markets reopened with large gaps lower after the weekend and today has seen further selling. A quick look at the 5 markets reveals something of a bloodbath. BTCUSD is down more than 8% but still fairing the best, with ETHUSD plummeting by almost 19% and LTCUSD having lost more than a fifth of its value just today.
Oil.WTI ended last week marginally lower, with the decline marking a 5th successive weekly fall. However, price recovered somewhat into the weekend and there are signs that this recent move lower maybe close to ceasing. A large bullish engulfing candlestick on Thursday saw the two prior days declines recouped and the scale of the buying could be a potential early sign of a reversal. As long as price remains above last week’s low of 45.77 then a recovery could be in the offing.
Looking ahead we have the first of what could potentially be several major central bank rate decisions overnight with the RBA set to announce their latest policy mix. The price action seen in the Australian dollar has been fairly interesting of late. The currency has thrived, however those gains are much less impressive weighing them against what we’ve seen in terms of export prices of key Australian commodities.