Pressure points are building, equities trading near historically high, gold above $1425, bond yields plummeting and the dollar floundering, no wonder I'm feeling as tense as a tightly coiled spring ahead of G-20.
Wow! Gold is up almost 12% since the end of last month but based on the critical one-month XAU-DXY - 71 % inverse correlation it suggests that the long US dollar position squeeze has done most of the heavy lifting,
The markets will have to come up for air at some point so while we could be entering the early stages of consolidating gains, gold could be hypersensitive to the USD movement
Euro has only sold off about 30 points, and gold is off about $10 on the day which tells me speculative positions are high, so we could see gold prices trade very much inversely correlated to the USD while the markets await the next significant catalyst
Still, in the absence of a surprise on the US data front, I expect the USD downtrend to resume and gold to push higher accordingly
Oil struggled in Asia today as investors appeared more preoccupied with profit taking at the through the US would scale back its Gulf Naval presence, reduces the chance of an accident or even a rogue policy mistake.
So while things look calm on the surface, there's undercurrent tension building around targeting sanctions on the Supreme Leader as it's more likely to provoke Iran hardliners and proxies.
USDJPY traded heavy during the Asia morning as the risk-off tone put local equities under pressure, and safe-haven assets went bid.
Risk Off
Things started excellently with reports Chinese Vice-Premier Liu had spoken on the telephone with US Treasury Secretary Steve Mnuchin and USTR Robert Lighthizer. Then the tone soured badly on the Washington Post article suggested some Chinese banks have violated sanctions with North Korea.
Indeed these revelations are hitting the markets are at a horrible time, especially as the US and China are trying to bridge the cavernous trust gap over a trade deal.