Currencies
EUR/USD – is climbing a little but higher and is trading around the 1.0461 level which has now turned into resistance. The USD weakened a little bit when on Friday it was announced that China has seized an unmanned US Navy vessel.
USD/JPY – started to drop after it reached the resistance around the 118.63 level and the drop became larger after the news broke that China seized the underwater drone. This obviously caused some safe haven buying as it caused the tensions between the US and China to increase further. The BOJ will start its 2-day meeting to discuss its monetary policy of which we will get the results tomorrow. We can already see that the weaker JPY has its effects on exports as net exports dropped much less than was expected, something that could be expected with a weaker JPY.
GBP/USD – moved up on Friday as the USD weakened, but if facing renewed pressured again this morning as Scotland is (again) threatening to leave the UK in case it will not be able to remain part of the EU single market. This week we will also get the GDP data out of the UK.
AUD/USD – dropped to a 6 month low on Friday as it extended its losses. It was also reported that Australia’s deficit is expected to be larger than previously thought. As a reminder, the GDP showed a decline last quarter and if the next GDP reading will also show a decline it would mean that Australia is in its first recession in 25 years.
Bitcoin – I mentioned it also last week and since then it has continued to move higher to reach the highest level since February 2014.
Indices
China A50 – continued to decline as saw its largest weekly decline since that beginning of the year, as tensions with the US continue to put pressure on the Chinese stock market.
S&P 500 – also dropped when news broke of the Chinese seizure of the US navy underwater drone as it added more uncertainty to the market. We can see that it is already recovering this morning, as it appears there is still more upside left.
Commodities
Gold – is able to benefit from the weakness in the USD and also from the increased tension after the Chinese seized an unmanned US Navy underwater drone which led to some safe haven buying. It is now trying to get back to the levels right before the FOMC statement, with the nearest resistance around the 1162 level.
Oil – moved higher on Friday after comments from Russia and also Kuwait at which they reiterated their commitment to the production cut. Also production in Libya is not resuming at its planned pace as oil filed guards prevented work due to a dispute. In addition, the seizure of China of the US Navy’s underwater drone boosted oil prices as on the one hand it weakened the USD, and on the other hand also added to tensions and could lead to supply disruptions. On the other hand, in the US the number of active rigs continued to climb further.