“The historic face to face meeting in Singapore of President Donald Trump and Kim Jong Un sparked the US dollar to jump up to a 3 week high. “
The President of the United States said that they made a lot of progress, and that the meeting went better that he undissipated.
They are hoping for a historical deal to end the nuclear standoff crisis between the Korean peninsula.
How Markets react
According to investing.com the US Dollar rose versus the Yen and the Koren Won went up almost 0.2% while the Asia equity Markets was more volatile than usual with the Nikkei getting some gains of about .5%.
The euro retrace from a three week high of $1.1840 to about 0.1% at $1.1769 and the Spot Gold went down about 0.2 % to $1,297.31 an ounce.
Now Analysts at OCBC stated "The key question is whether this summit will lead to a lasting, materially positive outcome"
The real question here is, are markets getting more balanced after the end of the summit? Or will Investors gain more trust?
Many investors have their hopes pretty low after the summit and believe that the summit was not successful.
Robert Carnell, chief economist Asia-Pacific at ING said "So today, we have the opportunity for a historic meeting, a possible end to the Korean war, and a possible move to denuclearize, and maybe even demilitarize the Korean peninsula. All of that's great, but how can you make money from it. Well, the short answer is you probably shouldn't even try."
Also Robert Carnell after the meeting of the G7 said that "existential global threat" is the tariffs and that those are a bigger threat.
Now the busy week ahead may give investors some glues of what may start happening with the global economy as the policy meetings of the U.S. Federal Reserve and the European Central Bank are next, as well the Brexit bill vote.
More or less the U.S. Federal Reserve is almost certain that is going to raise the interest rate the following week but investors are more focused on, if the central bank will decide to apply four interest hikes in 2018.
Goldman Sachs said, they are forecasting three and four rate hikes in 2018 and 2019, respectively while the possibility of a forth rate hike on 2019 to be also probable.
This is leaving also Gold Price vulnerable on the anticipation for upcoming the U.S. Federal Reserve meeting meaning that the gold may be bearish while its struggle to compete with yield-bearing assets when rates rise.
On the other hand Gold could find some short of support from save heaven buying while markets are trying to recover from the aftermath of trade tensions and the G7 Meeting.
The scenario of more save heaven assets on worrying times is more probable due the fact that investors want to feel more secured with the gold been more stable value.
Other reports this week that are important indicators are U.S. inflation, retail sales and industrial production.
About the Author:
Marios Athinodorou is TeleTrade’s market analyst and commentator. Apart from being an experienced trader, Marios is an advanced technical analyst and is interested in trading psychology. He has 7 years of trading expertise in Forex and CFDs, providing insights to share with all kinds of traders, from beginners to experts.Among others, Marios is delivering weekly trading webinars. Sign up for upcoming webinars, here.
Disclaimer: Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and education purposes. Personal Opinion of the Author does not represent and should not be construed as a statement or an investment advice made by TeleTrade. All Indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
Risk Warning: Investment services are provided by TeleTrade-DJ International Consulting Ltd, a Cyprus Investment Firm under reg. number HE272810 operating in accordance with MiFID, under license 158/11 by the Cyprus Securities and Exchange Commission. Trading in leveraged derivative financial instruments carries a high level of risk and may not be suitable for all investors. Past performance is not a reliable indicator of future results. Indiscriminate reliance on informational or historical materials may lead to losses.